Strictly casual

The region’s F&B scene is known for its fast development, but one sector that seems to be outstripping all others is casual dining. Lucy Taylor finds out why people are hankering for casual options and discovers the challenges operators face in delivering them.

Throw the words ‘Dubai’ and ‘dining’ at someone a few years ago, and their thoughts would have flown straight to fine fare.

This is a hospitality industry that founded its roots in luxury and for a long time, the F&B buzz words were ‘Michelin star’, ‘fusion’, ‘gastro’ and other top-end terms.

But two major changes over the past few years have completely altered — or perhaps evened out — the region’s range of food and beverage offerings.

The first of these is of course the ever-mentioned economic downturn, bringing penny-pinching and cost consciousness to a region that previously didn’t know the terms.

The second factor is the booming tourism industry.

As the Middle East’s destination status grows, it attracts a more diverse range of tourists — from honeymooners to families, from GCC nationals to visitors from the other side of the world.

And they want all their tastes catered for; so just as the region has expanded its hotel offerings to incorporate everything from self-proclaimed seven-star to budget options, so the F&B industry has spread its wings to offer every edible alternative the tastebuds could desire.

And integral to this rainbow of restaurant types is the casual dining concept: targeting the middle range market and, therefore, appealing to a whole spectrum of consumers.

It’s been difficult in the past to quantify the success of this field here.

According to Stefan Breg, ‘chief worrier’ at F&B creative strategist firm TRIBE, to date there’s been a surprising lack of data available on the Middle East’s casual dining scene.

But, as he explains, that is about to change. Tribe was recently engaged by UK-based foodservice research company Horizons to analyse the UAE’s eating-out market.

“We’ve defined casual dining as full table service with a formulaic menu and an associated brand,” explains Breg.

The report is aimed at operators who are already active in the market or considering entering it, as well as firms that supply them with food, equipment and other essentials.

“Data on casual dining brands was collected across the UAE — including locations, brand types, year of entry and estimates on market value,” Breg expands.

“The report also provides commentary on issues facing casual dining brand operators and future trends.”

The results of this study won’t be officially released until later this year — but Breg reveals a few of the key emerging trends to Caterer: “The rate of growth in brands has been stunning; there are currently over 200 casual dining brands in the UAE. Half of these were launched in the last two years — a striking 95% are less than six years old”.

Reasons for growth
Interestingly, this statistical success story is not as black-and-white as it first appears.

Considering these figures, you could be forgiven for thinking the casual dining sector is recession-proof. But as Breg explains, there are variables to be taken into consideration.

“The number of brand launches over the last two years [has been] driven by the fact that two large malls — Dubai Mall and Mirdif City Centre — were launched with the recession looming; or in fact, in Mirdif’s case, in the midst of the downturn.

“The large number of casual dining brands that entered the market during these openings distorts any analysis of the effect of the downturn,” he admits.

Indeed Mirdif City Centre boasts more than 79 food and beverage outlets. Making up a huge part of the portfolio is the contingent of casual dining options - including Mango Tree Bistro, More Café, Japengo Café, Al Forno and California Pizza Kitchen among others.

According to Mirdif City Centre vice president, Yousif Al Ali, variety is the key.

He believes the increasing number of casual options entering the region is good news for malls — explaining that the right F&B mix is “crucial” to a centre’s success — and he adds that despite the economic downturn, demand is still strong in this particular sector in comparison to many others.

“People tend to spend a lot of time in shopping centres in this region,” he notes.

“We kept that in mind — and there are endless options for customers to stop and refuel, each one unique not only in its offering but also in design and feel.”

But of course, finding the correct casual mix is not just a matter of taking the first names to come along, as Al Ali explains:

“When selecting the range of F&B options for the mall, we wanted to ensure that we gave our customers a real variety of tastes and experiences, so we looked to gather the best from around the globe and bring it all into one place,” he adds.

“The result is a mixture of old favourites, as well as a healthy dose of new dining options. In fact, more than a third of outlets at Mirdif City Centre are new and unique to the area.”

Feeling the pinch
This flood of new brands may have given the sector a boost — but Tribe’s Breg notes that casual dining operators “have been reporting revenue declines of between 10% and 35% since the pre-downturn peaks”.

Even operators themselves don’t deny they’ve felt the pinch over the past few years.

However, they’re quick to point out it has been considerably easier on the GCC casual dining sector than on other industries and indeed other regions.

RMAL Hospitality vice president strategy Tiina-Maija Bergman expands: “Demand initially showed a slight downturn, but nothing too significant in comparison to what we have observed in the market in general.”

She believes this is due in part to RMAL’s strong footing — and in part to that of the location.

But Bergman says that today, as the casual dining field expands, any operator worth its salt is focusing on what she describes as the “value-add game”.

Gourmet Gulf Company regional marketing director Antoun Abou Jaoude concurs: “All retailers in the region were hit by the economic downturn last year. Visits to restaurants were less frequent — and consequently, the consumer focus changed. People have become more selective and more cautious about when and where they spend their money.

“This has created a challenging environment for restaurant operators to maintain a high standard in food quality and service,” he continues.

“But it’s a challenge the region’s outlets are rising to: more value offers are popping up in the form of coupons, lunch deals and online offers.”

Of course, this increased pressure from demanding consumers is not the only challenge facing operators in the Middle East, as RMAL’s Bergman notes.

“Fielding stand-alone outlets like some of ours is tough due to the high operating costs — that’s something outlets located within hotels do not have to deal with, rent being the main expense,” she comments.

“So with the increased pressure of creating value-add programmes, our position is challenging, due to slimmer profit margins from the off-set.

“And as the pressure increases on minimising the cost base, it’s becoming increasingly challenging to hire and then retain qualified staff too,” Bergman admits.

RMAL has not had to venture into any major hiring campaigns in the past few years, but now the group is looking at adding two more restaurants to its portfolio and will be recruiting teams for them.

“In addition to our own database and networks, we’ll use recruitment services to help us with this,” says Bergman.

Meanwhile Gourmet Gulf’s Abou Jaoude points out that it can be tricky staffing restaurant brands comprising not just one outlet, but a whole chain — often across different countries.

“Today, Gourmet Gulf employs more than 600 people and operates more than 25 restaurants in eight cities — Dubai, Abu Dhabi, Manama, Kuwait, Muscat, Jeddah, Mumbai and soon Dhahran,” he lists.

The bigger picture
But that same broad brand distribution that could potentially cause issues can also be used as a strength, says Abou Jaoude.

By showing staff, however scattered, that they belong to a bigger picture — to a regional team striving to achieve more for the brand as a whole — the firm can inspire, motivate and develop its employees.

“We support teamwork, advancement and commitment. Our objective is to offer a working environment promoting mutual trust, best practices and partnership,” explains Abou Jaoude.

Now the downturn has pared away the ‘casual dining cowboys’, it seems the region’s serious operators are committed to delivering what the customer wants and taking advantage of growing demand for value and quality.

But when the sting of the economic bite recedes, there will be a new set of difficulties to deal with — as Tribe’s Breg points out.

“The key driver for sector growth is population and tourism growth and the availability of new sites,” he points out.

The upcoming report analyses population and tourist data — and flags up planned malls as key opportunities for operators looking to secure a firmer foothold in both the region and consumers’ mind.

But securing a space in these new developments won’t be the only issue operators have to contend with: they will need to think long and hard about the location and its long-term viability, says Breg.

“Migration within the UAE is also another challenge: because as rents drop, people started shifting from one region to another,” he observes.

A prime example: the study will reportedly pin-point Abu Dhabi as a key growth point for the region’s casual in-mall sector. Of course, although the UAE capital is clearly an immediately strong prospect, there are other areas around the region that have remarkable growth potential.

Having reviewed the development of new malls and urban areas, Breg anticipates that the number of casual dining restaurants will increase by another 150% by 2015.

“The report will also feature data on the value of the casual dining market — both current value and value by 2015,” he reveals.

But on all hard facts and statistics, Breg remains tight-lipped: the truth of the study will have to wait for its big launch at Gulfood 2011 at the end of February.

Still, there’s one thing the Middle East’s food and beverage operators can be certain of — study results or no — the casual dining sector here may be in its infancy now, but it’s maturing at an astonishing pace.

Demand for decent quality, good-value, family-friendly outlets is incredibly strong in the Middle East and it shows no sign of dampening.

As long as they are prepared to do it right, operators could do a lot worse than put the majority of their eggs in the casual dining basket.

What's on the cards?

RMAL Hospitality
“We have just secured two new locations in Dubai for Wagamama that we are very excited about, and will be looking at a few more in other emirates too in 2011.

We are also looking at possibilities to expand the MPW Steakhouse & Grill restaurant into Dubai next year as well, and are likely to announce an exciting new location for another Trader Vic’s in Dubai very soon.

Meanwhile, plans are underway to expand both Frankie’s and Marco Pierre White Steakhouse outside the UAE as well, details of which we can’t disclose as yet.

We are also looking at bringing some exciting new brands to the region through our affiliations within the Dubai Pearl development, and are exploring a few new concept developments as well as home-grown brands by RMAL Hospitality in the very near future.”
Tiina-Maija Bergman, vice president strategy, RMAL Hospitality

Gourmet Gulf Company
“We plan to grow the number of our restaurants we operate to 100 in the coming years.”
Antoun Abou Jaoude, regional marketing director, Gourmet Gulf Company