Al-Ghazzawi GroupFood and Beverage Strategy OverviewMarch 2012

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Agenda

► To review the strategy elements for Food and Beverage Sector for final approval► Vision & mission statements► Growth Strategies► Performance Objectives► Strategic Initiatives

► Develop an implementation roadmap for strategic initiatives

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Outline

► Background► Highlight of SWOT► Vision and Mission► Growth Strategies► Performance Objectives► Strategic Initiatives & Actions List► Strategic Initiatives List► The 5 Year Roadmap► New Initiative Investment Request

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Background

GDC was granted the exclusive franchising rights to develop and operate Joffrey’s Coffee & Tea Co. under the Joffrey’s Systems throughout the Kingdom of Saudi Arabia, and certain countries in the Middle East and South Asia.

At present, GDC has 51 (Fifty One) Joffrey’s outlets & six sub franchises in Jeddah, Dammam and Riyadh (Saudi Arabia), Bahrain, Beirut (sub franchise) and has continued planning to develop and operate additional Joffrey’s outlets in due course.

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Highlight of SWOT

Key Strengths► Early penetration in Saudi market

► Product quality

► Positive customer perception

Key Weaknesses► Poor visibility in key locations in KSA

► Retention of key employees

► Staff motivation and morale

Key Opportunities► Big market in KSA and Middle East

► Wholesale market penetration

Key Threats► Competitor strategies

► New government regulations may limit use of expatriate workers

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Mission and vision statements

Mission Statement: To establish sensational warm and inviting Social experience, and tie with our customer through generations in Saudi Arabia and the Middle East in food and beverage services

Vision Statement: To be the first choice in food and beverage services

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Growth Strategies

• Growing outlets from 58 to 100, by adding 8 outlets each year. 6 kiosks and 2 shops.

• Sub-Franchise: from 1 in Lebanon and 4 in KSA to 5 in KSA.

• Keep wholesale

- Sub-Franchise: add 15 more in new areas in the middle east.

• Plan to open new Food and Beverage brand

• Study the possibility of opening catering business.

Markets/Geography growth

Current Markets/Geographies

New Markets/Geographies

Type of growth

Organic growth(Extension of current products/services)

Inorganic growth(Step outs in new products/services)

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5 Year Growth Strategy – Overall View

Revenues

Profit margins

- 20% 0% 5% 10% 15% 20% 25% 30% Over 30%00 M

SR 50M

SR 75M

Over SR100M

Exist Outlets

201229 M

Wholesale

20121.9 M Sub-Franchise2012

0.47M

20163.94

New Outlets

Revenue (2012): SR33.05 M Forecasted Revenue (2016): SR64.23 M

SR 25M

20121.68 M

20165.63M

201650.72 M

20163.94

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5 Year Growth Strategy (Cont’d)

Revenues

Profit margins

-0% 0% 10% 20% 30% + 30%

00 M

SR 60M

- 10%

SR 50M

SR 40M

SR 30M

SR 20M

SR 10M

201226 M (15%)

Existing Outlets

201333.35 M (17%)

201438.35 M (18%)

201544.1 M (20%)

201650.72 M (22%)

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5 Year Growth Strategy (Cont’d)

Revenues

Profit margins

4% 8% 10% 12% 14% 16%

00 M

SR 6M

6%

SR 5M

SR 4M

SR 3M

SR 2M

SR 1M

20121.68 M (10%)

New Outlets

20133.70 M (12%)

20144.25 M (13%)

20154.90 M (15%)

20165.63 M (16%)

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5 Year Growth Strategy (Cont’d)

Revenues

Profit margins

20120.47 M (70)%

SR 6M

0M

SR 2M

SR 3M

SR 4M

SR 5M

SR 1M

- 20% 0% 10% 20% 30% + 30%- 10%

Sub Franchise

20130.90 M (70)%

20141.50 M (70)%

20152 M (70)%

20163.94 M (70)%

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5 Year Growth Strategy (Cont’d)

Revenues

Profit margins

20121.9 M (40%)

SR 6M

0M

SR 2M

SR 3M

SR 4M

SR 5M

SR 1M

- 20% 0% 10% 20% 30% + 30%- 10%

Wholesale

20132.28 M (40%)

20142.74 M (40%)

20153.28 M (40%)

20163.94 M (40%)

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Sector and business performance objectives

Strategic goals Sector objectives KPIs Joffrey’s KPIs

Financial: Create sustainable and profitable businesses with positive cash flow and return on capital

Diversify the sector income through several brands and business

Operation

Increase existing outlets sales by 15 % on early basisLeverage 50 % of financial needs for growth from internal accruals (2 Million)Increase sub-franchise income from 350 K to 6 Million by increasing sub-franchises to 25

Operation/Financial

Customer: Establish loyal & satisfied customers through effective relationship and follow-up approaches

Development

Increase loyalty cards & matching offering for 90 % of regular customers by end of 2013 Serving customers in time with required quality as per our SOPEnsure and control sub-franchises achieve 90 % evaluation rate on SER by controlling

Operation

Growth: Establish effective organization, management and operational systems to achieve efficient and reliable operations

Increase our brands portfolio by opening a new food & beverage Al-Ghazzawi brand

Development

Open 8 new outlets (6 kiosks and 2 shops) in prime locations (high traffic with higher average income)

Operation

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Sector and business performance objectives

Strategic goals Sector objectives KPIs Joffrey’s KPIs

Management/Operational Excellence: Establish effective organization, management and operational systems to achieve efficient and reliable operations

Hire qualified managers for this expansion

HR Manage sub-franchises to quality requirements by master franchiserStandardize our ManualFocus and maintain our quality

Operation

Employee Engagement: Develop motivated, competent, loyal and aligned employees to deliver the business strategy

Design and implement a comprehensive HR system in addition to career development.

HR Reduce Turnover of Joffrey’s employees from 30 % to 10 % within 5 years

HR

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Strategic Initiatives & Actions List

# Challenges Strategic Goal

Key Initiatives & Action Items (KI : Key Initiatives)(AI: Action Item)

2012 2013 2014 2015 2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

1

Limited sub-franchise base, which doesn’t utilize Joffrey’s master franchise agreement

Management / Operational Excellence

1.1 Review and update terms and contracts with sub-franchises in local and international locations (AI)

1.2 Update current SER (Service Evaluation Criteria) (AI)

1.3 Establish sub-franchise management function(KI)

X

X

X

2

Food and beverage business in Al-Ghazzawi is limited to Joffrey’s franchise, putting this sector in jeopardize if a conflict with Joffrey’s happened or they decided to seize partnership with Al-Ghazzawi

Growth

2.1 Market study for positioning a new brand(KI)

2.2 Business plan for new brand(KI)

2.3 Establish new brand(KI)

2.4 Feasibility study for creating catering arm (KI)

X

X

X

X

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Strategic Initiatives & Actions List

# Challenges Strategic Goal

Key Initiatives & Action Items (KI : Key Initiatives)(AI: Action Item)

2012 2013 2014 2015 2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

3

Lack of customer data to help in customer relationship management

Customer 3.1 Create information system and database for regular customers (AI)

3.2 Establish CRM function (KI)

X

X

4

Limited financial resources to support expansion plans

Finance 4.1 Secure 50 % of financial needs on yearly basis (approximately SR 2 Million financing)(AI)

5 Full support of top management

Management/ Operational Excellence

5.1 Approve & commit detailed expansion plan based on agreed upon strategy (AI)

X

6

Adequate and qualified support function (HR, Logistics, Finance) that matches planned growth

Management/ Operational Excellence

6.1 Design and implement HR system (KI)

6.2 Design and implement clear financial PnP(AI)

6.3 Prepare supply chain plan that matches expansion required (KI)

X

X

X

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Strategic Initiatives & Actions List

# Challenges Strategic Goal

Key Initiatives & Action Items (KI : Key Initiatives)(AI: Action Item)

2012 2013 2014 2015 2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

7

Reduce employees turnover from 30% to 10%

Employee Engagement

7.1 Design and implement training program(KI)

7.2 Design and implement performance based incentives (AI)

7.3 Design and implement career development plan (AI)

X

X

X

8

Decrease customer complaints by at least 50%

Customer

8.1 Establish a customer service section to collect , analyze and resolve customer complaints (KI)

8.2 Create customer complaints database(AI)

X

X

9 Improve Joffrey’s brand image

Management/ Operational Excellence

9.1 Standardize brand identity (Manual colors, logos and outlets design) (KI)

X

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Strategic Initiatives List

# Key Initiatives TimeInvestment Needed

(SR)

1 Establish sub-franchise management function 2012 (Q2) TBD

2 Market study for positioning a new brand 2013 (Q1) TBD

3 Business Plan for new brand 2013 (Q1) TBD

4 Establish new brand 2015 (Q2) TBD

5 Feasibility study for catering arm 2013 (Q1) TBD

6 Establish CRM function 2012 (Q2) TBD

7 Supply chain planning 2013 (Q1) TBD

8 Design and implement training program 2012 (Q2) TBD

9 Establish customer service section 2012 (Q2) TBD

10 Standardize brand identity 2012 (Q2) TBD

TBD : To be determined

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The 5 Year Roadmap

Review contracts (1.1) Establish sub-franchise

management function (1.3)

Establish CRM function (3.2)

Design and implement training program (7.1)

Per

form

ance

Implementation of Operational

Excellence

Scale to high performance

Getting house in order

2012 2013 - 2014 2015 >

Establish customer service section (8.1)

Standardize brand identity (9.1)

Stage 1Stage 2

Stage 3

Market study and business plan for a new brand (2.1,2.2)

Feasibility study for creating a catering arm (2.4)

Prepare supply chain plan (6.3)

Establish a new brand (2.3)

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Appendix

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New Initiative Investment Request

1 The Challenge

2 Objectives

3 Scope of the Initiative

4 Expected Benefits

5 Estimated Investment Needed (SR)

6 Resources required

7 Timing