Extravagant, conceptual, great food and views are some of the ways that the restaurant experiences in Dubai have been described as. However, oversaturated, oversupplied, and over-competitive are also some of the adjectives that the F&B industry has had to deal with even before the pandemic. New restaurants and concepts are seen mushrooming in different parts of this city everyday while many more end up witnessing an uncalled for demise.
This was reflected in KPMG’s recipe for resilience report where there was a consistent and concerning trend of declining F&B performance seen pre-pandemic. More than 50% of operators surveyed in the report witnessed a decline in like-for-like (LFL) sales, for a few years in a row.
While some factors (such as the pandemic) can’t be controlled, many can. Which is why despite the many economic troughs and crises over the last two decades, some restaurants have managed to survive and thrive. They are the ones that watched the market, understood the gaps, and most importantly, learnt from the failures of others.
Undeniably it is a game of what works and what doesn’t, especially when the country is young and the market is nascent. Every industry needs to experiment and go through their own process of trials and errors to ‘figure it out’, with the awareness that what might have worked in one market, under certain circumstances and at a different time might not work in Dubai in 2021.
To deliver or not to deliver?
Ghost kitchen, deemed the next big thing in F&B, is a forward, profitable model that certainly has potential in Dubai. Market research company Euromonitor International estimates that the ghost kitchen market could be worth $1 trillion by 2030. The pandemic propelled the effectiveness of the concept and served as a saving grace for many restaurant operators.
However, the question remains – is it for everybody? The quick answer to that is no. “I don’t think every business should be in the dark kitchen model. I see those businesses as verticals that support the industry overall,” he said.
“As brand owners we need to have brand integrity. From Ultra we do excessive amounts of deliveries, but Bistro Des Art, no delivery. The experience is based on in-house services we do and 50% of that happens to be food and beverage, the rest is experience, service, ambience etc.” he said.
It all boils down to what kind of a restaurant you are, what are you promising to offer your customers, and what is your value (not just monetary) proposition. At a time where people are craving human interactions and social connections, demanding unique experiences, and when dining out is considered to be social activity, it becomes the responsibility of the operator to cater to the wants and wishes of their customers and being where they want you to be. It could be in a packaged take-away box delivered at home to go with their Netflix binge or a beautiful beach-side restaurant with the views of Ain Dubai.
Collaborating with competition
Being where the now more informed, educated, and demanding customers want you to be, with the specific products and services they ae asking for, at their time and place of convenience can’t be an easy task. However, there is an easy way around it. Collaboration!
“What we have done in the last year is we worked with our colleagues in the industry. We are not competing, we are complementing. We had Hatem Mattar from Mattar Farms setting up a barbecue outside. It’s a new audience for us, new venue for the incoming brand, and the guest is getting a great experience,” he said.
It’s a win-win situation where collaborating parties can gain from each others customers, thus diversifying and expanding their base, use the strengths of each other, thus saving on additional resource expenses, and creating an environment that takes the industry forward collectively.
Data isn’t granted, so don’t take it for granted!
And all of this can only be achieved through access, comprehension and optimal use of data – irrespective of how it is gathered.
“Data isn’t oil, it isn’t soil, it is human behavior. We are all going through cycles of fashion, habits, and popularity. If you understand all of this and make sure your brand is aligned with these three as well as have brand integrity, where you are not always chopping and changing, but just catering to your audience who already enjoy what you do but just want to hear about it,” he said,
“It has a commercial element – understanding spend per head, peak hours, length of time for meals to come out of the kitchen etc. So if you have a bestselling item and you marginally increase the cost by AED 1 or 2, the volume of sales will result in great results. Data is what you do with it,” he said.
However, in this country it takes leg-work and effort and the basic sense of understanding that it isn’t necessarily about the complex algorithms or the mathematics and numbers, which people tend to get carried away with, but about being on the ground and deciding what is best for the customers that will in turn yield results for the business.
“I’m trying to get data on the demographics, age groups etc. of the people that reside in Dubai South. Elsewhere in the world, I could walk into a government office and get the data for some money, but that is an investment. So what we do instead we send two people that we educate to drive around the neighbourhood to see what cars are parked, go to shopping centres and see who is queing and what’s in the baskets. So we are having to do our own research. This data should be readily available. If it is, then it will help us make better decisions,” he added.
Eventually, all retailers and operators are working on grabbing the attention of that small portion of the pie, which is the population of Dubai. “Our population is 10 million, 60% of that would be the workforce who wouldn’t spend money in any of our businesses and send money home. And then we have a portion that choose not to eat out. And then there is the 20% that we are all fighting for,” he concluded.
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