Raydan to list on Tadawul in 2 years, says CEO

Raydan Restaurants and Cuisines Co. (Raydan Restaurants) expects to list its shares on the Saudi Stock Exchange (Tadawul) within two years from now, the company’s chief executive officer, Fawzan Abdullah Al Harthy, told Argaam in an interview.

Meanwhile, the Jeddah-based catering company, is set to offer a 30 percent stake, or 6.75 million shares, in an initial public offering (IPO) in Saudi Arabia’s Nomu-Parallel Market.

Raydan, which is a unit of Al-Salami Group, specializes in setting up and managing restaurants, in addition to operating a number of factories.

Q: Will the lower consumer spending in the Saudi retail segment weigh on the company’s performance?

A: The company is trying to overcome this by expanding market share, adding new products—such as kids meals, low-priced meals for workers and Hajj pilgrims. We also introduced the delivery service which increased sales by 20-30 percent.

Q: The company has 24 branches. Are there plans to open more locations?

A: We are targeting 50 branches by 2021 and also planning to expand in the GCC region over the next five years.

Q: Are your Egypt-based branches profitable? How would you hedge against the risks of currency fluctuations?

A: Our Egypt-based operations are generally profitable. However, they are negatively impacted by forex fluctuation. The company now plans to invest the local currency proceeds in the Egypt operations.

Q: The company needs to buy 85 percent of its poultry, livestock and rice needs. Do you import these items or purchase them from local suppliers?

A: We source mainly from the local market, which contributes to the kingdom’s economy.

Q: But can you not import meat at competitive prices, which would lead to higher margins for Raydan?

A: We face a huge challenge in maintaining the appropriate level of quality in products we deliver to customers. Last year, we set up a new logistics department and were able to cut costs in 2016 by picking up high-quality products at competitive prices. The department is currently studying the possibility of importing from China, India, and Pakistan.

Q: What was the impact of raising water and power tariffs last year?

A: We are revamping all branches to cut costs and reduce consumption. We also rezoned all branches, to cut the unnecessary spaces.

Q: Do you think the new fees on expatriates will weigh on the company’s operating expenses?

A: Of course, the new fees will add to the operating costs. However, we will overcome this negative impact by restructuring. The company laid-off employees in some branches, and re-employed them in new locations.

Q: The company has a low Saudization rate at between 11 and 26 percent. What is the reason behind that, and how do you plan to increase this percentage?

A: We are at the Saudization green range, and we are working on employing qualified Saudi candidates in a way that would support the company’s future strategic plans.

Q: Why has Raydan not provided insurance coverage for its business portfolio?

A: The company has provided insurance coverage for various segments and is now planning to provide full insurance coverage for all operations, in line with the International Financial Reporting Standards (IFRS).