Investing in Egypt: the right way to go about it

Investing in Egypt: the right way to go about it

Egypt’s hospitality sector is on track to grow at a CAGR of 6.2 percent for the next five years, making it a sound proposition for investors. Chadi Chidiac, managing partner of Protocol Hospitality Management and Consultancy, explains how investors should approach this lucrative market.

After a regenerated business approach, which came with the election of president El-Sisi and the massive inflow of US dollars and foreign direct investment after drastic political and economic reforms, Egypt has established itself as attractive investment territory. With that being said, it is important to seek the advice of a hospitality consultant to help you create a winning concept.

How to launch a restaurant business in Egypt
A base capital of EGP 250,000 (around USD 14,000) is required. Around 50 percent of this is released upon constitution. In the event of public contribution, a base capital of EGP 500,000 is required, with 25 percent being redeemed at the constitution.

Regulations permit non-Egyptian organizations to open branches in Egypt to perform works of a contractual nature. However, the business must be registered with the Commercial Registration Office, which registration, usually taking up to three working days.

What is the startup cost of a restaurant business? The average startup cost is USD 275,000, or USD 3,046 per seat, for a leased location. This amount can increase to USD 425,000, or USD 3,734 per seat, if you want to own the structure

How to develop a business in Egypt
Procedure 1: Trade Name Clearance Certificate
Procedure 2: Obtain a certificate from an authorized bank
Procedure 3: Issuance of the notification of incorporation

Is Egypt fertile investment territory?
Egypt is an excellent option for those looking to launch or grow their business. The country has an inviting business climate and offers security.

Why do many restaurants fail?
Around 60 percent of new cafés fall flat within the first year. What’s more, almost 80 percent stall before their fifth anniversary. The main cause of business failure is location. Therefore, to build your venture, it is crucial to have a hospitality consultant on board.

How do I register my LLC in Egypt?
Reserve the name for your LLC
Provide the Articles of Association to the local trade register
File the Memorandum of Association
Offer complete information about the shareholders (name, address, nationality)
Notarize the owners’ signatures
Name the board of managers

What type of food business is most profitable?
Casual diners are most profitable because of low CAPEX (capital expenditure), scalability and modular structure, high ROI and low cost of goods sold (COGS), ranging between 20 and 30 percent.

Are restaurants profitable?
Yes, restaurants are profitable, but they have low profit margins. You need to be aware and ask for professional consulting with your business plan and concept creation. Profitability depends on many factors, including the size and type of restaurant, as well as economic aspects. It takes an average of two years for a new restaurant to turn a profit.

Is Egypt a good place to invest?
Investing in Egypt is a good decision despite the slump in EGP (17 percent). From location to resources and future growth expectations, Egypt boasts great investment potential for the hospitality sector, especially in areas like New Cairo, Sheikh Zayed, North Coast and Marassi. International hotel chains, including Accor, Marriott and Hilton, have solid presence in the country, with over 100 properties offering around 35,500 keys. Another 50 projects are in the pipeline, adding 15,000 keys to hotel inventory by 2026.

Which Lebanese brands have already invested in Egypt?
Brands like Ni café (Sheikh Zayed), Odin the pool house and Mariolino (North Coast), O by Michel Fadel (Al Marassi), Sip, Myu (Sidi Heneish), Enab, Seray, Loris, The Lebanese Bakery and Mon Maki a Moi have all opened branches in Egypt, with many more on the way.

Chadi Chidiac
Managing partner of PROTOCOL
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