Do you want to start a restaurant business in Dubai? If YES, here is a complete guide to starting a profitable restaurant in Dubai with no money or experience.
Starting a restaurant business in Dubai is a good business decision to make especially if you are determined to tap into the fast-rising economic growth in the country. That’s why we have prepared a sample restaurant business plan for Dubai.
Please note that the restaurant industry in Dubai is highly competitive coupled with the high cost of lease, which is why loads of restaurants close shop early in the country. Your ability to strategize and modify your service delivery will help you stay competitive.
Prior to launching this type of business, you need to carry out your due diligence as it relates to market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your restaurant business in Dubai, it will not take you long before you break even and start smiling to the bank.
You can start your restaurant business from a small town in Dubai and if you are consistent and creative, it won’t be too long before your brand becomes a nationally recognized especially if you go into franchising.
Starting a Restaurant Business in Dubai – A Complete Guide
- Industry Overview
The Dubai restaurant industry is a thriving industry because per capita food spend in the UAE is among the highest in the world. It was at $3,159 in 2015, 32 percent higher than in the US (excluding alcohol), and about the same as the average person’s spend in Kuwait and Qatar combined.
As spend on food eaten in restaurants move in line with the economy and population, a portion of the high value spend on food by Emiratis is explained by their high net worth — and by the fact that visiting malls and dining out are the primary sources of entertainment for many in the region.
Although at a population of 10.1 million, the UAE population is small, but with increase in tourists visit, there is always a boom in the restaurant industry. The distribution of restaurants and people, however, is not even, with a heavy concentration of foodservice establishments in Dubai causing a high saturation rate in that market. Dubai has close to 260 people per restaurant (compared to 320 people per restaurant in the US).
In spite of the economic challenges brought on by sagging oil prices, many UAE restaurant operators continue to thrive. Consumer foodservice is an industry close to $15 billion — and one with an attractive long-term outlook. Several factors besides economic and population growth will be driving its performance over the next few years.
Despite the fact that there loads of players in the restaurant industry, there’s still a lot of room for growth among UAE restaurant chains (and those looking to expand into new markets). In the UAE, the share of spend on food away from home (i.e. restaurants) is lower than that of other developed countries.
The US, for instance, is near to a 50 percent-50 percent split between restaurants and groceries. The breakdown in the UAE, meanwhile, is 46.7 percent restaurants, 53.3 percent groceries — but that split is set to weigh heavier for restaurants and at an accelerated pace, over time.
There’s also potential for the growth of certain cuisines and segments. Chained foodservice, for instance, is under-developed:
While in the US and Canada the share of chained foodservice has remained stable over the last few years (at around 54 percent of the restaurant industry), in countries like the UAE and KSA, the market potential for the expansion of chains ranges from $4.3 billion to $5.1 billion annually, were it to reach a similar share. Though independents have dominated historically, chains tend to grow faster and cannibalize the mom-and-pops over time.
In the United Arab Emirates, the full-service restaurants are fragmented in terms of cuisines, formats, and price point, with a diversity of casual and fine dining options. Chained full-service restaurant sales are growing 1.8 times as fast as independents. The share of chains is set to grow to 19 percent in 2021 (from 16 percent in 2016), while segments like pizza are dominated by chains, others — such as Asian food — will begin to see an influx in chained operators.
It might interest you to know that the UAE Restaurant industry has minimal barriers to entry, with minimal startup capital and no specific licensing requirements. On the other hand, the high level of competition and market saturation in a declining industry can prove challenging to aspiring entrepreneurs who want to start their own restaurant in Dubai. Most players in the restaurant line of business in Dubai are small – to medium – size establishments that cater to the local and international community.
The restaurant business will continue to blossom in Dubai because people will always want to eat when they are hungry and can’t afford to go home to fix meals for themselves. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own restaurant businesses in Dubai.
Some of the factors that encourage entrepreneurs to start their own restaurant business in Dubai are that the business is thriving and it easily attracts tourists especially if it is strategically located.
Over and above, the restaurant line of business is a profitable industry and it is open for any aspiring entrepreneur who wants to come in and establish his or her business. You can choose to start on a small scale in a street corner like the average mom and pop business or you can choose to start on a large scale with several outlets in key cities and shopping malls.
Starting a Restaurant Business in Dubai – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who eat meals from restaurants cut across all genders and age group; hence the demographic composition for a restaurant business is all encompassing. The truth is that when it comes to selling food and drinks, there is indeed a wide range of available customers.
In essence, your target market can’t be restricted to just a group of people, but to all those that visit and reside around the locations where you have your restaurant and who have the purchasing power.
List of Niche ideas Within the Restaurant Business in Dubai That You Can Specialize in
There are several niche ideas an aspiring entrepreneur who is looking towards venturing into restaurant business can choose from. As a matter of fact, it is common to find restaurants majoring on a particular niche area except for large and standard restaurants who have the capacity to combine all niche areas in the industry under their roof.
There are various kinds of restaurants all over the world and you can choose to start any in Dubai. Here are a few examples;
- Fast food restaurants
- Intercontinental restaurants
- Local restaurants
- Family style cafeterias
- Casual dining restaurants
- Fast casual restaurants
- Quick-service restaurants
- Drive-thru and take-out facilities
- Specialized restaurants with foreign cuisines for Indians, Americans, Africans, etc
The Level of Competition in the Restaurants Industry in Dubai
The United Arab Emirates does not just have one of the most lucrative restaurant industries in the world; it is also one of the most competitive markets. The bright side to this is that since the market is saturating, service providers are coming up with more sophisticated ideas, different trends are being born and consumers have no shortage of choice. The unwelcoming side of this is that the restaurant industry in Dubai is also confronted with a lot of peculiar challenges.
To withstand this oversaturation, restaurant operators are advised to focus their efforts on building a strong brand and identifying the unique position that distinguishes them from the competition. Strategic advertisements, both physical and digital, can help attract new customers and that is the current trend in Dubai.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your business properly, you will always make headway in the industry. Just ensure you are good at preparing the varieties of local and intercontinental meals, you can deliver excellent customer care services and you know how to attract and reach out to your target market.
List of Well – Known Brands in the Industry
Here are some of the leading restaurants in Dubai and by extension the United Arab Emirates;
- Billionaire Mansion Dubai
- Al Dawaar Revolving Restaurant
- The Talk Restaurant
- Indego by Vineet
- La Cantine du Faubourg
- Fish Beach Taverna
- Little Miss India
- Al Grissino Restaurant & Lounge
- Loca Restaurant & Bar Dubai
- Peppermill Restaurant
- Flooka Dubai Seafood Restaurant
- Armani Deli Italian Restaurant
- Nobu Japanese Restaurant
- Armani Hashi Japanese Restaurant
- Pierchic Seafood Restaurant
- Armani / Ristorante Italian Restaurant
- Zuma Japanese Restaurant
- mosphere Burj Khalifa
- Tribes African Restaurant
- Armani/Amal Indian Restaurant
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry.
Restaurant business is not a green business in Dubai no matter the niche you settle for. As a matter of fact, you will come across several restaurant niches when you drive through town. So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey to familiarize yourself with the cost of renting a space where you are expected to build a standard restaurant, the amount required to purchase furniture and other supplies and also the cost to successfully run the business.
Lastly, you should make adequate budget for business consultants, branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the restaurant industry in Dubai.
Starting Your Restaurant Business in Dubai from Scratch vs Buying a Franchise
When starting a business of this nature, it will pay you to buy the franchise of a successful restaurant brand as against starting from the scratch. Even though it is relatively expensive buying the franchise of an established restaurant brand, but it will definitely pay you in the long run because the competition in Dubai might not favour a newcomer or brand.
But if you truly want to build your own brand after you must have proved your worth in the Restaurants industry, then you can start your restaurant business from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before launching the business.
Please note that most successful restaurant businesses around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
Possible Threats and Challenges You Will Face When Starting a Restaurant Business
Aside from high staff attrition and labor cost, steady increase in rent is one of our major threats you are likely going to face if you choose to start your restaurant business in Dubai. The average cost of opening a small, independent restaurant in Dubai ranges from AED 500,000 to AED 1.25 million depending on the size and the format.
Even these figures are based on restaurant space ranging from 500 sqm to 1,200 sqm only. 78 percent of money outflow of the restaurant business comprises of capital costs, rent and working capital. Thus, high rentals are the biggest and the most upfront challenge you will face in the restaurant industry in Dubai.
Unfavorable government policies and the arrival of other restaurants or eateries can also hamper the growth of your restaurant business in Dubai.
Starting a Restaurant Business in Dubai – Legal Matters
- The Best Legal Entity to Use for this Type of Business
If you are considering starting a restaurant business in Dubai, the legal entity that is open to you will be determined by your status (citizen or visitor) and the capacity of the business you intend starting. There are various options available in UAE for Investors and International companies wanting to establish business relations in this region. The Investor can opt for either Mainland License or Free Zone license.
In Dubai Mainland LLC formation falls under Commercial category and can be formed with a minimum of Two shareholders or a maximum of 50 shareholders in the license. The liability of the shareholder is limited to the shares invested in the company. In this license, the 49 percent shareholders can be an Expat and 51 percent shareholder can be a Local Emirati.
These are some of the factors you should consider before choosing a legal entity for your restaurant business in Dubai; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
The truth is that if you take your time to study the various legal entities to use for your restaurant business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your restaurant business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
Catchy Business Name Ideas Suitable for a Restaurant Business in Dubai
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own restaurant business in Dubai, here are some catchy names that you can choose from;
- Al Amirah® Restaurant, Inc
- Khalif Chickens™ Fast Foods Restaurant, LLC
- Prince Emirati© Restaurant Chains, Inc.
- Burj Lake® Intercontinental Restaurant, Inc.
- Jamal & Jamila™ Family Restaurant Chains, Inc.
- Arab Nourishment™ Fast Foods Restaurant, Inc.
- Najeeb & Sons© Restaurants, Inc.
- Chicken Federation® Fast Foods Restaurant, LLC
- Caliphate© Chinese Restaurant, Inc.
- Al Amin© Indian Restaurant, Inc.
In the United Arab Emirates and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your restaurant business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own restaurant business in Dubai;
- General insurance
- Group Health Insurance
- Contractors All Risks Insurance
- Workmen Compensation and Employers’ Liability Insurance
- Property and Business Interruption Insurance
- Public Liability Insurance
- Professional Indemnity Insurance
- Group Life Insurance
Intellectual Property Protection / Trademark
If you are considering starting your own restaurant business in Dubai, you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successful run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Is Professional Certification Needed to Start a Restaurant in Dubai?
Aside from preparing varieties of tasty local and intercontinental meals, professional certification is one of the main reasons why some restaurant brands stand out. If you want to make an impact in the restaurant industry in Dubai, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your own restaurant company;
- Clean Health Certificate
- Food handler Certification
- Catering Training Certificate
Please note that you can successfully run a restaurant company in the United Arab Emirates and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the restaurant industry.
List of Legal Documents You Need to Run a Restaurant Business in Dubai
Having the necessary documentation in place before launching a business in Dubai, cannot be overemphasized. It is a fact that you cannot successfully run any business in Dubai without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own restaurant business in Dubai;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID / Tax Identification Number
- Foods and drinks handler certificate / Food & Trading licenses
- Trading license
- Food and safety license
- Non-Objection Certificate (NOC) from the local municipality of Dubai
- Health inspection Certificate
- Copy of license for the service support facility and/or a recent inspection report
- Ramadan permit
- Liquor permit
- Pork permit
- Delivery permit
- Business Plan
- Non – disclosure Agreement
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Franchise or Trademark License (optional)
Financing Your Restaurant Business
Starting a fast food restaurant business can be cost effective especially if you choose to start on a small scale by running the business in a street corner. Securing a well-located facility and purchasing gas cooker, deep freezer, fridge, microwave oven, bread toaster, cooking utensils and equipment, baking and food supplies are part of what will consume a large chunk of your startup capital.
If you choose to start the business on a large scale, you would need to source for fund to finance the business because it is expensive to start a standard restaurant business in Dubai.
When it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your restaurant business in Dubai;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choosing a Suitable Location for a Restaurant Business in Dubai
When it comes to choosing a location for your restaurant business in Dubai, the rule of thumb is that you should be guided by the demand for food, drinks and other snacks and easy access to wholesale food supplies. Of course, if you are able to secure a central location for your restaurant business, it will help people to easily locate your restaurant.
It is important to note that a good location in Dubai does not come cheap hence you should be able to allocate enough fund for leasing / renting in your budget. If you are new to the dynamics of choosing a location for your restaurant business in Dubai, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city.
These are some of the key factors that you should consider before choosing a location for your restaurant business in Dubai;
- The demography of the location as it relates to welcoming tourists and visitors
- The demand for food in the location
- The purchasing power of residents of the location
- Accessibility of the location and the road network
- The number of fast food restaurants, sandwich shops, regular restaurants, canteens and any other outlets that also sell food in the location
- The local laws and regulations in the community / state
- Traffic, parking and security
Starting a Restaurant Business in Dubai – Technical and Manpower Details
There are no special technology or equipment needed to run this type of business except for gas cooker, bread toaster, cooking utensils, serving wares, food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.), Storage hardware (bins, utensil rack, shelves, food case), Counter area equipment (counter top, sink, ice machine, etc.), Computers and receipt issuing machines, Sound System (For playing music), and Point of Sale Machines (POS Machines).
You will definitely need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
As regards leasing or outright purchase of a restaurant facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent ease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location / facility for such business.
When it comes to hiring employees for a standard restaurant business in Dubai, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Bakers / Cook / Chef, Restaurant Manager, Sales and Marketing Officers, Accounting Clerk, and Cleaners. On the average, you will need a minimum of 5 to 10 key staff members to run a small – scale but standard restaurant business in Dubai.
The Business Services Process Involved in the Restaurant Business in Dubai
When it comes to the service process of a restaurant business, there are no hard and fast rules about it. Basically, it is the duty of the merchandize manager to help the organization purchase food ingredients and packaging / serving materials. They source for good purchasing deals and they also ensure that they only purchase at the right prices that will guarantee them good profits.
Once the restaurant business is in full operation, meals are prepared and they are listed on the menu. Meals and drinks purchased from a restaurant can be eaten in the restaurant or can be taken away. This is because the restaurant may not have the capacity to accommodate all their customers per – time.
So also, stocks are taken after the close of business every day and account are balanced. It is important to state that a restaurant business, especially as it relates to its niche, may decide to adopt any business process and structure that will guarantee them efficiency and flexibility.
Starting a Restaurant Business in Dubai – The Marketing Plan
- Marketing ideas and Strategies
If you choose to launch a restaurant business in Dubai, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determines the market direction for the restaurants industry in Dubai cum the United Arab Emirates.
Businesses these days are aware of the power of the internet, which is why they will do all they can to maximize the internet (videos / YouTube) to market their services and products. These are some of the marketing ideas and strategies that you can adopt for your restaurant business in Dubai;
- Introduce your restaurant by sending introductory letters alongside your brochure to construction companies, travels and tours companies, camp grounds, corporate organizations, car owners, taxi companies, transport companies, households, sports organizations, gyms, schools, socialites, celebrities and other key stake holders throughout the city where your restaurant is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your products.
- Engage in road shows in targeted communities from time to time to promote your restaurant business
- Join local restaurant business associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Pricing
One key factor that will help you sell your food, drinks and other snacks and beverages at rock bottom prices is to purchase your food supplies directly from farmers or from food ingredient wholesalers in pretty large quantities. The truth is the higher the quantity of items that you purchase directly from farmers, food hubs and wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your food, drinks and other snacks and beverages et al at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.
Possible Competitive Strategies for Winning your Competitors
The availability of varieties of well – prepared and tasty local and intercontinental dishes in your restaurant, your business process and of course your pricing model are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and all the local and intercontinental delicacies listed on your menu can favorably compete with the some of the best in the restaurant industry in Dubai.
Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be.
If your intention of starting a restaurant business in Dubai is to grow the business beyond the location where you are going to be operating from to become a national and international brand by owning chains of restaurants and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your restaurant business in Dubai;
- Place adverts on both print (newspapers and food magazines) and electronic media platforms
- Sponsor relevant community – based events / programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your restaurant business
- Install your Bill Boards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your restaurant business
- Distribute your fliers and handbills in target areas
- List your restaurant business in local directories/yellow pages
- Advertise your restaurant business in your official website and employ strategies that will help you pull traffic to the site.
- Position our Flexi Banners at strategic positions in the location where restaurant business is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles, trucks and vans are well branded with your company logo et al.