Armed with financial input from Central Europe's largest private equity fund, Enterprise Investors, the chain is already planning a mid-2005 debut on the WSE and negotiating moves into Russia, Germany and the Czech Republic. Rivals are skeptical, however, that the Łód-based firm will be able to hold its own against global competition.
A company which began in 1995 as a single Middle-Eastern restaurant in downtrodden Łód, Sfinks SA now has 55 outlets throughout the country. Enterprise Investors has been courting the company ever since 2000, when it first showed serious ambitions of expansion. But it wasn't until 2002 that owner Piotr Mikołajczyk decided to enter into the partnership which has since brought in five million dollars of investment.
Krzysztof Kłapa, spokesman for McDonald's Polska which has 205 outlets on the domestic market, is skeptical about the Łód -based chain's chances of reaching 130 outlets.
"I'll believe plans when they become realities," he says, "I remember when Burger King announced grand plans for expansion - and a couple of months later they walked off the market."
Krzysztof Kłapa stresses the importance of establishing brand awareness and the costs of promotion, which he sees as potential potholes in the company's future success.
Piotr Mikołajczyk is nevertheless confident that Sfinks, whose consolidated income from sales in 2002, at zł.70 million, doubled that of 2001, can hold its own. Consolidated results for 2003 are, however, not yet available. Since 2002 the company has been listed on the over-the-counter-exchange, in what Mikołajczyk terms a 'trial' for a future debut on the WSE, intended to raise capital to fund expansion abroad.
In Krzysztof Kłapa's view the economic situation in this country will also significantly limit the possibilities for success in the restaurant market.
"Purchasing power in Poland is very low," he says.
Jacek Woniak, Vice-President of Enterprise Investors, is of a different opinion, however.
"We approached them because we're interested in promising companies on this market, which, looking at European norms, clearly has a lot of growth potential," he says. While eating out constitutes 30 percent of spending on food in neighboring Germany, he says, in Poland the average is currently no more than three percent and is bound to rise.
The restaurant's diversified models, Jacek Woniak claims, correspond to developing market trends by reflecting consumer habits. Though brand management is strictly controlled and outlets, food, and prices all look much the same, Sphinxes nevertheless come in different shapes and sizes. The outlet range comprises full-size, full-waiter service 'casual-dining' restaurants, seasonal sea-side restaurants, self-service food-court outlets designed for shopping malls and Sphinx Burger bars offering fast service on busy street locations.
"We didn't design the model," says Piotr Mikołajczyk, "Consumer habits did."
This claim is not in fact supported by the profile of consumer habits that emerges from what little information is available. According to Jacek Woniak's own data, just over 15 percent of the current zł.11 billion eating-out market goes on restaurants, whereas nearly 80 percent of Sfinks' current 54 outlets are in the casual dining sector. And while over two thirds of spending goes on fast food, Sphinx Burger bars actually constitute only one eleventh of all Sphinx outlets. To which Mikołajczyk answers:
"The point is that we are still expanding, and our model allows us to go where opportunity arises. Warsaw, for example, we see as an ideal ground for stop-off burger bars attached to the premises of casual dining restaurants."
Chains in Western Europe are moving increasingly off-site in their efforts to meet the consumer, embracing sandwich bar formats, and even catering services.
Sfinks is planning to open food-court outlets in three shopping-entertainment complexes in Warsaw. As negotiations are ongoing, the sites are not yet named, however the press spokesman for Złote Tarasy's comment, "I cannot tell you whether we are in negotiations with Sphinx or not, because it is too early to say," seems telling enough. It is likely that Sphinxes will also appear at the Arkadia shopping mall and Centrum Handlowy Reduta.
Hilary Davies
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