UAE: IDENTIFYING KEY OPPORTUNITIES AT A GRANULAR LEVEL

The UAE restaurant market is set to grow 30 percent in the next four years to USD 780 million and will be dominated by American-style fast food brands. managing partner of PROTOCOL hospitality management consultancy shares exclusive insight on this growing trend and the factors that will influence your investment strategy

Branded table-service restaurants generate about USD 600 million a year in the UAE, a number set to swell to USD 780 million by 2018. In a poll of dining outlets in the Gulf state, PROTOCOL found that about 19,000 extra F&B outlets are expected in the UAE by 2019, bearing in mind that there are currently 6,021 outlets in the Emirates. American brands comprised up to 47 percent of F&B offers in Dubai malls. Homegrown restaurants, by comparison, made up between 8-17 percent.

The U.S. takeover

As profits slow in their domestic markets, U.s.-based chains are set to open some 250 outlets across the Middle East over the next decade. Brands including Shake Shack, Red Lobster and Texas Roadhouse have all debuted in the UAE market in recent months under tie-ups with local firms.

TGI Friday’s, PF Chang’s, China Bistro and Applebee’s, owned by Dineequity, are growing in the region by putting new spins on their menu options, while rivals Smashburger and Darden Restaurants are just getting started; braving the Arab Spring political turmoil to open locations in Egypt, Saudi Arabia and the UAE. Friday’s, owned by Carlson Cos, opened in Dubai in 1996 and has grown to 31 restaurants in the region. The company said last year it plans to open an additional 30 locations in the Middle East in the next five years. Darden, the biggest casual-dining operator in the U.S., opened its first Red Lobster in the Dubai Mall in July and will open two more restaurants in Kuwait City in 2012. Last year, the company committed to opening at least 60 Red Lobster, Olive Garden and Long Horn Steakhouse chains in the region in five years. Smashburger, with about 120 locations in the U.S., will open its first international store in Kuwait next year. The Denver-based chain has agreed to open 37 stores in the Middle East after regional specific menu tweaks.

Tapping into the food culture

The growth in restaurant brands has spilled over into other areas of the F&B market. Franchise brands from Europe were virtually non-existent in the GCC before the launch of Costa Coffee in the market in 1999. “I have found that Dubai has a serious food culture and that is what we are tapping into,” said three-star Michelin chef Heinz Beck.