What's on a F&B in­vestor's check­list?

Hospitality News Middle East - - CONTENTS - glee­hos­pi­tal­ity.com

With new mar­ket dy­nam­ics and the grow­ing in­flu­ence of mil­len­ni­als, F&B in­vestors are af­ter smarter in­vest­ment choices that will en­able them to cater to mar­ket de­mands, while boost­ing their re­turns on in­vest­ment (ROI).

Ab­dul Kader Saadi, manag­ing direc­tor of Glee Hos­pi­tal­ity So­lu­tions, of­fers his in­sight into the key F&B in­vest­ment trends and cur­rent talk­ing points in ev­i­dence across the MENA re­gion

In­vest­ing in ca­sual out­lets on the rise

When look­ing at in­vest­ments in the F&B and hos­pi­tal­ity sec­tors in the MENA re­gion, we need to con­sider a broad spec­trum of fac­tors that range from so­cial to eco­nomic and cur­rent mar­ket fac­tors. First and fore­most, we should weigh up the broader, cur­rent re­gional eco­nomic cli­mate, which has seen a slow­down in the re­tail and F&B sec­tors. Mar­ket chal­lenges mean op­er­a­tors and in­vestors are hav­ing to adopt a much leaner ap­proach in terms of run­ning a busi­ness and cal­cu­lat­ing the cap­i­tal ex­pen­di­ture re­quired to open an out­let. As a re­sult, we have wit­nessed a shift in which in­vestors are shy­ing away from high-end con­cepts and mov­ing, in­stead, to­ward fast-ca­sual out­lets. This re­fo­cus is al­low­ing in­vestors to forego hav­ing to deal with the dis­ad­van­tages of high-end in­vest­ment, which in­volve heavy in­vest­ment, higher risk and huge amounts of cap­i­tal ex­pen­di­ture, and reap the ben­e­fits of be­ing able to ne­go­ti­ate more fa­vor­able rental rates and over­all terms.

Com­pact con­cepts and star­tups

In light of th­ese mar­ket chal­lenges, most in­vestors are cur­rently keen to scale their con­cepts, which al­lows them to make them more com­pact and, in turn, far eas­ier to repli­cate or fran­chise out re­gion­ally. Fur­ther com­ple­ment­ing this trend, less so­phis­ti­cated in­vestors and star­tups are also seek­ing out small, street-food con­cepts as more fa­vor­able in­vest­ment tar­gets, due to the ben­e­fits they are seen to of­fer in terms of re­quired cap­i­tal ex­pen­di­ture.

Food de­liv­ery apps are king

It goes with­out say­ing that food de­liv­ery and so­cial me­dia play a far more im­por­tant role in to­day’s cur­rent mar­ket than they did three-to-five years ago. Small and streetfood con­cepts of­ten use dif­fer­ent chan­nels of pro­mo­tion and are mar­keted through on­line av­enues in par­tic­u­lar, es­pe­cially so­cial me­dia. To­day’s F&B clien­tele are heav­ily skewed to­wards the on­line de­liv­ery mar­ket, us­ing count­less apps to give them ac­cess to a mas­sive se­lec­tion of F&B out­lets. Th­ese de­liv­ery apps grant their users myr­iad ben­e­fits, such as the abil­ity to fine­tune their search re­sults, pull up their pre­vi­ous or­der info, make pay­ments and even track their de­liv­ery driver’s po­si­tion in real time via GPS. In re­sponse to this, al­most any F&B con­cept un­der de­vel­op­ment will need to con­sider its food de­liv­ery model to re­main com­pet­i­tive and rel­e­vant. In to­day’s mar­ket, on­line de­liv­ery apps, such as De­liv­eroo, Zo­mato, Ubereats and Tal­a­bat, have be­come too in­te­gral to the cus­tomer ex­pe­ri­ence to be dis­re­garded. To sum­ma­rize, in to­day’s cli­mate, in­vestors need their con­cepts to be vis­ually ap­peal­ing on so­cial me­dia space and have been forced to place a greater fo­cus on fac­tors like food pre­sen­ta­tion.

Dubai first, Riyadh and Cairo fol­low

In terms of at­trac­tive MENA mar­kets, Dubai is still con­sid­ered the main draw for in­vestors, since it is per­ceived to be the gate­way to the re­gion. Most se­cured fran­chises aim to open and es­tab­lish them­selves in the emi­rate first, build­ing a strong foun­da­tion there, be­fore mov­ing on to other hubs. Within Dubai it­self we are see­ing a few new de­vel­op­ments pop­ping up that fea­ture li­censed out­lets. Ex­am­ples of th­ese in­clude real es­tate pro­jects La Mer, City Walk 2 and Blue Wa­ter, all of which have sig­nif­i­cant num­bers of F&B out­lets within their space. For some of th­ese se­cure fran­chises, the po­ten­tial prof­its from set­ting up shop in th­ese beach­front or city-walk prop­er­ties may be suf­fi­cient to coun­ter­bal­ance the cur­rent mar­ket chal­lenges in terms of their own mar­gins. Out­side of the UAE, other MENA cities, such as Riyadh, are be­com­ing much more at­trac­tive to lo­cal and for­eign in­vest­ments as po­ten­tial al­ter­na­tives, in light of cur­rent de­vel­op­ments and so­cial changes. Riyadh’s draws in­clude a huge mar­ket that re­mains rel­a­tively untapped, in terms of pro­fes­sion­ally de­vel­oped and op­er­ated out­lets. Another strong con­tender is Egypt, which is also en­joy­ing a sig­nif­i­cant in­flux of in­vest­ment, thanks to its at­trac­tively sized mar­ket. In­vestors turn­ing to Egypt, and Cairo in par­tic­u­lar, are also ben­e­fit­ing from the coun­try’s de­ci­sion to de­value its cur­rency in 2016, which has re­duced the cost of open­ing nu­mer­ous out­lets by al­most 50 per­cent, sig­nal­ing op­por­tu­ni­ties that many see as too good to miss.

Newspapers in English

Newspapers from Lebanon

© PressReader. All rights reserved.