International brands eyeing prime cut of Dubai F&B sector
UAE's food consumption to grow thanks to increase in population, tourist arrivals and high disposable income
Dubai's food and beverage market is a prime target of leading international brands as it has a promising future due to increasing consumption from a growing cosmopolitan population and international tourist arrivals.
One of the latest entrants to the growing Dubai market is US-based Freddy's Frozen Custard and Steakburgers, which has grown about 30 per cent annually since 2013 while maintaining a 0.4 per cent closure rate. The Kansas-based restaurant has grown to more than 350 US locations and three international locations in Dubai; it inaugurated its first outlet on July 17, 2019, in The Dubai Mall, followed by branches in Mall of the Emirates in August and Nakheel Mall in December.
"As one of the world's top tourist destinations, Dubai has an unparallelled level of hospitality, complimenting Freddy's deep commitment to providing our guests with genuine service in a welcoming atmosphere," Scott Redler, co-founder and chief operating officer of Freddy's Frozen Custard and Steakburgers, told Khaleej Times during his recent visit to Dubai.
Dubai is targeting 20 million tourists in 2020 ahead of October's Expo 2020. The emirate sets target of 21 million to 23 million tourists by 2022 and 25 million visitors by 2025. It welcomed more than 16 million guests last year.
In line with increasing tourist arrivals, Euromonitor International has estimated that UAE consumers' spending on food and beverage is estimated to increase from Dh112.19 billion in 2019 to Dh117.6 billion this year.
Alpen Capital, in its latest report, said the UAE's food consumption may grow from 8.7 million metric tonnes in 2018 to reach 10.3 million metric tonnes by 2023 due to increase in population, international tourist arrivals and high disposable income.
The population of the UAE is estimated to grow at 3.1 per cent between 2018 and 2023. In addition, the rapidly increasing expatriate population, which increased to 9.6 million last year from 7.8 million in 2013, is likely to drive F&B growth in the country.
Global audit firm KPMG also said recently that Dubai is just behind Paris in terms of number of restaurants per million residents as every 30 days an estimated 100 new places to eat open their doors in the emirate. The Dubai Economic Department showed that more than 11,000 restaurants and cafes registered their business in 2018 alone and the similar trend was continued last year.
"We believe that there is always room for restaurants that offer value. Value can be sought after in many ways," said Yousef Khattar, managing director of Tastebuds Group, the franchise operator with exclusive rights to develop Freddy's Frozen Custard and Steakburgers in the GCC, Lebanon and Jordan.
He said residents in the UAE are very well-travelled people who come from all walks of life. "With that in mind, we believe restaurants who stand out with a proper differentiated product will eventually succeed, provided they have the right strategy to consistently execute at all times," he said.
To a question about expansion, Khattar said Freddy's is seeking prime and strategic locations that offer high visibility, easy accessibility and heavy footfall within the region.
"We are very excited with our location in Nakheel Mall. We believe that Nakheel Mall will attract the heavy footfall required for us to generate a positive return on our investment," he said.
100% USDA halal beef
Elaborating the brand's specialty, Redler said Freddy's delivers cooked-to-order steakburgers made with lean 100 per cent USDA halal ground beef along with Meadowvale chocolate or vanilla frozen custard.
"In 2019, Freddy's was named No.1 on Forbes' 'Best Franchises to Buy' for the second year in a row. In 2020, we anticipate continued expansion with our full-service locations and new opportunities in nontraditional spaces like university student centres and sports arenas," he said.
"Internationally we are looking forward to working with our partners, Tastebuds Group, on our continued expansion throughout the GCC, Lebanon and Jordan," he added.
Additionally, he said Freddy's is currently targeting additional international expansion in both Europe and Southeast Asia. "In the United States, we will continue to grow our restaurant footprint and many franchise opportunities remain in markets across the US, including Florida, New Jersey, Pennsylvania, Massachusetts, New York and California," he said.
To a question about survival in Dubai's competitive market, Redler said: "When we started, we wanted to differentiate Freddy's from other fast casual restaurants. We prioritised premium ingredients and full-service hospitality in a fast casual environment, which elevated the menu and the experience," he said.
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