Kyrgyzstan: Bishkek Burger Barons Channel Ray Kroc’s Spirit
This is a tale of a hippo emulating a behemoth. The outcome is a Central Asian version of a Happy Meal.
For a region that has long associated the term “gamburger” with Turkish-style mutton sliced from a spit, the meals served up at Begemot are a bit unfamiliar—beef patties on a fresh white bun, layered with cheese, lettuce, tomato, pickles, ketchup and mayonnaise. Even stranger, the food is served up in less than five minutes, even at peak hours, and made to order by an assembly line of young men and women dressed in clean red and white uniforms.
McDonald’s still hasn’t arrived in Central Asia, but Bishkek-based Begemot (“Hippopotamus”) has proven that there is a strong earnings potential for homegrown interpretations of Western business models in the region. Begemot has grown quickly since it opened in 2007.
“We have always had fast food, of course -- samsa, chebureki, and so on,” Begemot co-founder Sergey Mogiev explained, referring to fried Central Asian staples. “But no one had ever recreated the true Western fast food experience.”
Indeed, while it’s long been possible to order something resembling an American hamburger in Bishkek and Almaty’s upscale restaurants, Begemot is redefining the street “gamburger” (a Russian neologism derived from the English hamburger).
Mogiev and two Bishkek brothers in their mid-30s, Anatoliy and Grigoriy Kim, cut their teeth in food service by running a more typical café in the mid-2000s. That experience, along with Western television, inspired them to try something different. “Television had a big influence on us,” explains Mogiev. “When we were younger and got the chance to watch Western television and movies, we’d see Western fast food – pizza and burgers. And naturally, your vision becomes McDonald’s.”
Few Central Asian businesses have succeeded in developing the complex internal quality standards, vertical control, and distribution networks required for high-turnover food chains. These attributes, developed by McDonald’s owner Ray Kroc in the mid-20th century, enable a chain to establish a competitive advantage, grow, and increase market share.
Begemot, which is also known as “Gippo,” is one of the few success stories, running 13 burger stands, dubbed “pavilions,” in Bishkek, and 14 in Almaty. The company is briskly expanding in Kazakhstan; it has opened two pavilions in Karaganda, and its first in Shymkent late last year.
“We also are rolling out a new concept – food courts,” notes Mogiev. Malls have been sprouting up throughout Kazakhstan’s cities in recent years. This move will bring Begemot into competition with American fried-chicken giant KFC, which now operates in several Almaty and Astana malls through a Kuwait-based franchiser. Both Begemot and KFC remain tied to locations that offer a broad base of customers to power their high-turnover operations.
“We certainly don’t have any plans to go to Naryn, or even Osh. Even in Bishkek, 50 soms [about $1] for a hamburger can be a lot for many people,” explains Mogiev. “We are considering targeting the tourist market at [Kyrgyzstan’s Lake] Issyk-Kul, but only a few months per year. We are more focused on Kazakhstan now.”
Like a Western chain, Begemot has set standards for everything – how meat is stored, what utensils are used for which condiments, whether employees can wear makeup, and how customers are greeted. Each city is supported by one central distribution center, where hamburger is ground from whole carcasses, buns are baked throughout the day, and lettuce, utensils, and even employee uniforms are centrally washed and distributed. The centralization saves time and money, says Mogiev.
While drawing inspiration from McDonald’s, Begemot is no knock-off. Their street pavilions offer no seating, serving customers direct from walk-up windows. Burgers are made to order –there is no heating rack to distribute pre-prepared items. In addition, the pavilions are centrally owned, not franchised. And their top-selling item is a “gamburger from chicken,” which is, in fact, a chicken burger.
“The food is good, the prices are reasonable. I like it,” says Aida, a customer at one Bishkek pavilion.
An informal poll of McDonald’s-reared Americans in Bishkek found the burgers were “not quite the same,” though the fries are “really good.”
One major challenge for any chain food operation in Central Asia is finding reliable vendors. Beef and vegetables are sourced locally, based on direct contracts with local farmers. But the chicken, along with the potatoes, are imported from the West and shipped frozen.
Mogiev laments Begemot’s inability to source chicken and potatoes locally. “Actually, our local potatoes came out tasty when we fried them, but the equipment necessary to process the cut fries was over $1.5 million per unit, and it just was not worth it.”
Begemot Human Resources Manager Tamara Kozhomuratova says the company employs labor models that are unique to Central Asia. While base pay is modest, each shift splits a bonus based on its sales, which motivates employees to up-sell and seek promotions to the busiest pavilions. “Secret shoppers,” another American-pioneered practice, submit daily performance reports, recommending management penalize violators of service and cleanliness standards.
Begemot is now concentrating on improving its margins by streamlining operations. The founders previously received training sponsored by German International Cooperation (GIZ), Berlin’s aid arm, and are now working with GIZ to adopt “kaizen,” the Japanese-pioneered principle of continuous improvement in business processes. Begemot production staff proudly showed EurasiaNet.org how they had used kaizen principles to rearrange equipment and workstations, raising productivity while reducing waste.
While it has defied regional convention in many ways, the company still must cope with a difficult business environment. Just before finalizing its registration in Kazakhstan, it found a Kazakh company had copyrighted its unique brand name. Unfazed, Begemot in Kazakhstan took the name “Gippo.”
Still, Mogiev is confident about Begemot’s growth prospects in Central Asia: “Sure, there are special conditions that you need to adapt to do business here, certain problems to solve. But in the end, there is always a way.”
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