Consumers are becoming discerning ‘foodies’ Consumers are becoming discerning ‘foodies’
A new study shows that consumer spending on food and beverage (F&B) in the UAE continues to show encouraging trends, although almost two thirds... Consumers are becoming discerning ‘foodies’

A new study shows that consumer spending on food and beverage (F&B) in the UAE continues to show encouraging trends, although almost two thirds of restaurants are experiencing challenging conditions.

According to the 2017 edition of the UAE KPMG F&B report, the UAE’s growing reputation as a dominant F&B destination in the Middle East has encouraged a growing number of local and international food chains to set up their operations here – with the report indicating that, if overnight visitors are considered, Dubai outstrips New York in terms of the number of outlets per million.

This, along with rising costs, has led to an oversupply which has given rise to stiff competition among F&B operators – with 65% expressing a sales decline in 2017 compared with the same period last year. Many have had to re-examine their business models, brand strategies and cost structures to remain competitive. Despite these setbacks, operators remain confident of their growth prospects: 82% expect growth in the medium term, with Expo 2020 set to act as a major catalyst.

Meanwhile, consumers continue to be wooed by F&B operators and are increasingly becoming discerning ‘foodies’, with 71% claiming to spend the same amount or more per meal compared with last year.

Anurag Bajpai, Head of Retail, KPMG said: “The 2017 edition of the KPMG UAE F&B report has uncovered some very interesting findings. Our overall takeaway is that despite certain prevailing challenges on the operators’ side, the market is becoming more sophisticated. We are seeing an underlying and definite sense of optimism among operators. Everyone is preparing to benefit from improved market conditions stemming from Expo 2020 and Dubai’s growing popularity as an international tourist destination.”

The report also analysed GCC trends for the first time and found that the F&B sector in the UAE is more vibrant than in neighbouring GCC countries. Against this backdrop, UAE operators are unlocking growth opportunities for further growth in the GCC, with Saudi Arabia emerging as the most favourable destination, Riyadh being the top choice for expansion.

In terms of restaurant formats, Quick Service Restaurants (QSRs) and casual dining formats remain the most popular – especially those in shopping malls. Nearly three out of four consumers indicated that they eat out at establishments within malls at least once a month.

The boom in F&B is also being increasingly driven by convenience – which explains why the popularity of deliveries continues to soar – 43% of operators indicate that food delivery orders comprised almost a third of their business, on average.

As more customers choose to order in, restaurants are looking to leverage technology to improve operational efficiency, and enhance customer experience and engagement. They aim to achieve this by using data and analytics, digital kiosks, and by incorporating virtual-reality elements, among others. Consumers also play an active part in the online food revolution, with 60% indicating they use a food app on their smartphones.

Looking ahead, rising costs, including from impending regulations like VAT – are likely to impact consumer spending. Deal-seeking behaviour is set to become more common, with over 81% of respondents already saying that deals influenced their choice of restaurant.

“The UAE consumer is far more evolved in 2017 than in 2016. While they may be willing to experiment with different cuisines, quality of food and service is what ensures their loyalty. Operators have realised that to remain successful in this market, they must look at innovative ways to leverage tools involving creative concepts or technology, to ensure sustained consumer interest. Furthermore, they must re-evaluate their own business models and devise strategies enabling them to remain cost effective,” Bajpai said.

KPMG is a global network of professional services firms providing audit, tax, and advisory services.

  • sarah

    Monday, January 8, 2018 #1 Author

    There is no doubt that Dubai is a food lover’s paradise where you get different varieties of food and its great that Dubai expo has included the constant flurry of new restaurant openings.

    Reply

Your email address will not be published. Required fields are marked *