A hard look at the F&B landscape

The last couple of weeks saw several developments in the regional and global food and beverage (F&B) landscape. These include Dubai Municipality’s regulation around mention of calorie count on the menu of all eateries in Dubai, announcement of over 200 diverse F&B concepts at Expo 2020 Dubai and, on a global scale, shutdown of an award-winning chef’s restaurants in the UK.

In the wake of these developments, RetailME speaks to F&B and hospitality veteran, Naim Maadad, chief executive of Gates Hospitality – operating brands like Bistro Des Arts, Folly by Nick & Scott, Red Farm and Social Reform & Grill, to name a few.

Throwing light on the big developments for Gates Hospitality in 2019, Maadad says, “Given the challenge in the market conditions, we are entirely focused on business consolidation of the assets we have currently. The focus is entirely on a quality-driven approach, fully immersed in the four brand pillars – innovate, belong, engage and enrich. Our focus is to diversify and balance the equations till market conditions are favourable. And, of course, we eagerly look forward to participating in every feasible manner in Expo 2020 Dubai.”

“In addition, we are also expanding our footprint beyond the UAE. The first international venue – Red Farm – opened earlier this year in the prestigious Covent Garden in London, UK,” he adds.

Amidst the many positives, there are factors like oversupply in the market, high rents and high cost of operations that are impacting the F&B businesses. Maadad agrees, “These factors are a perfect recipe for a storm! We are faced with all these challenges currently. With limited residents and restricted market, culinary businesses are catering to and competing for a share of the pie. The reality is that people are losing jobs and the entire market has had a negative impact.”

Back in 2016 as well, Maadad had cautioned that the next couple of years would see F&B and hospitality businesses bleed.

In a previous interview with us in June 2018, Maadad had explained, “The population of Dubai is around three million, 50% being labour. Food businesses are fighting for that one-million population that dine out. It requires regulations on licences issued, quite like what Roads and Transport Authority (RTA) does. If the number of people increases, the taxi fleet must go up. The F&B industry must follow a similar approach. You can’t keep adding. If restaurants are unable to survive and keep closing, the economy will get negatively impacted. The need of the hour is to develop sustainably.”

His stance remains the same. Maadad stresses that oversupply cannot be justified. “Course correction would eventually happen in due course of time. The current situation is extremely volatile and probably dangerous for the sustainability of the economy. I have always maintained that there needs to be a restriction mechanism built in wherein the number of licenses issued for F&B business – like any other industry – should be controlled and maintained at an optimum level. The number must be efficiently controlled in order to meet the demand-supply ratio. This kind of planning would do a great deal of good for our line of business.”

The conversation turns to a new development within Dubai’s F&B space, wherein the Dubai Municipality has made the mention of calorie count of items on the menu mandatory for all eateries operating in the emirate. Starting November 2019, this new regulation will be applicable for all eateries with over five branches. All other eateries will have to implement the same by January 2020.

Commenting on the preparedness of F&B businesses to implement such a measure, especially the small eateries, Maadad feels that the move could be immature, given the current downturn in the market conditions. “When there is no specialist service provider who can extend the professional assistance in the calculation of the precise calorie count for each item on the menu, this would always remain a challenge to implement within the short period of time. Such a regulation would have made more sense to have for certain concept venues that offer healthy cuisine to begin with, rather than a blanket application for all. At least 12-18 months would be needed to have such a regulation implemented in totality.”

However, amidst several challenges, Maadad says that there are many things to look forward to, the foremost being World Expo 2020, which will be held in Dubai starting from October 20, 2010. “We are very excited about this global event, which will bring in the volume and drive the labour market by generating new jobs, and eventually after the six-month event, investors would come in a large scale and change the business environment in times to come,” Maadad concludes.