Value of restaurants industry in Saudi Arabia expected to reach SR28.9bn by 2014
- Saudi Arabia: Sunday, September 02 - 2012 at 10:35
- PRESS RELEASE
Casual dining restaurants are one of the fastest growing segments in the restaurant industry and almost all the major international casual dining restaurants players have already penetrated the Saudi market, while several other chains have either signed up for franchising or are in the planning phase.
Given the population size the main casual dining restaurants markets in the Kingdom are Riyadh, Jeddah and the Eastern Province, but even smaller markets are becoming attractive hubs for investment.
"The late 1990's was the time when the casual dining concept started setting foot in the Saudi market and within a span of 15 years this segment has witnessed aggressive growth and penetration by new chains," said Dr. Adnan Soufi, CEO, SEDCO Holding. "The trend continues as Saudi Arabia's prosperous economy consistently shows healthy growth, leading to higher disposable income, which in turn prompts consumers to frequent foodservice outlets."
Another key factor boosting growth of the casual dining segment is that the majority of the population is young and dining out not only provides them a source of entertainment and engagement, but also acts as a platform where they feel connected to other cultures.
These three main factors; high disposable income, global exposure and limited sources of entertainment - together with the ever increasing number of Malls in the country - present an immense opportunity not only for casual dining restaurants to capture larger market share and expand at a much faster pace. Accordingly, operators in the casual dining restaurants market are expected to proceed with their expansion strategy and the number of outlets is anticipated to reach approximately 17,000 by 2014, whilst the overall value is predicted to grow at a CAGR of 6% in constant value terms to reach SR28.9bn by 2014.
In addition to good acceptance level of international restaurant chains, some other reasons for growth are the strong economy and stable political situation in Saudi Arabia, which are instrumental in driving this industry forward.
Since casual dining was becoming increasingly popular, SEDCO saw an opportunity and decided to create Arabian Entertainment Co. Ltd (AECL) in 1996, a company specializing in the restaurant industry, with a strong brand and strong corporate governance that falls within our Shariah principles and investment guidelines
Today, SEDCO Group owns widely diversified companies and an employer of more than 1800 people in Saudi Arabia, a number which has been boosted by the Group's decision to enter the restaurant industry, a sector that is a significant economic driver of employment in the Kingdom.
Part of SEDCO's strategy in Saudi Arabia is to partner with and strong international players and in establishing AECL, SEDCO secured the KSA franchise rights for Applebee's Grill and Restaurant, the world's largest casual dining restaurant company with more than 2,000 restaurants in 19 countries around the globe including Europe, South America, North America, the Middle East and South East Asia.
Arabian Entertainment Co. Ltd opened its first Applebee's restaurant in Jeddah in 2003. Today AECL is the largest franchisee for Applebee's in the Middle East and currently operates 13 restaurants in all major cities in KSA. There are more Applebee's restaurants in KSA than any other core casual dining restaurants making it the most recognized brand in the market.
Commenting on the latest consumer trends in casual dining, Mr. Ahmed Marashde, CEO at Arabian Entertainment Co., said, "Consumers don't only want to enjoy casual dining food inside the restaurants but also want to enjoy the same taste in the comfort of their homes, hence a lot of casual dining restaurants have started home delivery services. In addition, Takeaway is another big potential for casual restaurants. At every level, due to increasing competition, restaurant chains are looking for extra revenue channels - or in industry terms what is called additional day part - and some international chains like Applebee's have started offering breakfast in some of their locations."
Applebee's Saudi Arabia was awarded the "Franchisee of the Year" award three times running and has already established itself in a leadership position in the core casual dining category.
All Applebee's restaurants have a friendly and family atmosphere with something exciting on the menu for all age groups putting great emphasis on freshness and quality. They are ideal places for business gatherings and special occasions, offering a variety of American cuisines. Chefs and development teams keep the menu up to date, introducing two to three menu changes throughout the year. This is one of the strong differentiating points from other casual dining restaurants. Guests enjoy hearty portions of their favorite food at great value, delivered by people who are passionate about quality service and guest satisfaction. Applebee's offers a variety of delicious items on the menu ranging from high quality fajitas to sizzling steaks, a specially designed kids menu and a premium desserts selection.
Applebee's success in Saudi Arabia could not have been possible without the great support from local communities. The team is committed to being socially responsible and involved in giving back to the neighborhood, working closely with local charity organizations and by allowing guests to be directly involved as well.
Riding on its success in Saudi Arabia, Applebee's is evaluating business potential in other smaller cities other than metropolitans. Now that the brand has a well established structure across all regions, supply chain management, economies of scale and high brand awareness, it is the right time to capture other untapped cities.
Applebee's is also working on smart investment models by building smaller restaurants in malls. The investment scenario for casual dining restaurants is still very lucrative and therefore an aggressive expansion plan in other virgin markets and satellite cities is still ongoing.
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