UAE F&B market going strong

June 3, 2015 | By RetailME Bureau

After a long day at work, we feel tired and cooking is the last thing on our mind, so we order out. Over the weekend we feel like socialising with family and friends over food, so we dine out. Or we’ve guests coming in so we order food from outside. That’s a strong trend within the UAE F&B market.

According to the KPMG 2015 F&B Survey, eating out market in the UAE continues to perform strongly with many residents now eating out more frequently and spending more compared to a year ago. It is estimated that by 2019 the number of F&B outlets will increase by around 1,600. Further Euromonitor predicts the UAE F&B market to grow from $11.3 billion in 2014 to $13.2 billion in 2018.

RetailME speaks to Anurag Bajpai, partner at KPMG, about the factors driving rapid growth of the F&B market in the UAE where a new concept comes up every other day

How often do people tend to eat out in the UAE?

Our survey – comprising respondents from a mix of Emirati and GCC nationals, Arab, Asian and Western expatriates – revealed that 66% go out for dinner at least once during the week with the average spend on eating out per person being AED 120.

What is the preferred format?

Among the formats, casual dining restaurants are doing very well. Now within casual dining there’s an increasing preference towards premium casual dining, which is eating into the traditional fine dining space. Quick service restaurants (QSRs) and food courts are also very popular among the UAE residents. Both formats – casual dining and QSR – were voted equally by 40% of our respondents in terms of popularity. On the other hand, fine dining is reserved for special occasions. Cafés are also growing in popularity.

Several home-grown concepts are coming up in the UAE almost every other day. On the other hand, several international chains are also foraying into the region. Typically, what is the incubation period for both categories?

International chains, popular elsewhere, tend to have a shorter incubation period compared to a new, home-grown brand. Take the examples of Jollibee or Five Guys that recently came up at The Dubai Mall and saw people queuing up for long hours. Such international chains are at least assured of some buzz around the opening, helping them to bring crowd in for the first time. But to gain customer loyalty, they will have to ensure best-in-class offerings, level of service as well as customer engagement programmes.

For any home-grown concept to click requires a unique idea to attract people. And mind you here people are willing to try out different cuisines and restaurants. Another key factor is location wherein most home-grown tend to fall behind.

What are the challenges facing the F&B industry?

While the UAE F&B market is robust and growing, competition is heating up. In some segments, for example gourmet burger, supply is much wider than demand. Hence, to survive in a cutthroat market like this is becoming highly challenging unless the brand is very unique and innovative.

In the days to come, what should players within the UAE F&B industry do to survive?

F&B brands will have to be highly innovative to survive in a competitive market like the UAE.
Online reviews are picking up. Over 40% of our survey respondents read an online review before visiting a restaurant for the first time. Hence, F&B brands will have to develop a strong online presence.
F&B players will have to concentrate on the level of service and make it consistent to deliver the right customer experience every time.