News & Blogs
Only the cream rises to the top
5 August 2018
The food and beverage scene in the UAE over the last five years has been moving at an almost unstoppable pace. The industry grew from the five star licensed dining destinations of the glitzy hotels to imported big franchise brands dominating the retail malls to a plethora of new growth arenas in the form of micro culinary districts, dining and visitor attraction destinations such as JBR, Citywalk, and La Mer , food truck parks such as The Last Exit, organic growth pop up locations in the form of Al Quoz and Alserkal avenue where new homegrown concepts are entwined with the local art, music and youth the scene.
Dining in the UAE is a melting pot where every cuisine is represented and in massive abundance meeting the needs of the diverse mix of culture and ethnicities that either live in the Emirates ,or the vast array of visitors travelling to this global destination. The UAE is now regarded to have the highest number of food and beverage outlets per capita than anywhere else in the world resulting in intensive competition and operating a profitable business is very challenging. The growth in the food and beverage sector shows no signs of stopping with over 20,000 restaurants expected to be operating in Dubai by the time of the EXPO 2020 and with this brings the debate over the amount of new openings and subsequent closures, but many do argue that these closures are only the forces of natural selection ensuring that restaurants with the magic formulas of location, footfall, accessibility, affordability, fantastic food and service and a variety of other requirements be they technology, courting the social media platforms , embracing food trends, sustainability , ethical eating or health to name just a few, will survive.
Any operators managing to circumvent the market share saturation issue also face a considerable array of operating challenges such as talent attraction and retention as the majority of the workforce are expatriates. Labour costs are not cheap with onboarding costs, visa, medical and other labour associated costs and the lead times to employ people can also impact an operating business detrimentally. The problem is exacerbated by most notice periods being only one month resulting in a lag between losing and hiring which can cause service and consistency issues in the operating restaurant or bar. The UAE is almost a 100% fixed labour model with part time working only recently being introduced making productivity and efficiency flexing of an outlets labour costs very difficult. Other challenges are that restaurants in the UAE operate within a desert and a vast amount of the produce is still imported. The importance of the food and beverage industry to the UAE as a pillar to drive tourism has seen the growth in local farming, sustainable fish farms, the development of food parks and manufacturing to ensure that the supply chain is robust and also responding to the consumer demands of local, sustainable and reducing the carbon footprint of products. The rise of technology in food production is becoming key and the aerofarm is such an example where vertical indoor farming and a reduction in the water consumed would be a great addition to local UAE farming
The list of challenges continues with high rents, a discount driven culture within the UAE spawned out of the Entertainer voucher to an array of discount platforms and operators offering a plethora of discount driven activities from brunches to ladies nights and everything in between. When it comes to choice and offers the customer really is King! If operators are not only grasping these issues they are dealing with how to embrace technology and ensure it is “frictionless technology” for their customers and staff or are their restaurants and the food on offer Instagram worthy? Has a venue got enough healthy options? Vegan options? Specialty coffee, almond milk, cold press juices, craft beers, the right wines at the right prices……………I have not even mentioned the Home Delivery market yet and to do or not to do , and whether to join forces with a third party aggregator and will this result in a restaurant losing control of its customer base chasing this revenue stream? What about the millennials and customers demanding experiential dining? The cost of entertainment and does it return to the bottom line?
That said despite all the above there are lots of fantastic operators and outlets in the UAE. The UAE consumer is so much more sophisticated now and well-travelled so knows what good looks like, so both imported or home grown concepts alike need to be on the top of their game to be or continue to be successful. The UAE boasts both successful international chains and celebrity chefs as well as home grown concepts but for all these successes there are many failures and this is just the natural state of order and how the business will cyclically correct itself eventually. The restaurant industry is a glorious business but not one for the faint hearted, ill-informed or anyone short on resources unless you prove to be the rare overnight success and it then still needs to be sustained in the light of all the aforementioned operating challenges. Food and beverage is a key industry in the UAE but to be respected and understood well before proceeding………. “I learned more from the one restaurant that didn’t work than from all the ones that were successes” Wolfgang Puck
Emma Banks, General Manager, Jumeirah Hotel Group