Pappasallis

It was a fine evening in Islamabad. Slow music, calm environment, dim lights and a low laughter

of customers was creating a nice sensation in Pappasallis. “Customer care and satisfaction is the

major problem, not growth. We can open up new outlets but I think we will lose our control.”

This was Mr. Hassan’s answer to Ms Ayesha’s question.

“How can we capture this large and growing Pakistani market? How can we maintain our

standard while opening new outlets? Should we be contended with the growth that we have

achieved in more than 20 years? Is this the place we wanted to be?”Mr. Hassan and Ms. Ayesha

were discussing the prospects of growth for Pappasallis. These and other questions hunted their

mind. “Would we be able to give quality products in Karachi, Lahore and Peshawar? Why are

we still in Islamabad/Rawalpindi?”

History/Background

About 21 years back there was not a single good restaurant in Islamabad. As Islamabad is the

capital of Pakistan and thus hosts most of the embassies and diplomats, there was no such place

for them where they can find exotic dishes. As the first Italian restaurant, Pappasallis was

established in October 1989. It is located in Jinnah Super Market, sector F-7 Islamabad. It is

located in a market which is easily accessible from sector F-7, F6, F-8, F-9, F-10, G6, G5, and E

where most of its target customers live. At start limited dishes were introduced and then more

were added according to customers’ demands and tastes. In 1992 home delivery service was

started to provide comfort to customers and boost sales. A café was incorporated to the outlet in

1998. After increased demand from Rawalpindi (which is a nearby city) a delivery point was
started in 1998 over there, and then a full dine-in restaurant was established in Jinnah Park,

Rawalpindi in 2006. (Table. 1)

Pappasallis has a good ambience and its environment is comfortable. Customer satisfaction, taste

of dishes and hygiene are the values of Pappasallis. Every customer is treated and welcomed as a

guest irrespective of their appearance.

When Pappasallis was started at that time there was no other restaurant in the locality.

Afterwards, many other restaurants opened including Pizza Hut, Rendezvous, Cinnamon, Luna

Caprese, and Domino’s Pizza to name a few. So, the sales of Pappasallis decreased over the time

because of the competition. Still Pappasallis is profitable as it serves on average 250 customers

in one outlet a day.

Pappasallis was a result of its owner Ms. Zeenath Ayesha’s entrepreneurial mindset. She felt that

there is a need to open a nice hang out place in Islamabad. Mr. Amer Hassan the general

manager of Pappasallis Islamabad branch joined Pappasallis in 1996. He is a great asset and key

person to the restaurant. He is an ex-army officer. He left Pak army and went to United States

where he worked for 11 years and then returned to Pakistan.

Challenges

As the owner and manager are maintaining a centralized control system, it was not clear how to

implement designated control mechanism in case of opening other outlets. In Karachi Pappasallis

opened a franchise in 1997. It was an effort for expansion but failed badly. The reason being that

franchisee Mr. XYZ was not the kind of person who could take the responsibility to run a

restaurant like Pappasallis and maintain its standard. He often used to offer free dinners and

lunches to his friends and family. Initially Mr. Hassan helped them for 6 months to establish the
restaurant, but the franchisee was neither experienced nor trained enough to run the restaurant on

his own. So, it had to be shut down after 9 months of establishment. That was a bad experience

for Pappasallis. Now, Ms. Ayesha could not stand a person who would ask her for giving a

franchise.

Pappasallis wanted to give better quality and more hygienic food to customers, but there was a

problem from suppliers’ side. The raw material or products they were providing or that were

available in the market were not of good quality. An example would be that of the soft drink

cans; which were bought abroad a few days before expiry date at lower prices and then imported.

New expiry dates were then written on those cans after rubbing the old ones. This situation posed

a threat to compromise on the quality.

Availability of educated staff and their retention was another problem for Pappasallis.

Employees were of low education and if they got some training after spending some time on job

they would have left the job. Some of the competitors were attracting Pappasallis’s employees,

after being trained. Similarly some employees were involved in stealing raw materials and

products of the restaurant. This was causing a decrease in profit margin and cash flow issues.

Conclusion/Moving Forward

With the cuttings of newspaper in front “restaurant that has been consistent in its standard &

service” and included Pappasallis in the top 10 restaurants of Pakistan; Ms. Ayesha was thinking,

how can we move further. Nando’s was established 2 years earlier than us, but now it has

presence in 28 countries and we are not yet out of Islamabad/Rawalpindi.

How can they expand into new markets while maintaining the standard they are offering? Should

they be contended with the profits they are making? Or should they expand and explore the

potential of growing Pakistani market? What should be their strategy for growth?
Table.1 History of Pappasallis

Date of establishment October 1989

Home delivery service 1992
Karachi franchise 1997
Café 1998
Delivery point at Rawalpindi 1998
Restaurant at Jinnah Park 2005