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Fri 27 May 2011 01:21 PM

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More closures seen in tougher UAE F&B market

Industry expert says more restaurants may shut as competition increases in the UAE

More closures seen in tougher UAE F&B market

A tougher food and drinks market means more restaurant closures are to be expected in the UAE, according to Stefan Breg of F&B consultancy Tribe.

Recent closures of Dubai restaurants such as Rive Gauche at The Address Dubai Marina, Empire at The Monarch hotel and Tang at Le Meridien Mina Seyahi were signs of a more competitive climate, said Breg in comments published by Hotelier Middle East.

“Up until 2008, the UAE had grown accustomed to enjoying great returns from restaurant investments. Over the last few years, the market has toughened; a combination of both a leap in competition and to a lesser degree, reduced demand. I don’t think these closures represent a major increase in closures,” added Breg.

“We should even expect more closures resulting from ‘churn’ as leases expire in five year old malls and new market entrants surface. In other markets, it's often how the restaurant sector evolves and the strongest survive."

The UAE F&B scene is well set-up to survive the current conditions, added Breg.

“In other parts of the world, it is perfectly normal for failures in year one to exceed 70-80 percent of openings. Also, the vast majority of restaurants here are privately owned rather than publicly quoted and therefore can often survive as part of a portfolio of other businesses such as food and clothing retail.”

UAE retailer BinHendi Enterprises on Wednesday said it is eyeing five new restaurants brands.

The Dubai-based conglomerate, which counts more than 50 brands in its franchise portfolio, said is mulling a string of new food and beverage brands to launch in the Gulf.

Existing BinHendi-run outlets include coffee chain Second Cup, and the restaurants Duck King, Café Havana, China Times and Ruby Tuesday.

“In the F&B business we create our own brands, and at the moment I have five on the drawing board,” Mohi-Din BinHendi, company president said.

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Original Joe 9 years ago

If I remember correctly this Breg guy was selling some blah, blah propaganda a few months ago regarding how great the casual dining restaurant sector is in the UAE. Which is it Breg, is the market booming and great which is what you were saying a few months ago or, with the closings mentioned in this article as well as many more including brands by Bin Hendi (also mentioned in the article), are you correcting yourself?

stefan breg 9 years ago

It's a shame you didnt buy the report Joe, we highlighted historical growth and the future growth driven by mall openings specifically in Abu Dhabi. This will still represent major growth which you can call a 'boom' if you wish. Let's talk again in 2 years...

Just to repeat from the above article; "I don’t think these closures represent a major increase..,” it's a 'churn' which by definition is not significant when taken across the whole market. Have a nice day 'Breg'

Omar 9 years ago

I just came from Mall of the Emirates and it was FULL. All malls of Dubai are FULL. They tell me Gitex, then Motor Show, then, Horse race, then Golf, then, Tennis, then, Air Show, then, DIFF, then, .... This is Dubai. I am struggling to find a single seat on Emirates!!Dubai is here to stay. It's now among the top 5 global cities. Last night, the Emirates chauffeur told me that all what he hears from his passengers - WOW, the moment he drives them on Sheikh Zayed road. All those people who say bad things about Dubai are just jealous. Why don't you have like Dubai?? Well, ask yourself, your president, your system!

Louie Tedesco 9 years ago

I must be living in the twilight zone although it sure does look like Dubai…We've been out dining in Dubai malls the past weeks and the restaurants are nearly empty with staff waiting at the door to drag in bypassing shoppers.

Friends visiting from Continental Europe nearly were killed two days in a high-speed road rage incident on Sh Zayed Road when their taxi was cut off by the usual idiot driving a too-big SUV. And no, Sh Zayed Road wasn't jammed, the SUV driver was estimated as going 140+ kmh.

They had no struggle finding TWO seats on Emirates - all they had to do was pay for their ticket.

Mr. Omar must be facing discrimination - no seats in local restaurants or aircraft? Everything full? Well, it's not full when we go there.

don peppone 9 years ago

Dear Omar, yes the malls are full but no-one is buying! People just stroll around because it's too hot outside or because the prices here are simply higher than in Europe. Take a look into the shops, they are empty! Emirates flights are full, yes, but to say it again, no-one stays in Dubai, most of passengers are transiting to Asia or Australia because Emirates ticket prices are much less than booking from Dubai. For example: If I want to go London from Dubai and back I have to pay almost 5000 Dhs for a simple economy class. If I live in London and would like to go to Dubai and back I pay only 1500Dhs! That's why Emirates is one of the cheapest airlines in Europe. But agian, most of passengers use them only to flights to Asia and so on.

Not buying it 9 years ago

Seems like you have all the answers Breg? Do you own and operate any restaurants in the UAE? I don't think you do? Like the saying goes, those who can't do, teach! And I guess as long as you have someone paying you will keep "churning" out the propaganda depending on which way the wind blows...

Paul King 9 years ago

The region's cheerleaders are so entertaining. They are the worst investors in the world. They buy high and sell low. Someone should tip them off, that's not the way it's done. This Dubai busy-ness that they are quick to point out to support their misguided claims looks productive and dynamic. But without solid thinking behind it, it's as empty as a whirlwind! Sustainable economic growth will not begin until these magic shows end. It's important to remember that this great correction is like a five-course meal. It arrives in stages... The lending institutions don't possess the balance sheet strength to choke down all these bad loans - (lent on even badder ideas) all at once. So instead, they take a few nibbles from their heaping plate of debts, then pause to digest the losses and then nibble away again! Any sign of economic recovery in this region is just a pause between the enormous portions of debt!

Travelling Parent 9 years ago

Omar, for the next 3 months you will find many of the malls are busy - this is down to the summer heat and school holidays - they are a good place to go, especially if you have young children, as they are airconditioned and free to enter. As Don points out, it doesn't mean anyone is buying anything, other than maybe doing their weekly supermarket shopping.

As for flights, goodness only knows where you were trying to get to that you couldn't get a seat on Emirates. I had to travel to Europe unexpectedly a week ago and was able to book a seat online at 9pm for a flight at 8am the next morning - I looked at several options and all of them had seats available in every class. When I eventually got on the plane there were plenty of empty seats, which means they couldn't even fill the plane with staff travelling on ID90 cut-price tickets.

ukfb 9 years ago

I miss Tang...not really a victim of the recession but a case of right restaurant, wrong place, wrong time.

Lex G 9 years ago

I'm somewhere in the middle of the comments below. Dubai is definitely busier than a year ago but will never (and should never want to) reach the heights before the bust. Malls are busier, restaurants are busier and generally disposable income spending is coming back. There will always be winners and losers in any market, the restaurants above had no real selling point and were in bad locations. There are plenty of places where you need to book well in advance to get anywhere near them though (hint, Dubai's finest bars and restaurants are not found in shopping malls!).

Churn in F&B and indeed retail is notoriously high in all countries, if anything I've been surprised there haven't been more failiures in the market here as it needs it. Less reliance on poor imported brands and more innovation are needed to succeed in the long term.