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Last Updated: Sunday, 11 December 2005, 09:58 GMT
Giving Brazil a taste of Arabia
By Robert Plummer
BBC News business reporter in Sao Paulo

Habib's outlet in Sao Paulo city centre
Habib's has succeeded in Brazil where many fast-food firms failed

It speaks volumes for Brazil's diverse blend of cultural influences that one of its biggest home-grown fast-food chains is an Middle East food franchise called Habib's.

Although people of Arab descent make up a mere 7% of the Brazilian population, a business offering such delicacies as hummus, stuffed vine leaves and tabouleh as part of its menu now serves 120 million meals a year.

From a modest start 17 years ago with one restaurant in Sao Paulo, Habib's has grown to 260 outlets in 15 of Brazil's 26 states, plus the Federal District that contains the capital, Brasilia.

That is small in comparison with US hamburger chain McDonald's, which has more than 1,100 outlets in Brazil.

But Habib's is still far more successful on its own turf than many better-known international brands.

Even more surprisingly, the man who founded and still runs Habib's, Alberto Saraiva, was born in Portugal and has no family ties to the Arab world.

Mr Saraiva, now 53, came to Brazil with his family when he was still very young.

In 1973, he was studying medicine in Sao Paulo when his father Antonio, who had recently taken over one of the city's Portuguese-style bakeries known as "padarias", was attacked and killed by a robber.

Niche

As the eldest of three sons, Mr Saraiva had to support the family and took over the bakery, during what he describes as "the most difficult time of my life".

"In that padaria, I learned to be a businessman," he said, in an interview with the BBC News website.

"After that, I had other businesses that I built up and sold in order to continue studying. In one of those businesses, I got to know an Arab cook - an old man of 70, retired - who came to me to ask for work.

Drive-thru sign from Habib's outlet on Avenida Interlagos, Sao Paulo
Habib's has various different types of fast-food restaurant

"So I learned Arabic cuisine from him. Then I realised that Arabic restaurants in Brazil were very traditional places, not aimed at the majority of the population, and I saw there was a niche there ready to be discovered.

"So I gathered up all the experience that I had gained in the other businesses, took the main dishes from Arab cuisine and founded Habib's.

"It was aimed not at the Arab community but at the wider population, the middle classes and at people who like not just Arabic food but good food, served fast."

The result was an immediate success. The first Habib's in Rua Cerro Cora, in the west of the city, attracted huge queues of customers from the start.

Mr Saraiva built up a chain of 16 outlets before starting to offer franchise opportunities in 1992. Today, he owns 45% of the chain's restaurants, while the rest are run on a franchise basis.

Low prices

The most popular products at Habib's are the esfiha - a small, round flatbread topped with minced beef or cheese - and the kibe - a croquette of beef shaped like a rugby ball.

These are deliberately priced as low as possible. Esfihas sell for 69 Brazilian centavos (31 cents; 18p) each, with the price falling to 39 centavos in some special offers.

Poster outside Habib's restaurant on Avenida Interlagos, Sao Paulo
Habib's aims to be affordable for the majority of Brazilians

Last year, Habib's sold a record 600 million esfihas - more than three for every man, woman and child in Brazil - and 60 million kibes.

But the menu contains about 50 other options, including pizzas and burgers.

Various set menus are available, ranging from a full Arabic meal to a combination of esfihas, kibe, French fries and freshly-squeezed tropical fruit juice.

Unusually for fast-food restaurants, a waiter takes your order at the table, while knives and forks are always provided.

Competition

The low prices and wide range of options are key ways to stay ahead in Brazil's highly competitive food market.

Mr Saraiva and his franchisees are up against padarias, "por kilo" restaurants where you serve yourself and pay according to the weight of your plate, street vendors and many other low-cost outlets.

But Habib's has successfully seen off the challenge from most of the international fast-food chains that once saw Brazil as a target.

Street vendor on Avenida Paulista in Sao Paulo
Even this street vendor is a player in Brazil's competitive food market

Apart from McDonald's, which has been in Brazil since 1979, most US companies entered the market in the 1990s, after the end of high inflation brought stability to the Brazilian economy.

However, many of them have since withdrawn, unable to compete on price and unwilling to acknowledge Brazilian culture.

"They didn't study the market, they just came with the intention of doing what they did abroad," says Mr Saraiva. "They didn't adapt to the country.

"Suddenly KFC wanted Brazilians to pick up pieces of chicken with their fingers, when it's not the Brazilian habit to eat with your hands.

"Also, the pieces of chicken were served in cardboard buckets. Brazilians are not used to being served like that. These are basic mistakes which customers will not accept."

Profitability

Other innovations brought in by Habib's include their 28 Minutes home delivery service - if it takes longer, you pay nothing - and a sponsorship deal with Sao Paulo Football Club that has put the firm's distinctive logo on the sleeve of the team strip.

Mr Saraiva has even written a book, The Commandments of Profitability, in which he outlines the principles of his business philosophy.

Habib's restaurant on Avenida Interlagos, Sao Paulo
The chain remains Brazilian-only for the time being

But one dream has eluded him - the desire for international expansion of the chain.

Plans to open Habib's restaurants in the US state of Florida were put on hold indefinitely after the 11 September 2001 attacks on the World Trade Center and the Pentagon.

"There is no tradition of Brazil exporting fast-food, which makes it difficult. We would also need to develop local partners who would be prepared to take Habib's to their countries," says Mr Saraiva.

"It's also not our priority, because we still have a lot of potential for growth inside Brazil.

"Sometimes growth can bring disadvantages, but in our case, we are growing in an extremely controlled way, which allows us to maintain the level of service and quality of our products."


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