Crepaway was founded in 1984 by two brothers, Charles and Claude Thoumy, as a limited liability company and was incorporated in 2003. Today, Crepaway Corporation operates eight outlets in Lebanon with two seasonal restaurants, and four franchises in Egypt, Saudi Arabia and Qatar. Charles Thoumy has been the chairman and general manager of Crepaway since its founding as a small kiosk serving crepes. He spoke with Executive about he and his brother’s successful chain of “casual dining” restaurants.
E How is the casual dining industry performing, and what are the major problems in the industry?
The major problem is basically inconsistency. In a country like Lebanon, even if you go by strategic planning, you have to have a tactical approach in dealing with circumstantial ups and downs. Sometimes you go for a five or six year plan, and something happens, like a war or a crisis, and then you have to [halt] your plans and go for tactical little things to make your thing work. Again you are not working on a road map to achieve your goals. It is a temporary deviation.
E So you always have to have a plan B?
And C and D sometimes.
E Other than the inconsistency, are there any problems that you are facing with government regulations?
No, but you are working in a country that is not really structured. Sometimes you have to deal with different departments, sometimes they overlap, sometimes they do their job and sometimes they don’t. There is no system that you can abide by. You do not feel that there is someone to help you. When the government structures its departments again, we will be able to deal easier with their rules and regulations. Even though we know that rules and regulations, like everything else, need to be updated.
E What corporate strategy do you use to deal with competition?
We have fierce competition. The fiercest competitor we have is ourselves. We compete with ourselves to do better every day. I think competition is a source of richness. Competitors learn from you and you learn from them; that is basic. You do better in something, they do better in something else. Then you upgrade, they update and that is the nice game of competition. On the other hand, since we have been leading since 1984, we have had a lot of people coming and copying… well not copying, but it is a normal thing in business when people look at businesses that are working well and try to do something similar. That is another confirmation that we are doing well and where we feel we have the responsibility to do better than we did before. That is the main scope of our competition.
Talking about strategies, there are different strategies to deal with competition. First, when you talk about competitive strategy, [it] is when you see what the competitor is doing and try to do better. We are not into war with our competitors — we try to complete each other, so there is not really an approach where we look closely at what they are doing and then try to block the way for competition. It is a nice game everybody is playing, and people who win have to be complemented.
E In the last couple of months, many restaurants have increased their prices. Do you know the reason?
We also have extra running costs concerning electricity and generators… we are living that today. The increase in prices happened in the last couple of years. And again the cost of real estate has increased a lot. Which means that the rent went up a lot. At all levels, you have an increase in your costs. In the end you are in a business that requires high running cost. We haven’t increased our prices in the last two or three months. Beginning in spring, we have added sometimes 500 or 1,000 Lebanese lira because of the fluctuation of the Euro. So, we had to.
E How has the financial crisis affected Lebanon and your business?
The economic downturn of course has an adverse impact, not only on Lebanon but on the global level. It leads to a decrease in purchasing power. We have witnessed a decline in the purchasing power, especially from the people and expats who used to come from Dubai and Qatar. They were loaded with money, so they used to come and spend their money with more freedom. These were affected. But we cannot say people are refraining… but there is for sure a drop in average spending.
E Do you have an idea how severe the drop has been?
I cannot tell you really, but I can say that it doesn’t show a lot because we tried to increase the volume (the number of people) and the flow of tourists was high. But we can say that the average check that was $15 could go down to $13. But you can tell that in big restaurants that serve champagne and wine, because some people that used to spend $300 for a bottle of wine are now spending $70, for example. It is an attitude. Instead of ordering three platters and appetizers and a dish and a desert, people would share. It goes back to the average check.
E If we want to talk about tourism this summer, what do you think is the difference?
[With] the stability of the political situation we have seen a very high flow of tourism. Even in our branch in Egypt, where Arabs used to go, our management there said they were affected by the flow of tourism that hasn’t been very substantial there, and they say that all the tourists went to Lebanon. They sensed it in the Egypt branch because usually Egypt is a destination for Arabs in summer. You can also tell by the hotel reservations. I can tell that definitely there is a 35 percent increase in our sales.
E What about other branches in the Gulf. Are you sensing a negative effect?
The casual dining industry is able to face the financial crisis, even in the regional markets, because the average check is affordable. There is no doubt that they were affected because there was less tourism and these countries also rely on tourism. But the affect was not on a large scale, because it is not a luxury product. For an expat working in Saudi or Qatar, he would definitely [rather] go spend $15 or $20 for a meal than $50. But in Dubai, the yield changed drastically.
E What are your plans? Are you planning to expand in the future to other countries?
Strategically, growth is a constant objective; it is the main motivation, we cannot stop. We have one opening in Hamra [district in Beirut] probably in a month’s time, and there is a new mall in Saida — we are opening there. There is also a plan to grow into micro markets but the idea is not consolidated yet. We have plans for several locations in the KSA, Qatar, Syria, and Dubai. We are planning for all that. We were planning to open in Dubai the beginning of this summer, and we postponed that until next year.
E Do you expect to do better than last year in terms of profits?
Yes I expect it to be better because when the volume goes up, you have better opportunity to make a profit. We work on a volume basis. In our industry, we are not defined by what 50 people would [spend in one] night, with an average of $200 per person… if we have three bursts per year like we have this summer, I think our industry would be fine. We invested a lot in organization last year, so our profits were slower last year because we were in an investment mode. But this year we amortized that and we know we have around a 40 percent increase in profits.