Rental contracts stall “Carry On” upgrade: From lifeline for the have-nots to fancy supermarkets

In September 2025, the Minister of Supply inagurated three supermarket outlets, followed by a fourth in December. The new branches carried a single brand, Carry On, and the English name seemed designed to compete with Egypt’s retail chains such as Carrefour and Panda.

In recent months, though, the supply ministry has again been talking up expanding the chain, alongside a sweeping plan to restructure the food subsidy system so Carry On outlets would handle the distribution of subsidized goods to ration card holders.

The government is not planning to scrap the vast network of state-run consumer cooperatives spread across the governorates and major cities. Instead, it is looking to upgrade them through the Future of Egypt Authority for Sustainable Development (Mustaqbal Misr) to keep pace with the new system for subsidized foodstuff, which aims to sell a wide spectrum of goods, including poultry and frozen meat, that require advanced refrigeration systems lacking in older outlets.

The rent trap

While the Ministry of Supply works hurriedly to expand the plan, Minister Sherif Farouk noted in a brief statement that the modernization process is not straightforward. Many outlets are not owned by the ministry but rented under the old rent law, which was abolished by legislation in August 2025. That law set a five-year timeline to fully liberalize the landlord-tenant relationship for commercial and administrative units, alongside a mandatory 15% annual increase throughout the transition period.

Officials at the consumer-cooperative companies said their firms are currently negotiating with property owners, who are unhappy with the current rents and want to raise them from a few hundred pounds to several thousand, capitalizing on the amendments to the old rent law.

Only 25% owned

In recent months, management at the Nile Company for Consumer Cooperatives, the Ministry of Supply’s largest commodity distribution arm, held internal discussions on a plan to convert its 1,060 branches into modern outlets equipped with advanced refrigeration and storage systems fit for the new Carry On brand. But they concluded that a large number of branches is not possible because of eviction threats, according to a management official at the company who spoke to Al Manassa.

The source, who asked not to be named, said they rely mainly on renting the outlets. The company owns only about 25% of branches, and at least one third of the rest are leased under the old rent law.

The source explained the eviction threats saying property owners won’t accept the current rents, which range from 300 to 500 Egyptian pounds ($6 to $10) and are seeking rents of 10,000 to 30,000 pounds ($200 to $600) a month.

The government has been unable to compel property owners to lease premises to the consumer cooperatives since 2018, following a Supreme Constitutional Court ruling that the old rent law no longer applies to non-residential units.

“The landlords’ demands have put the company in a difficult position,” the official said. “The company must either absorb a new rental cost that could make the branch economically unviable, or it hands the branch back to its owner and looks for an alternative site that fits the new project’s requirements.”

The economic squeeze

Officials’ sense of being caught in a bind stems from the fact that the details of the new subsidy system still aren’t clear. They are being asked to modernize branches while continuing to sell subsidized goods at reduced prices to ration-card holders, leaving them concerned about their ability to pay the new rents given their currently low profit margins.

“Total monthly sales for a single outlet currently range between 150,000 and 250,000 pounds ($3,000 to $5,000), with gross profits not exceeding 40,000 pounds ($800) per month in the best-case scenario, from which electricity, water, and labor costs are later deducted,” the source added.

The above example regarding gross profits applies primarily to old-rent outlets, the source explained, as they are older and less equipped to sell a wide range of goods, both subsidized and unsubsidized. Outlets operating under new leases, by contrast, can generate higher margins and are better equipped to absorb higher rents.

Nile Consumer Cooperatives is the largest network of supply outlets. Having merged with Al-Ahram Consumer Cooperatives Company in 2022, its branches concentrate heavily on Cairo and Giza governorates. Next in scale are the Egyptian Wholesale Trading Company with 360 branches and the General Wholesale Trading Company with 250, both offering broader reach across the governorates, followed by the Alexandria Consumer Cooperatives Company with 45, according to Ministry of Supply data compiled by Al Manassa.

Outlets operated by the Egyptian Wholesale Trading Company face the same operational dilemma, according to Mohamed Abdel Moneim, a retail outlet manager in Giza Governorate. However, he noted that negotiations with landlords may prove easier for the company because many of its branches sit in lower-cost areas across Upper Egypt.

“We try to reach an amicable settlement with property owners who ask to adjust the rent, rather than going to court, and to arrive at a new rent that works for both sides,” Abdel Moneim added to Al Manassa.

Searching for alternative outlets

Even as they struggle to negotiate with property owners, the consumer-cooperative companies are expected to take part in an ambitious plan for the rapid expansion of Carry On, which is supposed to grow from four branches to 39 by the end of the year, Alaa Naji, managing director and CEO of the Food Industries Holding Company, told Al Manassa.

The Nile Company official noted that the co-op outlets’ issues with rental contracts did not begin with the modernization plan but have persisted for years. Many property owners have long resented the low rents the company pays and have gone to court over recent years; around 150 of the company’s leases have already been terminated by court rulings.

In response to this problem, the source said the Nile Company is trying to work with other state entities to secure alternative outlets owned by the Holding Company for Food Industries, which oversees the cooperatives sector and other state enterprises.

“Alternative locations include sites owned by companies such as North Cairo Mills, Nile Oil and Soap, Sugar and Integrated Industries, and the General Company for Greater Cairo Bakeries,” the Nile Company source said.

He said the ministry wants to avoid leaving geographic gaps in the state-run retail network whenever an outlet goes out of service, particularly since the new project aims not just to change signage, but to construct a more integrated state retail trading network.

This was echoed by Ayman Abdel Aziz, Canal region branch manager at the General Wholesale Trading Company, who said he attended meetings at the Ministry of Supply that discussed utilizing the branch networks of state-owned enterprises to offset any shortfall caused by the loss of leased sites, alongside the modernization of branches in prime locations with high sales volume.

By the end of the year, the credibility of the government’s ambitious timeline for scaling the new subsidy network will be put to the test. The hurdle goes well beyond securing outlets at affordable rents; the state must also ensure equitable coverage across underserved areas while building out the storage logistics and transport networks required to improve service delivery.