Dubai, Abu Dhabi and Sharjah have in the past few years gained immense commercial importance. When it comes to trading and business, the importance of the Emirates of Dubai and Abu Dhabi is now at par with London, Singapore and Hong Kong. With one of the most liberal trade practices globally, the UAE has off late been attracting a huge inflow of strong capital from various regions of the world. The presence of expatriates from more than 150 countries and the cosmopolitan nature of the UAE has only helped the region grow more prosperous -
The Sector Holds Vast Potential
The cosmopolitan culture and the wealth of the UAE people have also aided in the growth of the foodservice sector. The foodservice market of the UAE is normally bracketed into full-service restaurants, fast-food restaurants, cafes, home delivery and street kiosks. As per a CAGR report, it is believed that the restaurant management sector is expected to expand at a rate of 5.22%. The positive growth is heartening despite the brakes that the pandemic applied to the economy of the country.
The key factors that have contributed to the growth of the foodservice sector of the UAE are high income, the influx of tourists, and consumers’ evolving preference. Ordering food at home and dining out are considered to be two favourite pastimes of Emiratis. The presence of expatriates from across the world has also helped the country get exposed to cuisines from around the globe. This has indirectly contributed to the growth of the foodservice industry in the region.
As per a report by Mordor Intelligence, close to 32% Emiratis are willing to spend AED 100-300 while eating outside. Those willing to spend AED 50-100 is about 39%. With the high purchasing power capacity of the UAE residents, the market is becoming more robust with every passing day. Food outlets in the UAE have now become synonymous with a place to celebrate occasions and enjoy with family members.
Fast-Food Restaurants Are Leading the Way
In this growth spurt story, fast food restaurants have now become the growth engine. Full-service restaurants now account for a lion’s share in the food away from the home market. But the past few years have also seen a rising trend in casual dining because of the influx of business professionals and travellers in the country. The rise in figures for casual dining in the UAE has been so astronomical that Dubai has now overtaken Doha as the number one location for casual dining in the Middle East. Dubai and Abu Dhabi occupy two positions in the top five Middle East cities.
Like most of the Middle East cities, the restaurant management landscape of the UAE is dominated by international players, especially those from the United States. McDonald’s and Yum Brands - KFC, Pizza Hut, & Taco Bell are the most popular fast-food chains in the UAE. These international chains have received tough competition from local players like Apparel group, Rmal Hospitality and Bin Hendi Group. The competition among these players is so tough now that more than pricing, it’s the quality of food and calorie intake now have become deciding factors for customers.
The challenges to the restaurant sector too are many. The prominent ones include high rentals, stiff competition, high attrition and high labour cost. The average cost of starting a restaurant in Dubai ranges from AED 500,000 to AED 1.25 million, which is way above the cost of other countries. Close to 78% of the total outflow of the cost goes into rent, working capital and capital cost. Again with stiff competition, it has become extremely difficult for restaurants to survive. High competition has also led to the attrition of talent in the restaurant sector. With more options available, the risk of switching over to a rival firm always lurks from behind.
But every cloud has a silver lining, and that silver lining has been provided to this sector in the UAE by the local mid-market restaurants leading innovation. Because they are lower-priced, there is a surge in their popularity, coupled with the value-added experience they have been offering. Another factor contributing to the growth in the foodservice sector is home food delivery, which has become extremely popular off late. With the mushrooming of food delivery apps, ordering food has never been this easy. Home food delivery becomes a necessity in this part of the world because of its climatic condition, and delivery apps are reaping the most. High levels of customer satisfaction can also be attributed to the Food-Technology solutions utilised to support operations.
The surge in online ordering has resulted in a massive increase in sales, and UrbanPiper remains at the top when bridging the gap between customers and restaurants. Through its suite of products, UrbanPiper is the perfect partner for restaurants to optimise their operations, & drive business results. While Hub offers a single dashboard to manage orders from multiple restaurants, menus, & inventory, Meraki helps create whitelabel apps & websites for your business, & Comet helps you manage your delivery operations to ensure your customers receive their orders on time.