{"id":23219,"date":"2020-02-27T09:06:55","date_gmt":"2020-02-27T09:06:55","guid":{"rendered":"https:\/\/www.posist.com\/restaurant-times\/?p=23219"},"modified":"2023-08-29T17:28:36","modified_gmt":"2023-08-29T11:58:36","slug":"challenges-of-running-restaurant-in-the-uae","status":"publish","type":"post","link":"https:\/\/www.posist.com\/restaurant-times\/uae\/challenges-of-running-restaurant-in-the-uae.html","title":{"rendered":"Here\u2019s How You Can Navigate The Challenges Of The UAE Restaurant Industry"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">With <a href=\"https:\/\/www.mordorintelligence.com\/industry-reports\/uae-foodservice-market#:~:text=Market%20Overview,foodservice%20market%20in%20the%20country.\">the UAE foodservice market forecasted to grow at a CAGR of 5.22%<\/a> during (2019 &#8211; 2024), it is right to say that <\/span><span style=\"font-weight: 400;\">the F&amp;B industry is one of the fastest and most competitive sectors in the UAE. The city is home to over <strong>200 nationalities<\/strong> and supports a variety of restaurant concepts that have emerged rapidly. High disposable income, flourishing tourism sector, modern lifestyle, and evolving consumer preferences have been the most significant growth drivers of the foodservice market in the UAE. However, running a restaurant in the extremely competitive UAE market is ridden with some of the most challenging factors. This article discusses the major challenges faced by restaurants in the UAE and offers useful tips that will <a href=\"https:\/\/www.Posist.com\/restaurant-times\/uae\/restaurant-business-expansion-in-uae.html\">help in overcoming these challenges and fostering business growth.<\/a><\/span><\/p>\n<h2><b>Top 4 Major Challenges In Running A Restaurant In UAE<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">To run a successful restaurant business in the UAE, there are multiple factors and challenges that need to be considered. We have compiled a list of the top four challenges faced by restaurant operators in the UAE and tips on how to overcome them. The problems mentioned in the article would also serve as a guide to aspiring restaurant owners about what to expect when setting up a restaurant in Dubai.<\/span><\/p>\n<h3><b>1. High Competition<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The UAE foodservice market comprises a large number of regional and international players among other local players. According to <\/span><a href=\"https:\/\/assets.kpmg\/content\/dam\/kpmg\/ae\/pdf\/food-beverage-2018.pdf\"><span style=\"font-weight: 400;\">KPMG\u2019s analysis<\/span><\/a><span style=\"font-weight: 400;\">, Dubai has a large restaurant footprint with <strong>2935 restaurants per million residents<\/strong>. The growing variety of new restaurant concepts have further raised the competition in the F&amp;B sector. Additionally, there is <a href=\"https:\/\/www.Posist.com\/restaurant-times\/uae\/restaurant-competition-uae.html\">increased competition among the operators<\/a>, based on the pricing and quality of foodservice.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The flourishing metropolitan areas of the UAE make it one of the most important economic centres of the Middle East. The country\u2019s unique position has attracted many restaurant operators thanks to its evolving economy and shifting demographics. <strong>Low entry barriers and conducive business environments<\/strong> have resulted in too many service providers crowding the restaurant space.\u00a0<\/span><\/p>\n<h4><b>Tips F<\/b><b>or Overcoming Competition In UAE Restaurants<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With increased competition, profit margins can diminish, making a restaurant venture unsustainable. Along with forming strategies to attract more customers, make customer retention the primary area of focus. As <\/span><a href=\"https:\/\/www.hotelnewsresource.com\/article18752.html\"><span style=\"font-weight: 400;\">80 percent of a restaurant\u2019s business<\/span><\/a><span style=\"font-weight: 400;\"> comes from 20 percent of the regular customers, your restaurant\u2019s marketing efforts must cater to the interests of your regular patrons\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">By <strong>leveraging CRM technology<\/strong>, create rewards, integrate loyalty programs, offer special discounts to the regulars, and accommodate customized plans for your customers. This strategy will help in retaining and building a connection with your customers.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To gain a competitive advantage and set your restaurant brand apart from other direct and indirect competitors, develop your <strong>unique selling proposition<\/strong> via a distinctive theme, re-engineered menu, value-based pricing, exceptional brand presence, etc.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>2. Real-Estate Costs<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">For restaurant operators, real estate rental is a significant cost component and accounts for a substantial percentage of the total revenue. Foodservice operators in Dubai bear hefty rental costs where the average cost of <\/span><a href=\"https:\/\/www.arabianbusiness.com\/tips-for-starting-restaurant-in-dubai-653487.html\"><span style=\"font-weight: 400;\">opening a small, independent restaurant in Dubai<\/span><\/a><span style=\"font-weight: 400;\"> ranges from<strong> AED 500,000 to AED 1.25 mn<\/strong> depending on the restaurant size and leasing costs. The figures are based on an approximate restaurant space ranging between 500 and 1200 sqm. Capital costs, working capital, and rent comprises 78 percent of the total money outflow.\u00a0<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-large wp-image-23220\" src=\"https:\/\/www.Posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-1024x641.jpg\" alt=\"Challenges In Running a restaurant business in UAE\" width=\"696\" height=\"436\" srcset=\"https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-1024x641.jpg 1024w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-300x188.jpg 300w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-768x480.jpg 768w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-1536x961.jpg 1536w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-696x435.jpg 696w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-1068x668.jpg 1068w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-1920x1201.jpg 1920w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry-671x420.jpg 671w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/Challenges-in-UAE-restaurant-industry.jpg 1960w\" sizes=\"(max-width: 696px) 100vw, 696px\" \/><\/p>\n<h4><b>Overcome The High Rentals Issue With Proper Budget Management<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">While high restaurant rentals are an unavoidable aspect of operating a restaurant business, it is advisable to analyze the market and customer trends and prepare a balanced business plan that comprises all the financial forecasts.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Before finalizing the location for your dining establishment, analyze the restaurant\u2019s long term goals, product offerings, footfall in the vicinity areas and target audience,<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Opt for locations that are in alignment with your restaurant\u2019s requirements and are in your budget.\u00a0<\/span><\/li>\n<\/ul>\n<h3><b>3. High Food Costs<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The UAE\u2019s harsh climate and limited arable land offer little opportunity for food production. Over 80 percent of the food is imported. Though the cost of food has decreased <\/span><a href=\"https:\/\/www.khaleejtimes.com\/business\/economy\/what-inflation-uae-cost-of-living-set-to-decrease-in-2019-123\"><span style=\"font-weight: 400;\">by 1.1 percent<\/span><\/a><span style=\"font-weight: 400;\">, the food quantities are also shrinking. The United Arab Emirates\u2019 Food<\/span><a href=\"https:\/\/tradingeconomics.com\/united-arab-emirates\/food-inflation\"><span style=\"font-weight: 400;\"> Inflation is projected to trend around 2.00 percent in 2021<\/span><\/a><span style=\"font-weight: 400;\">. Moreover, the cost of living in the United Arab Emirates is more expensive than in 83% of countries of the world (source: <\/span><a href=\"https:\/\/www.expatistan.com\/cost-of-living\/country\/united-arab-emirates\"><span style=\"font-weight: 400;\">expatistan<\/span><\/a><span style=\"font-weight: 400;\">), putting a direct impact on food costs.<\/span><\/p>\n<h4><b>Control The High Food Costs In UAE with Standardization<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Given the rate of inflation, it is not exactly possible for restaurant owners to trust the market with food prices. Hence a more viable solution is to practice food cost control at their individual outlets.<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">While food inflation is subject to economic changes, you can effectively manage inventory and prevent food wastage by<a href=\"https:\/\/www.Posist.com\/restaurant-times\/uae\/restaurant-pos-restaurant-management-uae.html\"> implementing robust POS systems in your restaurant<\/a>.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><strong>Adopt Standard Operating Procedures<\/strong> that are followed thoroughly by the employees\u00a0 especially while preparing dishes<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Establish a menu pricing policy that covers the fixed overhead costs and bring changes in the menu according to the fluctuating food costs. However, remember not to overprice the menu offerings to avoid the loss of potential customers.<\/span><\/li>\n<\/ul>\n<h3><b>4. High Employee Turnover Rate<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">While retaining customers is in itself a challenging process, most restaurants in the UAE face a bigger challenge-retaining the staff. In the UAE, the F&amp;B industry experiences one of the highest employee turnover rates as employees have a plethora of options to move to. Even though there is no shortage in the supply of labor, the demand for professionals and increased competition have stirred the industry enough to raise staff attrition levels. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to a report, a<strong> staggering 83% of UAE workers<\/strong> may <\/span><a href=\"https:\/\/www.entrepreneur.com\/article\/251091\"><span style=\"font-weight: 400;\">consider resigning from their current position<\/span><\/a><span style=\"font-weight: 400;\"> to seek better opportunities with another employer. A high attrition rate has an adverse effect on the performance of other employees and considerably hits the restaurant\u2019s finances.\u00a0<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-large wp-image-23221\" src=\"https:\/\/www.Posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-1024x576.jpg\" alt=\"Challenges In Running A Restaurant Business In UAE\" width=\"696\" height=\"392\" srcset=\"https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-1024x576.jpg 1024w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-300x169.jpg 300w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-768x432.jpg 768w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-696x391.jpg 696w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-1068x600.jpg 1068w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE-747x420.jpg 747w, https:\/\/www.posist.com\/restaurant-times\/wp-content\/uploads\/2020\/02\/High-Employee-Turnover-Rate-UAE.jpg 1366w\" sizes=\"(max-width: 696px) 100vw, 696px\" \/><\/p>\n<h4><b>Retain Restaurant Employees With An Effective Employee Retention Strategy<\/b><\/h4>\n<ul>\n<li><span style=\"font-weight: 400;\">Conduct <a href=\"https:\/\/www.Posist.com\/restaurant-times\/uae\/restaurant-staff-training-use.html\">proper training programs for new employees as well as existing ones.<\/a> When implementing new changes in the restaurant, encourage communication, provide all the necessary information, and invite constructive feedback<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Offering <strong>competitive wages can lower the attrition rate significantly<\/strong>. Conduct regular performance reviews and provide annual raises to boost productivity<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Implement an <strong>attractive reward and recognition strategy<\/strong> to acknowledge the achievements of your employees. Reward employees based on their contributions. Offer salary hikes, bonuses, and other financial rewards such as health and medical benefits to motivate the employees and foster loyalty.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These are some of the top challenges in running a restaurant business in the UAE market. If you are running a restaurant business in the UAE or deciding to enter the Dubai F&amp;B space, keep these challenges in mind and overcome them with confidence!<\/span><\/p>\n<p><!--HubSpot Call-to-Action Code --><span id=\"hs-cta-wrapper-5239a4ba-bd3b-400a-a668-06c29fc78a00\" class=\"hs-cta-wrapper\"><span id=\"hs-cta-5239a4ba-bd3b-400a-a668-06c29fc78a00\" class=\"hs-cta-node hs-cta-5239a4ba-bd3b-400a-a668-06c29fc78a00\"><!-- [if lte IE 8]>\n\n\n<div id=\"hs-cta-ie-element\"><\/div>\n\n\n<![endif]--><a href=\"https:\/\/cta-redirect.hubspot.com\/cta\/redirect\/4762187\/5239a4ba-bd3b-400a-a668-06c29fc78a00\"><img decoding=\"async\" id=\"hs-cta-img-5239a4ba-bd3b-400a-a668-06c29fc78a00\" class=\"hs-cta-img\" style=\"border-width: 0px;\" src=\"https:\/\/no-cache.hubspot.com\/cta\/default\/4762187\/5239a4ba-bd3b-400a-a668-06c29fc78a00.png\" alt=\"UAE PRIME EDITION\" width=\"768\" height=\"276\" \/><\/a><\/span><script charset=\"utf-8\" src=\"https:\/\/js.hscta.net\/cta\/current.js\"><\/script><script type=\"text\/javascript\"> hbspt.cta.load(4762187, '5239a4ba-bd3b-400a-a668-06c29fc78a00', {\"region\":\"na1\"}); <\/script><\/span><!-- end HubSpot Call-to-Action Code --><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>With the UAE foodservice market forecasted to grow at a CAGR of 5.22% during (2019 &#8211; 2024), it is right to say that the F&amp;B industry is one of the fastest and most competitive sectors in the UAE. The city is home to over 200 nationalities and supports a variety of restaurant concepts that have [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":25,"featured_media":23238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":""},"categories":[1151],"tags":[1173,1174,1176,1177,1175],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Here\u2019s How You Can Navigate The Challenges Of The UAE Restaurant Industry<\/title>\n<meta name=\"description\" content=\"Running a restaurant business in the UAE? 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