Rus News Journal

“ competently built companies of unit “

the Company “ Arpikom “ - one of leaders of the Russian restaurant market - has sold 50 % of the actions to the structures close to UGMK, and hardly has started start of network concepts of beer restaurants together with Sun Interbrew earlier. About why large domestic businessmen from different branches actively are interested recently in restaurant business, the general managing director " has told; Arpikom “ known Moscow victualer Michael Zelman.

“ Restaurant business is very status activity “
the FIRM SECRET: Not so long ago you declared sale 50 - a percentage share in “ Arpikom “ to the structures close to owners Ural is mountain - the metallurgical company. What for to you it?
MICHAEL ZELMAN:
We have agreed at once with UGMK preliminary to co-ordinate comments under this transaction. Nevertheless I can tell that for us it is absolutely natural and defensible step. After all as young and bystrorazvivajushchejsja the companies are extremely necessary for us the investment. And with such serious and powerful partner we can involve for our projects available assets on beneficial terms. We have come to a conclusion, as to us, and possession 50 - a percentage package is the most interesting to our new partners. Besides for UGMK to receive a smaller package “ Arpikom “ it would be illogical. After all we also have agreed that our company will continue to operate this business.

Council of Federation: And what has interested in your business UGMK?
MZ:
I again - taki would not like to argue on this theme as this question is faster to UGMK. By the way, I would like to underline: in this case we speak not about UGMK, and about the structures close to this company.

Council of Federation: It is said that the president and the owner of UGMK Iskander Mahmudov it is simple “ follows “ general director UGMK Andrey Kozitsyna who supervises the Ekaterinburg company “ the Planet Malachite “ owning a network of restaurants and discos.
MZ:
In my opinion, between these examples there is no communication. I would tell that arrival to the restaurant industry of investors from other branches occurs thanking its extremely dynamical development now.

Besides our company is one of leaders in the market. Therefore from the point of view of economic appeal I understand and, naturally, I divide interest from party UGMK. And if to speak about personal predilections for a long time it is known that restaurant business is very status activity.

Council of Federation: whether there Will be in the near future at your company other strategic investors?
MZ:
It can occur through two - three years. Not earlier.

Council of Federation: Shortly before this transaction your company has concluded the contract with Sun Interbrew on opening of beer restaurants. It has been connected with desire to increase cost of the business before sale UGMK or with other strategic problems?
MZ:
to increase business cost before sale UGMK the transaction with Sun Interbrew is not connected With desire in any way. After all it too became result of long and laborious work. We communicated with Sun Interbrew about it more year and left on a home straight more recently. But interest to each other and partner relations have arisen at us even in work with restaurant “ Kolbasoff “ in a year before last. Certainly, we carried on negotiations with many brewers, but the transaction with Sun Interbrew has seemed to us as much as possible mutually advantageous.

Council of Federation: What particularly you are going to undertake within the limits of this cooperation?
MZ:
We want to occupy a niche of beer restaurants with the average check from $8 to $40. In cooperation with Sun Interbrew we are going to open a network of institutions under brands “ the Siberian crown “ Beck’s, Staropramen and Belgian Beer Cafe. Within the limits of this project we build now five restaurants. Next year we plan to open still nearby 15.

Council of Federation: Restaurants will appear only in Moscow or regional expansion is supposed also?
MZ:
In regions we are going leave next year. First of all - to St.-Petersburg and Nizhni Novgorod. The further expansion will depend on results of activity of restaurants in these cities.

Council of Federation: How many you are going to spend for network expansion?
MZ:
the Sum which is necessary for enclosing in opening of new restaurant, certainly, fluctuates and depends on each concrete case. On the average this figure makes about $700-800 thousand So can count, in how many to us expansion will manage.

Council of Federation: has already counted - approximately in $16 million This money will allocate Sun Interbrew?
MZ:
the Information is confidential. I can tell only that Sun Interbrew will invest also considerable money in development of this network.

Michael Zelman was born in 1976. After high school Zelman termination has decided not to enter the institute, and at once to be engaged in business. It has begun in the middle of 1990 - h years with training at a stock exchange, was then switched to sale of permits in the best for that period the Sochi hotel “ Pearl “ and then was engaged in foreign trade activities - raw materials deliveries to the Italian manufacturers of footwear. After that Zelman has left in customs business and became one of heads of the customs terminal in Moscow Region. After a while together with the partner has decided to open restaurant for informal dialogue and meetings “ the Dignity - Michel “ and after has definitively concentrated on restaurant business. Now Michael Zelman is the general managing director of the company “ Arpikom “. The winner of the award “ the Best victualer of 2003 “.

“ the Risk to be underestimated it is available “
Council of Federation: this year “ Arpikom “ expects to increase twice a turn in comparison with 2003. At the expense of what you plan to achieve such growth?
MZ:
It should occur first of all at the expense of opening of new restaurants. We also consider variants of acquisition of already working institutions and even restaurant networks but while there is no closed transaction. All of them are at a stage of negotiations.

Council of Federation: Under your statements, having built up business - processes in restaurant holding just like the large companies and having reached a turn in $100 million, you are going to leave for a stock exchange. When it will occur?
MZ:
We do all from us depending at any moment to be ready to an exit on IPO. But while no concrete decisions and forecasts in this respect are present. After all it is very heavy to predict, as market condition at least through two - will look three years. I believe that we will take place at a stock exchange not earlier than through five - seven years. Nevertheless IPO on - former it is considered as one of the most convenient tools for attraction of new strategic partners, and also for sale of own part of business and a definitive exit from it. After all, in my opinion, each competent businessman should always be ready to enter and leave business operatively. Reaction to any sudden change of the market validity should be extremely mobile. And especially it is actual for the Russian restaurant market which, by our estimations, will constantly show growth in tens percent during the nearest five - ten years.

Council of Federation: And you are not afraid that your company can be strongly underestimated at a stock exchange owing to what restaurant business is now poorly presented in the Russian stock market?
MZ:
In Russia it was not valid till now examples of an exit of restaurant networks for a stock exchange. That is the risk to be underestimated - it is available, and we should put a maximum of efforts that it to avoid. It quite really to achieve, to that there is a weight of examples in world practice: the same network of coffee houses Starbucks and enters into the USA which successfully is quoted at a stock exchange in Top - 100 largest world companies.

Council of Federation: But, according to analysts, for realisation of the ambitious plans for five years it is necessary for your company to grow at least six times that is improbable …
MZ:
If to tell about the Russian companies working in the market of metallurgy or oil, that, certainly, to reach such indicators it would be almost impossible. However if to consider that last year “ Arpikom “ has constructed nine restaurants, and this year plans to open still at least as much becomes obvious that we already show 100 - percentage growth and we confirm the forecasts. And the next year at us investments are already allocated, the areas for creation of new institutions are prepared, and our management has received corresponding instructions. And I do not see any reasons which realisations of our plans could prevent. Certainly, in the future there can come the moment when it becomes heavy to us to support the same indicators of growth. But I want to remind that while we use only own resources. All of us do not resort yet to purchase of already ready institutions and not especially actively we leave in regions though are absolutely convinced of perspectivity of these tools of development of business.

“ the Time of recovery of outlay of successful restaurant does not exceed two years “
Council of Federation: Many Russian businessmen are engaged in investments into the projects connected with a public catering. Experts say that restaurants - for today the most demanded investors business. You agree?
MZ:
Quite often purchase of restaurants is for the person of a hobby, satisfaction of own requirement for a venue of leisure or business meetings or realisation of any creative ideas. But even more often businessmen are involved with exclusive economic indicators in this sector.

Council of Federation: However why so strong interest to restaurant business is observed recently? Say even that now demand for purchase of restaurants exceeds the offer.
MZ:
time of this sector has obviously, simply come and large investors have paid to it steadfast attention, having reflected at last on the food industry as about high-grade business. Believe, correctly debugged restaurant is very good business on which its owners can earn more than 30 % annual.

Council of Federation: And what is the time it is usually necessary, that the restaurant project has paid off and has started to give profit?
MZ:
All very individually also depends on concrete circumstances of business dealing. On the average, by our estimations, the time of recovery of outlay of successful restaurant does not exceed two years. And really good and demanded institutions can pay off and for six - eight months.

Council of Federation: In the end of summer it became known that you together with the chairman of board of directors “ the Alpha - groups “ Michael Friedman and the vice-president of Alpha bank Alexander Gafinym be going to open piano - a bar on the Patriarchal ponds in Moscow. Than personally you were interested by this project?
MZ:
The matter is that I absolutely agree with Michael Maratovicha`s opinion (Friedman. - Council of Federation ) concerning that in Moscow shortage of qualitative bars is available. In the West almost in each house there are bars to which people spend time considerable quantity, - and in general meet for dialogue much more often there, instead of at restaurants. In Moscow, to all other, practically there are no also good thematic bars - a jazz - bars, a grill - bars, pubs and etc. And we three together are great admirers of a jazz. That is this bar becomes also a certain general child of three adherents. Thus it is not necessary to forget and about economic feasibility of the project, available which I am absolutely convinced.

Council of Federation: How you think, for Friedman and Gafina the bar is a business or is faster PR?
MZ:
For them it, certainly, not business and not a public relations. This reception of that service which they searched in the market, but could not find. And now, putting up in this project own money, Friedman and Gafin get that place in which will spend a lot of personal time. Thus in Michael Maratovicha`s head a certain message, directly as in the computer program is always put: if in business money it should give profit are invested. Therefore the project of creation of piano - a bar is built on all canons of restaurant business.

Council of Federation: Also what, mister Friedman it will be valid to play for visitors of this bar a piano?
MZ:
And why is not present? He promised.

“ we, as a matter of fact, do not have restaurant culture “
Council of Federation: According to some information, 70 % of new Moscow restaurants there are more are closed or change the owner, without having worked and two years. With what it is connected, in your opinion?
MZ:
In the restaurant market of professional managers and competently built companies it is possible to count on fingers. “ Arpikom “ I carry to number of professionals though we too commit various errors during opening of restaurants and something is necessary us repozitsionirovat, to alter and alter. And what then to speak about those people who come to this business practically from street? After all the quantity of professionals in restaurant management has started to grow in our country just now. Though in it there is nothing especially terrible as as I already spoke, our industry very young and all its participants study on the and another`s errors. And closings of restaurants are connected, in my opinion, first of all with the general low level of professionalism in branch. By the way, mission including our company - to make this market highly professional.

Council of Federation: whether you Agree with opinion, what now in our market the greatest success accompanies basically to network restaurant concepts in a niche of qualitative inexpensive kitchen?
MZ:
Yes, it agree. In spite of the fact that it is created recently in our country, many people feel some stability and start to spend more money for the, we will tell so, high life. And the campaign in restaurant even more often ceases to be a certain social gesture and it becomes simple in the way of pastime. So, the audience of inexpensive restaurants more and more extends. And the potential for this growth, by the way, is still very high.

Council of Federation: However it is obvious that in Russia the culture of visiting of restaurants strongly differs from the western. What print on business is imposed by the Russian specificity?
MZ:
it is unconditional, the Russian specificity is reflected in our business. We, as a matter of fact, do not have restaurant culture. On the other hand, our fellow citizens opened to all new, are adjusted it to develop. To us as to victualers, it is awfully interesting to participate in it, undoubtedly, cultural urological process. After all it is impossible to tell that increase of cultural level depends only on consumers. They wait for new offers from victualers. And than these offers will be more interesting, the they will be more accessible to our clients, the above there is a general level of restaurant culture.

“ Our competitors are even grocery shops “
Council of Federation: On the Russian market for the present there were no international restaurant networks. Whether you are afraid of toughening of a competition after their arrival?
MZ:
Actually it only seems that they still are not present. Meanwhile leaders of the market are the international companies. The same McDonald’s.

Council of Federation: But after all they work in absolutely other format.
MZ:
it is clear that their format differs from ours, but all of them equally work in ours industrii.

Council of Federation: So, they are your competitors?
MZ:
Certainly. Moreover, I can tell that our competitors, and, grocery shops are serious enough even. After all the person can or descend in restaurant, or simply buy products in shop or in the market and prepare their itself. That is upon at us very much a considerable quantity of direct and indirect competitors.

Council of Federation: And how you with them struggle?
MZ:
Offering new interesting restaurant kontsepty and raising culture of the consumer. After all when in the market appears more and more new democratic and inexpensive institutions, people even more often start to reflect on how it is better to arrive - to waste time on purchase and preparation of meal of the house or for the same money all family to descend in restaurant.

Council of Federation: And who all - taki your direct competitors?
MZ:
From other restaurants of competitive pressure as we do not feel that. They are our colleagues and even the partners quite often investing money in general with us projects. For example, we use now the computer programs which working out has been financed in due time by the company “ Rosinter “. That is about competitors speech does not go is in general too rigid name for players of our market. These are the companies which together with us lift the restaurant industry in Russia. And if in the market there will be new companies (including foreign), we only will be glad to it. As, in my opinion, during the nearest three - five years the Russian restaurant market will remain not simply free, and partly even naked. It is in embryo and only has started to be formed.

“ I actually became the hostage “ Arpikom “ “
Council of Federation: It is known that before becoming the victualer, you supervised over a customs warehouse in Moscow Region, and were engaged in export of skins even earlier. Why you have decided to leave in restaurant business?
MZ:
I have begun the working career in the middle of 1990 - h the trainee at a stock exchange. Then together with partners was engaged in sale of permits in hotel “ Pearl “ - at that time the best in Sochi, and was a year or two from now replaced by a profile and has started to export horned cattle skins. We bought raw materials in the Russian regions, and then sold to Italians who used a skin for footwear manufacture. After that I was engaged in customs business. And after a while we with the partner have decided to open restaurant for informal dialogue and meetings - something like smart office which has received the name “ the Dignity - Michel “. In its management we did not accept participation, and have employed for this professional managing director. We at all did not have a special desire to earn money thanks to restaurant, however this project has unexpectedly appeared profitable. Thus the idea to test in restaurant business seriously has arisen at me only a year later after opening “ smart office “. Business where it is possible to become the real professional was necessary to me. Having analysed the market, I have understood, what exactly network restaurant business can appear very perspective business. Besides my basic for that period activity already has turned to the adjusted business process. And I have decided to concentrate the time and forces on restaurant development. By then I already understood how to be engaged in this business. Besides, management of restaurant was represented to me by rather respectable employment which as much as possible approached for display of my creative qualities.

Council of Federation: And that can become the following “ turn “ in your career?
MZ:
Actually I already actually became the hostage “ Arpikom “ - certainly, in good sense of this word - owing to the obligations taken on to shareholders on management of the company. However I do not exclude that in due course I can be switched to hotel business which, by the way, too is profile for our company and cross in relation to a restaurant segment. This sphere also is extremely interesting to me. Besides, it is rather perspective, as in Russia shortage of good hotels is obvious: both a tourist format, and intended for the business purposes. And I know how correctly to construct this business. But there is time for everything.

Council of Federation: And you do not plan in frameworks “ Arpikom “ to start any other business? For example, delivery or manufacture of products?
MZ:
We very much do not want to be engaged in it. Equally as personnel training, architectural and building questions. All it does not concern our profile activity, after all all of us - taki the restaurant company. We would like to buy all these services in the market. But today we cannot find qualitative service in these areas. Therefore we are compelled to be engaged in all it. So, we have own design bureau, the Internet - division and other departments which from the point of view of economic efficiency much best services render us, than that we can receive in the market. We are compelled to do auxiliary business as we do not have other variants. But I hope that in due course our divisions become the independent companies in the market.

Council of Federation: Restaurant business in our country is astable enough and we depend on external factors. You does not frighten, what there can be a crisis and restaurants will become empty?
MZ:
the Risk of leaving of clients from - for various social or economic shocks is one of the most important things for our branch. Such moments can suddenly upset our plans, if something happens business development will come to naught. But, by our estimations, the next years such situation is improbable.