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F&B sector serving up growth opportunities for GCC economies

Image source: JLL

The GCC food and beverage (F&B) sector is delivering the right mix of technology, global trends, and innovations to revive needed services and revenues for its countries' economies

UAE's cafes account for 27% of the total mix of restaurants Approximately 70% of fine dining restaurants are located within Dubai’s hotels The GCC F&B market is set to reach $36 billion by 2022

Over the past 18 months or so, the UAE’s food & beverage (F&B) sector was impacted by measures designed to prevent the spread of COVID-19, according to JLL Research. But the success of the country’s vaccine roll-out program, Dubai’s lifting of restrictions on the number of people permitted to sit together at public dining tables, and the emirate’s hotels running at full capacity once again, gave the sector renewed optimism.

Image source: JLL

Projections from Euromonitor show that the country’s consumer foodservice industry will largely reverse the contraction seen last year by posting strong growth over 2021-2023 of around 26%.

Dubai Expo 2020 is anticipated to provide a boost to the emirate’s consumer foodservice activity as both tourism and business travel bounce back.

JLL has researched and categorized almost 45,000 foodservice units across eight cities in the UAE, Saudi, and Europe. Of these, Dubai ranked highest in terms of the largest number of outlets per resident and the most variety in terms of categories & available cuisines.

The UAE, having one of the highest volumes of retail gross leasable area on a per capita basis globally, translated into the country’s cafes accounting for 27% of the total mix of restaurants.

It is interesting to know that the GCC has a significantly higher proportion of fast-food restaurants when compared with Europe such as in Saudi and the UAE, where 44% and 32% of all restaurants fall into this category respectively, versus just 19% in Europe.

Full-service restaurants account for a much larger slice of the overall offerings in Europe (56%), when compared with the UAE (35%) and Saudi (25%).

Dubai versus Abu Dhabi restaurant mix

Abu Dhabi’s population of UAE nationals as a percentage of the city’s total is more than twice that of Dubai. And since Emiratis and expatriates broadly have different dining preferences, the foodservice markets across the two emirates have evolved to reflect their respective demographics.

Graph source: JLL
  • In 2019, Abu Dhabi received 11.3 million international visitors and Dubai welcomed almost 17 million; this largely explains why the latter’s foodservice industry is more oriented towards catering to international visitors
  • Abu Dhabi (32%) has a bigger share of fast-food restaurants than Dubai (23%). Meanwhile, the latter has a larger percentage of casual dining options (31%) compared to the capital (24%)
  • Fine dining restaurants are also more prevalent in Dubai (3%) than in Abu Dhabi (1%); this is partly due to the greater number of 5-star resorts/hotels in Dubai and the city’s established financial district (DIFC)
  • In Abu Dhabi, food retail is more popular (7% versus 5% in Dubai). The capital benefits from a greater number of bakeries and other take-home options as the city’s inhabitants tend to have gatherings at home more frequently

Fine Dining

In the UAE, fine dining concepts tend to commonly be found within financial centers and 5-star dining experiences. Going forward, we expect more fine dining restaurants to open outside of hotels to better target the local residential population. JLL recorded 340 fine dining restaurants across Dubai and Abu Dhabi, of which 80% are based in the former location.

Approximately 70% of fine dining restaurants are located within Dubai’s hotels; this figure increases to around 75% for the capital. Most hotels have a preference for accommodating purpose-developed restaurant concepts rather than leasing to international brands but this is slowly changing and leasing hotel F&B units is gaining in popularity. Currently, only 10% and 15% of fine dining outlets in Dubai and Abu Dhabi, respectively, are part of international chains.  

Future trends and opportunities in the UAE

Dinnertainment is a concept where F&B and entertainment are merged within a destination outlet. Dinnertainment for adults in the UAE typically existed in the form of table and live music. But in recent years, the UAE has seen an increase in interactive & licensed dinnertainment concepts where diners can take a break from their dining table to engage in activities such as bowling, electronic gaming, etc.

F&B boost

The F&B businesses in the UAE, Saudi Arabia, and Qatar are expecting a boost in business. A recent study by Dubai Statistics Center estimates growth to accelerate to 4% in the UAE by 2021. Dubai’s tourism industry will be looking to consolidate its gradual return to form as the UAE celebrates its 50th-anniversary. Qatar’s preparations leading up to hosting the FIFA World Cup 2022, are increasingly opening business opportunities across sectors, including hospitality & restaurant business.

The GCC, as a whole, has established itself as a gastronomic hub with some of the best restaurant concepts in the world and well-known international chefs. The industry caters to contactless dining, VIP guest experiences, multichannel delivery, and take-out services, with technology in the midst of these developments.

Global reports revealed that the GCC F&B market is set to reach $36 billion by 2022.

The POSist Restaurant Industry & Market Evolution (PRIME) Report, released earlier this year, highlighted that 7 out of 10 restaurants in the UAE are willing to invest up to 8% of their revenues in technology to improve their customer experience, bring more efficiency to their operations, and boost their profitability.

POSist recently introduced its app marketplace for the restaurant industry. The POSist marketplace allows restaurants to quickly discover and install trusted third-party applications to make the front and back of house operations more efficient. The marketplace currently has over 150+ technology partners offering, online-ordering platforms, digital wallets, cloud telephony software, table reservation platforms, loyalty programs, and delivery integration with top online food aggregators globally.

Did you know?

Here are interesting stats and facts about the GCC food market:

  • Total foodservice outlets in the GCC nations were estimated at more than 134,000 in 2020
  • The overall market expenditure of Saudi on food and beverage was estimated to be more than $50 bn in 2020
  • Saudi is a leading market for quick service restaurant (QSR) chains such as McDonald’s, KFC, and Pizza Hut, with 304, 220, and 222 stores respectively
  • Total UAE restaurant sales are expected to reach $8.9 bn by 2025
  • The Kuwaiti market is the third largest among the GCC nations and the F&B sector accounts for 1.6% of its non-oil GDP
  • The Food & Beverage in Oman market is expected to reach pre-pandemic levels in 2022