The introduction of VAT in the UAE is likely to negatively affect the restaurant and café sector – which has seen rapid growth in the last decade.
Those at the heart of the industry are outlining ways in which government departments can help them. It would begin, they say, by recognising the independent food and beverage business in Dubai as something that is a key part of the economy and a sector that needs protecting.
Gates Hospitality CEO Naim Maadad said: “The independent food and beverage industry really supports the economy – but we are not isolated from the fluctuations in that economy as well. We cannot just sit back looking at 2017 and then ahead to 2018 and say that everything is ok.
“There are many factors that are making life tough, and the UAE authorities should look at our industry and recognise we are part of the overall mix of the economy doing well. They are putting lots of great ideas into practice, but the problem is they are more about building a nation whereas we are running individual businesses.”
Creneau International director Dirk van de Haar feels that support on controlling rents would be a major step forward. He said: “At the end of the day it all goes back to real estate and the cost of that. People don’t understand all the costs we must pay to set-up and operate a restaurant. I cannot explain to a customer they are being charged AED 400 for a meal due to high rent – they are not going to accept that. That is really where we need to start tackling the issues.”
When it comes to starting up a food and beverage business in Dubai, there is hope that payments such as licensing could be stretched out over time, which would help independent businesses to offset costs which are directly passed onto customers.
Figjam co-founder Sanjay Murthy said: “Living and working in Dubai is incredibly unique and entrepreneurship is really being driven at a high level. But there are roadblocks to what we are doing in food and beverage and one would be the large up-front payments which we have to make and that needs to change.”
When it comes to the specifics of VAT, Maadad believes it will take time for the market to settle and the full repercussions for restaurants and cafés to be seen, saying: “We will have to take a lot of time and care over every single invoice and every single receipt so in all honesty I think it will take at least six months for it to be understood and how it affects us to become apparent.”
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