Dubai: Serve them up... and keep doing so. For Dubai’s food and beverage sector, there is no such thing as taking a breather.

The launch of the second phase of City Walk (on and off Al Wasl Road) and the opening of the much expanded food court at Dubai Festival City will keep the F&B sector brewing for a while yet.

And these and other locations across the city will continue seeing new concepts being tested out, while existing operators rework their offerings. (The upturn in activity has been feeding another business category — those start-ups that have launched apps connecting restaurants with consumers ordering takeaways or making a booking.)

“The menu should be spiced up at least every year — ideally, if the operator can manage to do so, every six months,” said Emile Salloum, marketing director at the hospitality division of Salah Bin Lahej (SBL) Group, which is the franchisee for the fast-serve chains Chili’s and Joe’s Crab Shack, among other brands. “Wait too long over the menu makeover and it can easily spoil the brand’s prospects in the long term.

“It’s much more so in a market like Dubai — the city’s residents seem to get bored too quickly with the same fare. They are always willing to try a new concept.”

Which explains why Dubai, and for that matter Abu Dhabi, has been witness to an explosion of new restaurant concepts — fast-serve, casual or fine dining — come through the pipeline. In tandem, mall developers are expanding their leasable foot print to accommodate as many new F&B tenants as possible. Food, it seems, is the optimum way to get shoppers to spend more time in a mall environment.

Funding traction

In fact, F&B possibilities are getting a lot of funding traction, from private capital as well as those retail-facing business groups trying to diversify into this space.

“There’s a valid reason why a presence in F&B seems just the right thing to do these days — consumers are not going to change their eating habits because of the state of the economy,” said Salloum. “The SBL Group’s hospitality division will focus on expanding our existing F&B portfolio as well as add new ones where we can, There are three possible options we are considering right now.”

For international F&B operators, the UAE is the place to be in their expansion agenda. Clearly, it is the trending category for brand principals and potential franchises alike.

According to Trevor Mackenzie, managing director of Exquisine System Co, a subsidiary of Coca Holding International, suggests there is still a lot of space that F&B can grow into within Dubai and the UAE. These markets are “still in its infancy in the life cycle of restaurants... so I firmly believe that we have many more years of change and opportunities ahead of us,” he said. (The group owns the Mango Tree and Coca brands.)

“Back in 2008 when there was a global crisis, we saw a change in the F&B sector — fine dining was the hardest hit while other sectors of the F&B industry grew dramatically,” Mackenzie added. “I believe there are opportunities for available sites and there is also a new range of investors looking to diversify from their existing businesses.

Eyes on the future

“In challenging times, there are always opportunities. We are not just looking at the current market conditions, but where they will go after the next few years.

“[In the UAE] you’ve seen several changes over the years in an attempt to improve the rules and infrastructures. Certain rules are warranted of course... however, I would also ask the regulators to really look at what worked — and didn’t work — in our industry in other places in the world.

“Some places the rules make it next to impossible to be successful, and that’s where we have to be [to make] sure that in the UAE it doesn’t happen.

“Otherwise, it will just be the big companies that have the power to play. But we still need the individuals and independent restaurateurs, as they tend to be the ones who come up with the great new concepts that forever change the F&B industry.”

 

Fact box: Costs prove the biggest stumbling block

* Even though their industry might still be clocking near double-digit growth, local F&B operators can still do with some respite on rents. A location at the prestige malls is prohibitively expensive. This is why the coming to market of City Walk’s second phase and other locations on and off the high-streets could help F&B operators better juggle their costs at the newer locations.

* Even outside of the F&B space, the food sector seems to be favoured in corporate deal making. Kuwait’s Al-Yaqout Holding Company acquired Dubai based Azure Global Foods llc and created new business units in FMCG (fast moving consumer goods) distribution.

* In early February, a consortium of Gulf investors confirmed plans to acquire a stake in Kuwait’s Americana, which has sizeable interests in processed food and quick-service restaurant chains.