BrazilHow international F&B brands should approach entering the UAE’s hospitality market
The UAE offers global food & beverage brands enormous opportunities, but the path to success is easier said than done. David Richardson, founder of advisory firm SHP Portfolio, shares three key factors that market entrants should consider for a successful market entry in the UAE’s hospitality scene.
The UAE is fast becoming the global culinary hub that it wasn’t known for before. Dubai alone is home to more than 26,000 food & beverage establishments with many more in the pipeline to open over the coming years. The openings throughout the second half of 2024 exemplifies just how quickly a new opening can become both a local hotspot and a must-visit for tourists, particularly over the winter season.
The region offers enormous opportunities for international food & beverage brands, but the path to success can often be overlooked. Entering the UAE market isn’t just about opening a venue, it’s about understanding the landscape, adapting to its unique nuances, and positioning a brand for long-term success in one of the most progressive and competitive hospitality scenes in the world.
Strategic location – setting the foundation
Choosing the right location in the UAE is not just logistical, but a strategic investment that can determine the success or failure of an food & beverage business. Iconic spots like DIFC and the Palm guarantee visibility and footfall but come with high costs, competition and more pressingly, lack of availability. On the other hand, areas like Dubai Hills, Bluewaters and now Jumeirah 1 are gaining continued traction, offering emerging opportunities catered to different demographics.
Brands need to think ahead in terms of location strategy, not just about where their audience is today, but where they will be tomorrow. For example, major road infrastructure enhancements and emerging master communities. Developments like the Dubai Walk Master Plan, which will loop key destinations within a 6,500 km network of modern walkways, covering 160 areas across the emirate, will open opportunities for brands to capitalise on emerging areas expected to drive high volume.
Selecting a location requires meticulous analysis. Each opportunity must be evaluated on its own merits, factoring in revenue projections, demographics, competition, construction costs, and future infrastructure developments. Areas undergoing upgrades or aligned with broader market trends often provide a strategic advantage. The key lies in a data-driven strategy and feasibility studies to make an informed decision.
Navigating operational challenges
Understanding Dubai’s timelines is crucial. From company setup to authority approvals and potential construction delays, each stage carries significant risks. Leases often include penalties for missed opening dates, and ‘dead rent’ – paying rent without generating revenue – can sink a business before it begins.
Many international brands underestimate the intricacies of Dubai’s market, from licensing to operational compliance. Working with experienced advisors can prevent costly missteps and streamline the process.
Standing out when the market appears saturated
The prime and obvious locations in the UAE are essentially fully occupied. While official figures indicate mid-90% occupancy levels, our anecdotal assessment suggests closer to 99%. Any location that becomes available often attracts intense competition, with some sites receiving interest from over 50 restaurants for a single space.
In a landscape known for its success in elevating international food & beverage names like Zuma, Nobu and Sushi Samba, standing out is non-negotiable. Restaurants must also recognise the scale and sophistication of UAE developers. These landlords often curate their tenant mix, prioritising the right blend of offerings together with rental income.
Brands entering the UAE must offer something unique to the market and the developer, whether it’s a distinctive dining concept, or an authentic effort to connect with the region’s consumer profiles specifically.
The path to long-term success
Thriving in the UAE’s hospitality sector requires more than a great concept, it demands strong relationships with landlords, developers, and stakeholders. These connections are crucial for navigating the region’s intricacies and ensuring long-term growth.
Competition will only intensify, making it imperative for brands to operate at the highest level. The ecosystem of branding, marketing, execution and value proposition needs to be tight. The UAE’s hospitality scene is as trend-driven as it is competitive, with preferences evolving rapidly.
For international brands, the opportunities are there, but success requires strategic foresight, cultural representation, and adaptability informed by data-driven insights. We empower clients to acknowledge and understand the distinctiveness of the market. A concept that thrives in London, New York, or Singapore may not automatically resonate here, but by approaching this market with these principles in mind, the UAE’s hospitality scene will continue to evolve.
About the author: David Richardson is founder of SHP Portfolio, a UAE-based food & beverage real estate advisory firm offering specialist services in acquisitions, licensing and franchising, lease and transaction advisory, lease disposals, end-user development, and portfolio management.
