The dramatic growth of Super Regional Malls (SRM’s) in the United Arab Emirates (UAE) is driving massive expansion in the eating out market in the region, says a new report by Horizons, a UK-based foodservice consultancy.
The report, titled “Eating Out in the UAE—a booming restaurant market,” says the region holds significant growth potential as spend per capita on eating out in the UAE is still at only a quarter of that of the U.S., the world’s most mature market.
“By 2015 the value of the casual dining market in the UAE is expected to increase by 47 percent to AED 3.24 billion ($882 million USD) with the amount of retail space growing by at least 30 percent over the next two years,” says Horizons’ managing director Peter Backman. “Much of the growth will be in Abu Dhabi, where at least three giant super regional malls are in the pipeline, each with over 74,000 square meters of space,” Backman says. “Abu Dhabi’s mall market is set to overtake Dubai’s in terms of size over the next five years, giving the Emirate one of the heaviest concentrations of retail space in the world.”
UAE residents visit malls on average once a week, three to four times more frequently than West Europeans. Eating has become part of the mall experience with UAE-based strategy house TRIBE finding that 75 percent of mall visitors buy food and drink during their visit, ranging from coffee or a snack to a table service meal. In addition some 60-70 percent eat in a quick-service restaurant, café, or casual dining unit.
The UAE has a total of 370 branded casual-dining units, including 201 casual-dining brands located in malls, urban areas, and residential developments. Nearly half of the 370 units are owned by 20 restaurant operating groups ranging in size from as few as five to more than 40 units. The number of casual-dining units and brands has grown by a factor of 20 since 2004, with overseas operators now including Carluccio’s, Vapiano, YO! Sushi, Baker and Spice, and more recently PF Chang’s.
A number of local companies such as Alshaya, Saleh Bin Lahej, Azadea, and Gourmet Gulf own a portfolio of casual-dining brands. This, combined with their portfolio of non-F&B retail brands, means they are able to leverage their strength to secure prime sites in malls.
Casual-dining operators in the UAE are also facing increased competition from quick-service chains such as McDonald’s, Burger King, KFC, and Pizza Hut Express, many of whom are marketing a range of meal offers at discounted prices, which frequently match plated meals in terms of the quality and value for money.
Some quick-service operators in food courts now provide full plated meals collected by the customer, which compete directly with casual-dining restaurants. These are served on paper or plastic disposable plates. Casual dining restaurants in the UAE have responded to the competition posed by quick service chains by offering daytime discounts and guaranteed service times.