The potential of F&B in Qatar

In recent years, the Qatari F&B scene has become a hotbed of activity with vibrant F&B hubs springing up, international brands clambering to enter the market and hospitality investors redirecting funds to capitalise on Qatar’s growth.

Figures from Euromonitor International point to a 25% increase in the amount of money spent on dining out in Qatar between 2005 and 2009 — most of which was spent in cafés, full-service restaurants and fast-food outlets.

Growth in the Horeca sector has followed strong economic growth — forecast to grow by 19.97% in 2011 — and the contribution made by Qatar’s trade, hotel and restaurant industries last year has more than doubled in a four-year period, according to figures from Qatar Central Bank.

“Qatar is trying to emerge on the regional map as an important player in a number of key areas including economy, travel and sports,” explains Ròya International hospitality consultant, Turab Saleem.

“The same can be said for the F&B industry. It is still very much in the developing phase, but it is establishing a solid base upon which a bright future can be built.”

There is a sense across the industry that growth in Qatar’s F&B market has been slow but sure, with some projects taking longer than anticipated.

However, the announcement that Qatar will host the 2022 World Cup has acted as a catalyst and injected a sense of urgency into the market for brands to be fully established and ready to capture market share.

“The lure of Qatar’s planned building and development of 130 new hotels is mainly behind the decision of many international brands to enter the market and cash in during the lead up to 2022,” says W Hotel and Residences, Doha assistant director of F&B, Stephen Gee.

“As such, the received wisdom is that most will be completed well within eight years — and many will open in the next couple of years to bed down. As we see Qatar’s infrastructure grow to meet the demands of the World Cup event, so too will the number of customers wanting to dine in the five-star sector.” Bring on the brands!

Qatar’s investment potential is attracting scores of international F&B brands like Megu, Tse Yang, Pampano, Mango Tree and Burj Al Hamam. The hospitality investors behind many of these operations are aware of Qatar’s future potential and are aiming to establish their brands in the market and expand quickly to achieve a competitive advantage over those slower to react.

It was this “early bird” approach that informed Foodmark’s own introduction of the Carluccio’s brand.

“Qatar’s real estate is growing and the current construction phase provides a good opportunity to negotiate great deals and get the best locations.” says Foodmark country operations manager for Qatar, Sumeet Jhingan. “Companies that have wanted to expand regionally in the GCC have definitely put Qatar on their expansion plans.

“A year ago, I was tasked with expanding Foodmark’s portfolio into Qatar — a most challenging location! With the diverse mix of expatriates in Qatar there is a demand for mid to high-range food and beverage concepts, so we introduced Carluccio’s and Mango Tree — both at the Pearl.

“Although the market research suggested otherwise, the risk has paid off and we have experienced great success. We now plan to open three more concepts in Qatar by the end of this year,” Jhingan adds.

Logistical difficulties
Qatar’s F&B industry has grown quickly and consumer tastes have diversified. While initial expansion came in the form of franchised fast food and casual dining brands, the opening of the Pearl Qatar has changed the needs of the market and placed a stronger emphasis on quality. The high-end brands have been quick to follow the trend.

However, supply chains into Qatar are maturing at a slower rate than hospitality development, causing logistical difficulties for the country’s operators.

“For a regular restaurant, the existing import supply chains into Qatar are more than sufficient,” says restaurant manager for Pampano at The Pearl Qatar, Niranjal Rijal.

“But Pampano is a specialist restaurant with a unique concept, so we require exotic ingredients — and this can be a real challenge. It is not always easy to have a constant supply of high-quality goods, however, I’ve noticed a significant improvement since more suppliers have entered the Qatari market.”

With the supply chain still maturing, most international brands are forced to import their specialist ingredients to ensure consistency and quality.

However, operators with more day-to-day flexibility over their menus can adapt their offering around locally sourced ingredients.

“Most products here are imported, so before you even think about writing your menus, you need to do a market survey,” explains W Hotel’s Gee.

“It is quite challenging at the beginning to get whatever you are looking for, but once you get to know the market and the best local suppliers it becomes easier and we are now aiming to use as much local produce as possible.”

It is likely that an increasing number of operators will turn to local suppliers as the market matures, but for the time being, Dubai remains the dominant supplier of fresh ingredients to outlets offering international dishes.

Qatar’s F&B industry has little option but to tap into the UAE’s vast processing and storage facilities to support its development in the medium term.

“We are involved in a number of operations in Doha and the difference between the supply chain set up in Qatar and the region’s other established F&B markets is stark,” says Saleem. “To achieve a balanced supply chain, the market needs to develop economy of scale. This has not yet developed in Qatar because the industry is still developing.

“Sourcing ingredients can therefore be challenging — especially for new F&B operations. But once you settle down, set up your par stock rotation and better understand the lead times from various sources, it then becomes easier to establish reliable sources capable of delivering quality produce time and time again.”

Identity
Qatar has become a melting pot of cuisines as more and more US and European franchised restaurants open their doors. There are concerns that this influx of international brands is squeezing more traditional F&B concepts out of the market and that ultimatelty, Qatar will lose its gastronomic identity.

Although shisha restaurants are still popular, they are finding it increasingly difficult to compete against the new hotel developments which are better equipped to deal with expatriates and international travellers.

“Something that’s very different here when compared to the dining culture in cities like Tokyo and New York, is that Doha’s consumers tend to patronise hotel restaurants rather than free-standing restaurants,” explains Four Seasons Hotel Doha executive chef, Giancarlo Di Francesco.

“I think the expat community and Qatari locals are well-travelled and appreciate high standards of quality — something that the international brands recognise.”

Hotel restaurants currently dominate Qatar’s F&B scene because they have cultural and logistic advantages over the competition. These plush new mixed-use developments boast cutting edge design and have become a symbol of the new Qatar — a rising gulf state that has transformed itself into an international hub for business and leisure. They have quickly become icons of Qatar’s prosperity.

International communities are drawn to them — in part by the “taste-from-home” experience and alcohol licences.

“F&B outlets targeting international demand tend to heavily revolve around hotels and mixed-used developments,” agrees MKG Hospitality market development and research manager, Michael Komodromou.

“Let’s not forget that it was hotel infrastructure that initially established the destination’s presence, as it was able to offer visitors and the expat community the facilities they demanded: international standards, entertainment, accommodation, multiple options, shopping, and business facilities.

“No doubt, alcohol licences in hotels have also allowed them to dominate the sector. As the destination develops and matures, more independent outlets will surely appear, but I think it will be quite difficult for them to compete against F&B outlets in hotels.”

In a market like this, it is competition that will drive innovation; and a creative operator with the right strategy could change everything. Ultimately, healthy competition will improve the value and the quality of the F&B product for the end consumer, but this will only be possible with more robust supply chains in place.

But let us not lose sight of the bigger picture: Qatar remains an extremely attractive market for any operator or investor, despite the teething problems that naturally occur in any maturing market.

“At the end of the day, Qatar is a thriving F&B market which has experienced incredible growth over the past few years,” concludes Pampano’s Rijal.

“This growth curve is likely to continue, so it’s unquestionably the best time to enter this market … now!”

Doha’s main F&B hubs
The Pearl Qatar – This mixed-use development is built on a man-made island and features a range of high-end F&B brands. The area carries alcohol licences and feels like a self-contained city.

Souq Waqif – One of Doha’s main tourism areas, this souq is used by all nationalities and features terrace and outside dining experiences. It is an alcohol-free zone.

Katara – This global village style environment mixes many different cultural influences and cuisines. It is predominantly a location for Qatari locals and is alcohol-free.