"Autumn" ... the story of the rise and slope of a series of quick Saudi meals

After more than four decades with the launch, the Herfy Food Services Company finds itself in front of a crossroads. The company that started as a small restaurant in Riyadh and reached its operational peak in the middle of the last decade. Today, it faces one of the most difficult stages after taking up historical losses, amid rising costs, margin erosion and structural changes in the fast food market. Birth: From a local restaurant to an integrated system in November 1981, Ahmed Al -SAEED opened the first restaurant named “Herfy” in Riyadh, which opened his eyes to build a local mark that can compete with international names. Soon, the company took an expansion path, especially after entering the ‘Panda’ of the SAVOLA group as a strategic partner in the purchase of 70% of its shares, which enabled the construction of an integrated production series that included bakeries, meat factories and restaurant management. The official launch in the market in January 2010, “Herfy” decided to convert a joint stock company, and its shares were increased for public subscription in January 2010. She has strongly entered the market, supported by a strong financial performance and a firm commercial name in the minds of consumers. Where the company valued about 1.4 billion Riyals. At the time, the chairman of the Board of Directors Ammar Al -Khudairi, the managing director and CEO of founders Ahmed Hamad Al -SAAEED. However, the period from the inclusion of the arrow to mid -2013 was a fluctuation in the leadership of the Board of Directors, where three names were punished for his presidency: Al -khudairi began, and then Abdulaziz al -Ghafili followed him before Issam Abdel -muhaTib took over. From the escalation to the peak from 2010 to 2016, when Issam Al -Muhaidib took over the chairmanship of the “Herfy” board of directors in mid -2013, the company made an excellent way to consolidate its mark locally, but the real challenge was to maintain momentum and maximize operational efficiency. Ahmed Hamad Al -Seaed remained in his position as CEO and delegate and supervised the details of the daily operations, based on his long experience since the establishment of the first restaurant of the business. In light of this administrative duo – a new leadership in the council and the executive stability in the administration – Herfy continued its upward path. During this period, the company recorded a regular growth in net income as it increased from 124.27 million Riyale in 2010 to 217.08 million Riyals in 2016, representing an annual growth rate of about 9.7%. In the period, there was a remarkable expansion in the number of branches, from 172 restaurants to 328, which is directly reflected on the growth of profits. The company’s market value has increased to more than 4.6 billion Riyals. Herfy managed to reach his financial peak in 2016, when he recorded record profits of 217.1 million Riyals, which is the highest in its history. However, this growth did not come in a soft economic environment. The same year, the beginning of radical transformations in the Saudi economy, from reducing fuel and electricity support, was to impose fees on expatriates, the high cost of residence and insurance, and the application of higher relocation rates. Despite this pressure, Herfy still reached relatively stable levels, which varied between 196 and 204 million Riyals in the following year 2017 to 2019. The annual distributions increased from 81 million Riyale in 2010 to 143 million Riyale in 2014, and then established at levels of more than 135 million Riyale annually to 2019. In 2021, the distributions temporarily stopped, before resuming partly in 2022 with a dividend of 32 million rialals, and then returning at 2023 and 2024. 2020, “Herfy” finds her in the heart of an unprecedented global storm. Corona’s pandemic swept the markets and imposed wide restrictions on movement and commercial activities to close restaurants or shrink their work sharply. Herfy was not immune to these consequences as it was influenced by the low demand and the closure of temporary branches, but it remained despite the pressure within the profit area. To record modest 52.8 million rows; This is the lowest since its inclusion in the financial market. 2021: The end of another stage and starts after an exceptional year, casting a shade across the sector. In the year 2021, there were profound changes in the structure of leadership within “Herfy”. On April 25, founder and CEO Ahmed Hamad Al -SAEED announced his resignation from his post, to more than four decades of the company’s leadership, pointing out that “a lack of harmony in views” is as an official reason, according to the announcement of the Saudi website website “Tadawul”. A few days went by until the membership of Issam Al -Muhaidib ended with the chairmanship of the Board of Directors, to be followed up by Moataz Qusai Al -zzawi, who took the position and is still on his head to this day. In an attempt to contain the executive gap, Khaled Al -SAEED, the son of the resigned CEO, was assigned to lead the executive administration temporarily, but this assignment did not last long as it ended on June 21 of that year, to be replaced quickly by ‘Sam Badr’, which was officially appointed in November 21, which was appointed by Mohamed Lotfi on April 21, Al -barghi and the appointed BYFI -Lotfi Al -Barghi and Who -Who -Who. Administration to the writing of this report. 2022 – 2024 .. from slowdown to losses while the majority of Saudi businesses recovered from the consequences of the pandemic, ‘Herfy’ took another path. In 2021 – the last year led by founder Ahmed Al -Seaed – the company earned profits of 151.8 million Riyals. But it was the latest positive results before the indicators began to deteriorate. In 2022, the company scored a sharp decline as it barely exceeded the profits of 3.5 million Riyals. As far as 2023 is concerned, profitability has seen a slight improvement to 8.4 million rows, which can be described as a short breath, before financial problems in the following year, when the company recorded net losses of 116.5 million rows, which is the largest in the history of the business since the inclusion of the financial market. The sharp decline in profitability, despite the stability of income, raises questions about the efficiency of operations and the company’s ability to control costs. Revenue did not see that a sharp decline corresponded to the significant decrease in profits as it ranged between 1.1 billion Riyals and 1.24 billion Riyals, which has been close to average revenue for the past five years. So why are you bleeding profits? Abd Rabbo Zaidan, director of research at the “Financial Number” portal, pointed out that the course of the decline in “Herfy” has already begun since 2022, with the beginning of the registration of operating losses in the restaurants sector, with the exception of the losses it has transferred to the intensity of the competition during the corona pandem. In an effort to diversify the sources of income and expansion externally, ‘Herfy’ used the franchise franchise model between 2021 and 2023, which led to the increase in the number of branches in Bangladesh to ten, in addition to the operation of seven branches in Kuwait and three in Nigeria. On the other hand, the report of the “Herfy” board of directors attributed the decline to a group of factors, the most prominent of the poor demand, the decline in purchasing power, the high expenses for marketing and management, and the increase in the burden of financing and Zakat, as well as the decline in other income. Mohamed Al -Maimouni, the financial adviser of the ‘Arab trader’, described the results of 2024 as’ disappointing ‘, pointing out that’ revenue fell by only 4.2% to 1.124 billion Riyals, but the sharp rise in expenses, especially in marketing and management, has the losses instead of combating it. “Zidane added that the company” needs an extensive review of its operational and marketing strategies if it wants to improve efficiency and restore financial balance. ” As far as the meat sector is concerned, although it has not yet been recorded in net losses, but new competitors to the local market can expose it to extra pressure. “In the same context, Al -Maimouni believes that” the company has lost part of its market share in light of the intensification of competition and the nature of the activity, whereby “urgent internal restructuring and the improvement of the quality of sales. ‘He pointed out that’ re -evaluation of the strategy is no longer an option, but an urgent necessity. ‘