It’s ‘dinnertainment’ time
Saudi Arabia’s rapidly growing food and beverages market offers promising returns to operators
The food and beverages (F&B) industry in Saudi Arabia is growing, evolving rapidly, and has become one of the leading sectors in the kingdom. Today, F&B is at the forefront of how people spend their disposable income and leisure time. It is also one of the main deciding factors for travellers – millennials in particular spend the highest proportion of their income eating out. The fact that they will make up 75 per cent of the global workforce by 2025 suggests that this industry will only keep growing in importance for the foreseeable future.
THE OVERLAP
Globally, retail used to be the main reason to visit a development, but this trend is currently being redefined. Over the past 10 to 15 years, retail has gradually been replaced by F&B options as a result of the growing popularity of e-commerce. F&B, in shopping centres specifically, has moved from between 5 per cent to 8 per cent of total gross leasable area (GLA) to between 10 per cent to 12 per cent of GLA.
In addition, JLL’s database, which looks at over 7,500 units globally, shows that entertainment options – such as cinemas – in a shopping centre increase the need for foodservice. According to our research, developments with a cinema can support from 2 per cent to 7 per cent more F&B than centres with less leisure in relation to the total GLA.
The retail and foodservice industries complement each other, and both answer basic psychological needs. Today, with the younger generations valuing experiences much more than purchases, there is a strong need for traditional centres and dining outlets to adapt and transform their product-based offer to one based on experience.
OPPORTUNITIES IN SAUDI ARABIA
Previously, restaurants and family entertainment centres used to be the only form of leisure in the kingdom. Now, with the wave of transformation we are witnessing, as well as changing regulations such as the end of restaurant segregation between men and women (families), more entertainment-led experiences are being introduced in the country.
For increased revenue generation, developers are combining F&B and entertainment in order to create ‘dinnertainment’ concepts. The entertainment aspect of these units drives footfall, while F&B successfully increases the average spend, making the units more profitable at a per square metre basis.
For years, our team used to say “you cannot eat
online”, but today a growing food delivery business, estimated by UBS to grow to $365bn by 2030, has a similar effect on F&B as e-commerce had on traditional retail. There is only one significant difference – a meal is a much more social experience than shopping and, therefore, more sought after.
What we are looking at is a shift in the landscape, whereby the kingdom is looking to attract international tourists. To promote this, a lot of investment needs to go into supporting the infrastructure, whether it’s an upgrade in the quality of hotels or an expansion of the F&B and entertainment offerings.
We strongly support this shift and expect to see more international retail/ fashion experience led concepts and brands to set up shop in the kingdom.
We’re also looking at the potential for the growth of ‘dinnertainment’ as an industry of its own where people don’t just go to a place to eat, but to engage in entertaining experiences. On a bigger picture, development wide, we expect shopping centres to become experience centres serving as destinations to socialise and gather experiences with friends and family.
Currently, there are limited examples of these concepts in the kingdom as most units and centres are still under development. Given the pace at which Saudi Arabia is looking to attract tourists, and the keenness with which Saudis are seeking out entertainment, there is no doubt that we will continue to see an increasing number of innovative customer-led concepts being introduced in the months to come.