US fast food chains, looking to expand their geographical footprint, are being lured to the UAE by its glitzy shopping malls and insatiable appetite for fast food
It’s a scene replicated across the GCC every day; a queue of people patiently wait in line to place their order. The glossy new menu features freshly brewed coffee, fried breakfasts and loaded pancakes. But these consumers don’t bother to look at the menu; they’ve been meeting friends and family for their all-American breakfast at IHOP for years.
This store, however, is on The Walk at Dubai’s Jumeirah Beach Residence. Further along this parade of beachside shops and restaurants a similar scene is being played out in the recently opened branch of Fat Burger. Walk a little further down the road and you’ll see Starbucks and Burger Fuel, to name but a few. The stretch of prime retail is not unique in Dubai but it is one of the clearest signs that the UAE is one of the hottest destinations for fast food brands looking to expand their global footprint.
“Anything American is more sought after than a brand that was born in say Eastern Europe, Asia or even locally,” says Zubair Razzaq, CEO of Dubai-based AWGAL Investments, which recently signed a deal to introduce the US burger chain Mooyah Burger to the UAE.
“These companies have a track record of perfecting their brand and food so while no investment is risk-free, knowing that it will be accepted by the local market makes it less risky,” he adds.
He’s not wrong. Demand for fast casual dining, which includes the more traditional fast food chains such as McDonald’s as well as the table service brands like IHOP, is growing amid a rise in disposable income, extravagant shopping malls and a seemingly unquenchable appetite for Western food concepts. The UAE’s fast casual dining sector is expected to grow from $6.4bn in 2011 to $8.7bn by 2015 with burger chains set to see the biggest increase, according to research firm Euromonitor.
At the forefront of this revolution are the American brands such as Smash Burger, Shake Shack and IHOP. US retailers are the world’s most global with 73 percent of all brands operating across their home market, Europe, Middle East and Africa and Asia Pacific, according to a recent study by global real estate consultants CBRE. The number one target market for American retailers outside of their home region is London followed by Dubai and Kuwait City, adds the report.
But it’s not just American concepts that are interested in the Middle East. Canadian-based coffee shop Tim Hortons and Freshii, together with operators as far as New Zealand, are all keen for a slice of the action. No matter where they are from, the one thing they have in common is that they are typically contacted by a local family-owned firm looking for franchise opportunities, says Matthew Corrin, founder and CEO of Freshii.
“The interest doesn’t often start with the American or European brands, it starts with the local group saying we want this brand, which is then followed by the brand saying the economics of Dubai sound really attractive,” says Corrin. “We are just reacting to sophisticated businessmen and women who are putting together incredible portfolios and want to include our retail concept within their portfolios,” he adds.
One of the most significant players is the Kuwait-based conglomerate MH Alshaya Co, which has introduced a plethora of new brands to the region in the last twelve months, including several food outlets. The retail giant, which manages or owns regional franchise rights for over 70 brands, recently opened local branches of IHOP, The Cheesecake Factory, Texas Roadhouse and Shake Shack, to name but a few. “Good brands can cross international borders,” a spokesperson for the company says.
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