Comment: Opportunities in F&B are growing in UAE
The UAE F&B market has come a long way in a very short period of time. It was once dominated by the ends of the spectrum with five-star hotel restaurants and many cheap and cheerful small outlets holding the lion’s share of the custom.
The middle sector until now was largely unattended with limited choice. Nowadays, as more people have come to the country, the market has matured and we have seen variety with both home-grown concepts and international names brought over. There have been spin-offs too, where employees come over to open one outlet, but ultimately leave and open their own.
The gaps are narrowing, not only in Dubai but also the rest of the UAE; there is certainly still room for middle ground, cafés, healthy eateries, sea-facing small units and restaurants. I’m a firm believer that there is a strong market for non-alcoholic wine bars; we have beautiful settings, and these types of restaurants or bistros could offer guests a memorable experience.
The industry is growing at a fast speed and it is up to us as professionals to act responsibly and make sure this growth is structured and sustainable. Utmost care and attention should be placed on the quality of product and service as, overall, the market will only grow if these can match the brand’s ability to look nice. In turn, making sure quality and consistency continues to grow.
As the market reaches maturity, we will see a lot more investment from governments. Public sector and PPP (public private partnerships) will mean more consideration on F&B offerings when setting up a facility or overall project master plan. For example, if the brand is four or five stars then the F&B needs to operate at the same level.
Investment will come from individuals in the region, as the GCC population continues to grow. International brands will always come in, but I think we will continue to see a lot more home-grown concepts. Investors need to put their money together to create strong operating brands that do what they say.
Don’t try and make returns at speed like they were in the past, such as six months’ ROI. Today there’s more choice and discerning customers who want a better focus on service and product. Concepts will need to deliver and have a longer-term outlook.
Customers want variety; we know this by the amount of places that open daily (and survive). It’s a very faddy market, people will always jump to the ‘next best thing’, and businesses will succeed as long as they provide good service and products. In general, supply chain and food costs are both stable; obviously we can’t control climatic conditions overseas but overall it’s steady.
Real estate is probably one of the biggest challenges in terms of the proportion of capital and operating expenditure that it takes up, but the more choice there is, the better deal an investor is going to get. Today there are some good deals around with non mall-based or non-traditional leases.
Staffing is also always an issue as the ability to provide great customer service at the front end is key for the end user. A bigger variety of staff will allow quality of customer service to increase.
Overall, the UAE market is successful and growth won’t stop any time soon. The GDP is growing at 4-5% every year, inflation is under control, and it is not mature enough to suffer from the cyclic booms and slumps as others do. Other emirates have the opportunity to grow… we have plenty to offer tourists and we need to make sure the F&B industry does it justice.
Sanjay Murthy is the managing director of Figjam, the Dubai-based food & beverage agency. Figjam combines the disciplines of branding, interior design and operations to deliver complete design solutions for its clients. Visit www.figjamco.com