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Europe & Middle East Outlook

Amrest

AMREST

Everything is possible



The long standing significance of the "Everything is Possible" mantra for AmRest emulates the entrepreneurial spirit of the company's founders and the company's ambitious growth plans

Writer Emily Jarvis
Project Manager Glen Newton

AmRest Holdings SE (AmRest, WSE: EAT) is the largest independent restaurant operator in Central and Eastern Europe with a growing international presence. Since 1993, the company have been building a portfolio of well recognised, power brands such as KFC, Pizza Hut, Burger King and Starbucks based on a solid franchise and joint venture partnerships. AmRest also owns the La Tagliatella brand in Spain which is being developed internationally as both company operated restaurants and franchised stores. Recently, AmRest acquired two unique brands operating in China: Blue Frog and Kabb.

Today, AmRest operates over 750 category leading quick service and casual dining restaurants, with headquarters situated in the southern Polish city of Wrocław. Through their "Everything is Possible" culture, every day 20,000 AmRest employees in 12 countries across 7 brands deliver delicious food and exceptional service at affordable prices. "Most restaurant holding companies are regional, whereas we have spread our wings across Central and Eastern Europe in order to provide for the ever-growing quick service market as a multi-brand operator," explains Wojciech Mroczynski, Executive Director of AmRest.

Wszystko Jest Mozliwe – Everything is Possible
Running throughout AmRest's history is the idea that "Everything is Possible" or "WJM". In 1993, the CEO and founder of AmRest, Henry McGovern, along with his business partners acquired a prime property at the beautiful, main square of Wrocław, a city in southwestern Poland. One of the partners, Don Kendal Sr, a longtime Chairman and CEO of PepsiCo, challenged Henry to open a Pizza Hut on the ground floor of their newly acquired building. Shortly after they received an offer for the Pizza Hut franchise. "Such an opportunity could not be missed and thus, the Everything is Possible (Wszystko Jest Mozliwe, in Polish) mantra was born," affirms Mroczynski. "The phrase was repeated over and over to any naysayers and the restaurant was opened, with outstanding success and on time, in November 1993. The philosophy of Everything is Possible has fuelled our entrepreneurial culture throughout the company's life." From its roots as a small restaurant start-up business, AmRest has now become one of the largest players in the quick service and casual dining sector.

Continually Growing Portfolio
Since 2005, AmRest has been a public company, listed on the Warsaw Stock Exchange. As one of the first operators of foreign restaurants in Central and Eastern Europe (CEE), AmRest's extensive portfolio continues to grow; on average, they open a new restaurant every three days. "More recently, we have acquired western-style concepts –Blue Frog and Kabb restaurants - in some of the major Chinese cities, which is proving to be highly profitable and scalable. This further expands our reach as at the moment, around half of our portfolio is in Poland," Mroczynski says.

Three years ago AmRest acquired Italian restaurant chain La Tagliatella in Spain, and Mroczynski is excited for the new expansion opportunities this is bringing: "Taking on this leading brand is a new chapter for us; a lot of people do not know that Spain has the largest market per capita for the restaurant market. This means that initial business has been very successful." "Our business model rests on three pillars: People, Brand, Scale" Before AmRest, there was no heritage in the quick service and casual dining industries in CEE as Mroczynski highlights: "In the beginning, securing people was one of our key challenges when developing our business. We had to develop people and their expertise from the ground up as there was no expertise to be hired." As with any restaurant business, millions of interactions are made each day both internally within the company and externally with their customer base. "As a result, all of our processes start and end with people," adds Mroczynski.

"Operational excellence is what distinguishes a good player from a great player, and we believe this is one of the reasons we have been so successful," states Mroczynski. This can only be achieved by bringing the right people on board and providing them with the right systems and tools to ensure excellence in how we operate. AmRest go to great lengths to provide high quality restaurants and accompanying services, including sourcing fresh chicken for their KFC branches, even going as far as marinating the fresh meat on site. "This high consistency really makes a difference. Even though KFC is not our own brand, we have treated it as our own since day one."

The second part of AmRest's unique selling proposition is leading brands. "We make the point to always choose reputable brands, which are leaders in their respective categories. We strive for the best restaurants in order to secure scalable businesses, which can only be secured if you have a unique business model; ours includes seeing through the eyes of our customers." As the company continue to increase the number of restaurants under their belt, further emphasis is placed on the happiness of their customers.

"The first two ingredients, i.e. People and Brands, are indispensable to drive our growth and ensure the necessary Scale, our third component of success formula. It matters not only in such typical areas as achieving economies of scale in purchasing, accessing attractive locations or being able to launch effective marketing campaigns. Scale also opens up a lot of new growth opportunities for our people and our shareholders," Mroczynski adds: "Truly a win-win outcome!"

BHAG Aspiration
BHAG - or Big Hairy Audacious Growth - is a popular term at AmRest that comes from the book From Good to Great by Jim Collins. When discussing long term growth plans with Mroczynski, the BHAG aspiration really works for AmRest: "In the next 10-20 years, we strive to surpass the US$1 billion sales mark which we are currently reaching. With McDonalds as the biggest player in this sector, we are ambitious and wish to overturn this one day, becoming the largest globally. If our past is anything to go by and we continue growing at the current pace, we will catch up with them by 2032. Though this is a distant and stretch aspiration it provides for us a clear sense of direction." Further, Mroczynski wants to grow both the top line and bottom line faster so that shareholders can see an ambitious 20+ percent return: "Our shareholders are important to us, and we want to make sure that they receive adequate returns, whilst exceeding expectations. Therefore, continuing to fuel our growth means that we can continue to open new restaurants and achieve profitable expansion."

Bringing Fun to Life
AmRest recognise that profit is not the sole purpose of their business and with some 20,000 employees on hand, both staff and customer happiness is crucial for the business to succeed. "With over 120 million transactions made per year in our restaurants, it is not just about the money that changes hands. As the majority of our staff are in customer facing positions, we have to nurture a positive energy and attitude within our staff. We believe no amount of training will change a negative attitude, therefore we insist on hiring people with a positive attitude who have fun working and are engaged at work." Further reinforcing this core value is AmRest's back to basics programme, where even those in senior managerial positions, including all Executive team members, are tasked with a few restaurant shifts. "At the end of it all, we want employees to feel more engaged in what they do. I have to say that I found it a very enlightening experience; it is really refreshing and you learn a significant amount about your people, business and customers. Senior management need to be role models who live and breathe our core values to our general staff," Mroczynski emphasises.

Moreover, for the last couple of years the company conduct an annual engagement survey with nearly 90 percent response rate from the staff indicating a rising engagement score year-on-year.

The long standing significance of the "Everything is Possible" mantra for AmRest as a company, emulates both the entrepreneurial spirit of the company's founders and AmRest's ambitious growth plans which are sure to continue propelling the company forward in the coming years.