The Gramercy gastro pub in Dubai International Financial Centre. Courtesy The Gramercy
The Gramercy gastro pub in Dubai International Financial Centre. Courtesy The Gramercy

F&B operators can beat slow demand by filling market gaps



A focus on value for money will help food and beverage (F&B) operators stoke consumer demand amid the sector’s most challenging period since the financial crisis.

According to the Dubai F&B consultancy Glee Hospitality Solutions (GHS), this year is forecast to be the first since 2009 in which the sector reports flat growth or up to a 5 per cent fall.

A combination of softer economic conditions affecting demand and an overcapacity of food outlets has placed a further burden on concepts.

“We have seen many high-end concepts close across Dubai as it is hard to be aspirational when money is tight,” said Aboudi Saadi, the chief executive of GHS. “A soft economy coupled with the exponential growth of F&B options means outlets will close. Even in our Gramercy gastro pub in DIFC, the financial heart of the UAE, people will come in for the lunch special at Dh70, and not even buy a drink.”

GHS has been involved in the launch of about 40 F&B concepts in Abu Dhabi, Al Ain and Dubai since 2009, ranging from high end to fast food.

Mr Saadi said GHS will close two of the 10 concepts it owns this year because of falling revenue and stubbornly high rents.

Across GHS’s portfolio, there has been an average of a 20 to 30 per cent fall in revenue this year.

“We still have people knocking on our door wanting to open new F&B concepts,” Mr Saadi said. “We have to explain to them that the economy has changed and it’s a new ball game as the bubble has burst.”

According to Rabia Yasmeen, a research analyst with Euromonitor International, the number of F&B outlets is expected to reach 16,720 this year, rising to 19,000 by 2020.

“The growth in the [number of] outlets follows the residential expansion in the country, as new residential spaces and community centres are being developed, existing food and beverage outlets see the need to expand into new areas, which is also driving the growth of the sector,” he said

While many operators are struggling, however, Mr Saadi believes there are still gaps in the market for value-for-money quality food. New malls and locations also means that there are more affordable rents on offer. He said there are exceptions to the sector’s downward trend, especially outlets favoured by Emirati customers.

“The slowdown is very apparent,” said Trevor MacKenzie, the managing director of the restaurant operator Mango Tree Worldwide. “When things are down I see opportunity because people still need to eat.”

Its Mango Tree outlet in Souq Al Bahar closed this year and will reopen in the first quarter of next in another location, to target a more value-focused customer.

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16 Indoor cricket matches are 16 overs per side

8 There are eight players per team

There have been nine Indoor Cricket World Cups for men. Australia have won every one.

5 Five runs are deducted from the score when a wickets falls

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Zones

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Engine 1.6L turbo

Gearbox Six speed automatic with manual and sports mode

Power 165hp @ 6,000rpm

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Top speed 420 kph (governed)

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Sector: Health & wellness

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Capoue 45' 1

The specs

Engine: 2.2-litre, turbodiesel

Transmission: 6-speed auto

Power: 160hp

Torque: 385Nm

Price: Dh116,900

On sale: now