Top row (L-R): Rami Badawi, Amber Haque, Sergio Lopez, Tahir Shah and Tom Arnel. Bottom row (L-R) Yousef Al-Barqawi, Alexandra de Montaudouin and Emma Sawko.
Money matters
Once a restaurateur has an idea in place, it’s time to find someone to back it — which isn’t always easy without a big brand name behind you, something stated by Gates Hospitality CEO Naim Maadad last month at the Caterer Middle East Food & Business Conference advisory panel. Our entrepreneurs largely agree with this.
Arnel says: “Based on the view that the franchises and multi nationals are the massive majority here, it’s hard to get investors, let alone landlords, to listen to the little guys without spending piles of money on conceptual design and pretty business plans. All start-ups need external investment, but if you don’t have the cash for the initial outlay, life is very tough.”
Al-Barqawi agrees and says emphatically: “Without a doubt, financial backing for new, home-grown brands is all but non-existent in this region. Most banks, if not all, will not even entertain the idea of supporting upcoming F&B concepts; not only in the start-up stage, but well into their challenge-filled first few years.
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It is precisely for this obstacle that, probably above all others, many interesting concepts never see the light of day, and those that do, end up reaching far less than their potential promised.”
Shah states it is not easy in the UAE for small entrepreneurs. “I would say the region is not really geared for SME. People with the experience and the right money backing them will do well, but any developed support system for the modest start-up is still in its infancy here.
“You have to work hard, network hard, and demonstrate hard that your concept makes money. Investment should come from friends and family first, and if you can't get backing there, then your idea or belief is not strong enough.”
Haque agrees and says the best option is to have a solid business plan, and seek funding through personal networks. She explains: “As difficult as it is to obtain financing for a business, personal loans are extremely accessible. So if you have a lot of faith in your prospects, why not leverage that option? We like being under financial pressure; it keeps us disciplined.”
Comptoir 102 co-founder Emma Sawko adds: “We were lucky enough to be able to self-finance our start-up, but we started small, with 80 seats. Of course, as it is doing well, we now have new development projects, and would imagine finding financial support will be easier now that our company is up and running.”
However, Montaudouin adds: “Since Comptoir 102 was neither a brand nor an existing concept, it took us a while to find a good location and a landlord who would trust us.”
But how much does it cost to set something up? Al-Barqawi says: “It's very difficult to specify a certain amount. In the last year, I've come across new concepts that have been launched on as little as a few hundred thousand dirhams, to some that have gone as high as tens of millions.” Arnel agrees and says all scenarios and businesses are different, but a small café would cost a minimum of AED 1.5 million.
Shah wryly says: “Starting a business here will easily cost AED 500,000 — which will be gone by the time you’re dusting off your shiny new licence.”
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