Midlevel U.S. Chains Move Into Fast-Food Hungry Gulf

After twelve years of running two small, organic tea shops in the New York borough of Brooklyn, Jonathan Spiel had to close one down when his landlord increased the rent in 2009. Facing that setback, Mr. Spiel decided to look into selling Tea Lounge franchises to expand into new markets and keep his business going.

The Tea Lounge’s first franchise opened this year, in Kuwait.

Big name American brands have not been able to open franchises in the Middle East fast enough to satisfy demand in recent years. Fast-food concepts like KFC and Subway have been popular for years, but recent additions include IHOP, The Cheesecake Factory and Papa John’s Pizza. These franchises have the backing of major family-run businesses, like the Al Shaya Group in Saudi Arabia.

The success of these well-known American names has encouraged midlevel brands, like Tea Lounge, to venture into the region in search of financing and some market share. And often, it is Arab businessmen that reach out to them.

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