Articles

Management change: Cupola sells KFC Pakistan to Delicious Holdings

By Farooq Baloch

Published: January 30, 2014

The KFC business was going through some managerial and financial crises and the quality of service was down lately, say industry sources which might have led to the transfer of KFC franchises to a new party. PHOTO: FILE

KARACHI: 

Dubai-based Cupola Group – that held the master franchise of Kentucky Fried Chicken (KFC) Pakistan for over a decade – has sold its flagship KFC business to Delicious Holdings of United Arab Emirates, The Express Tribune has learned.

For confirmation, the headquarters of Yum! Brands Inc. – the Louisville, Kentucky-based parent company of KFC, Pizza Hut and Taco Bell – was contacted but they did not respond to queries, which were acknowledged by its media team.

Cupola Group, in response, said that its shareholders had set up a food retail holding company out of Dubai to expand into food franchise — both inside and outside Pakistan. “The KFC business in Pakistan will be a part of this entity,” stated the Cupola Group.

While the parties involved are tight-lipped over details about the agreement, two independent sources have put the transaction value at a minimum of $20 million.

Cupola confirmed the development with sources adding that its senior management has been changed already. Nigel Belton has replaced Rafiq Rangoonwala as the Chief Executive Officer (CEO) of KFC business, announced Gray Mackenzie Restaurant Internationals, an investor in Cupola Group.

Based in UAE, Belton is the Chief Development Officer at Yum! Restaurants International, the largest division of Yam! Brands Inc. He has 17 years of experience in food and retail businesses in different parts of the world and possesses a good understanding of Pakistani market.

Irfan Mustafa, a partner at Delicious Holdings, and Cupola Group are said to be finalising the formalities as the agreement has already been signed, our sources say. Mustafa is an IBA alumnus who previously served as Managing Director (KFC and Pizza Hut) of the Middle East, North Africa, Pakistan and Turkey business for Yum Restaurants International, the world’s largest restaurant business.

The American fast food restaurant chain had entered Pakistani market in 1997 after Abraaj Group opened the country’s first KFC franchise in Gulshan-e-Iqbal, Karachi. In 2001, Cupola bought the master franchise rights to operate KFC restaurants in Pakistan.

The business grew significantly over time to a network of 60 KFC restaurants, covering 20 cities across Pakistan and contributing more than Rs10 million a month in direct taxes to the exchequer – each new outlet developed by the company costs around Rs40 million, according to its website.

The recent growth of local fast food chains coupled with the entry of several international fast food chains have increased competition. In contrast, the KFC business was going through some managerial and financial crises and the quality of service was down lately, say industry sources which might have led to the transfer of KFC franchises to a new party. The change of management would help the company revive its quality, they say.

Denying market talks about quality of service issues, Cupola Pakistan’s former CEO Rangoonwala said, “Some people may have bad experience but that doesn’t mean the overall quality is down.” When a restaurant serves 40,000 to 50,000 people a day, not everyone is pleased with the service, he said.

The former head of KFC Pakistan said the business could still grow. “I think it was time for a change. The people who have bought it have a lot of experience. This is a good decision.”

Published in The Express Tribune, January 30^th, 2014.