We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Mon 25 Jan 2010 04:00 AM

Font Size

- Aa +

Moving on up

The Middle East’s F&B operators have learned from the past year; now, a little older and a lot wiser, they are entering 2010 with a cautiously optimistic outlook.

Moving on up
The region’s first RBG launched at Park Inn Muscat earlier this year.
Moving on up
Rezidor Hotel Group’s Marko Hytönen.
Moving on up
Filini restaurant at Radisson Blu Hotel, Abu Dhabi Yas Island.


The Middle East’s F&B operators have learned from the past year; now, a little older and a lot wiser, they are entering 2010 with a cautiously optimistic outlook.

For the past 12 months, industries have dwelt a great deal on doom and gloom, and on the generally negative state of the market place.

Now, after a tough 2009, many F&B operators will want to approach the new year with a fresh outlook and a positive plan of action.

But to do so, it is important to acknowledge what state the F&B marketplace is in today.

At RMAL Hospitality, the Abu Dhabi-based firm responsible for Wagamama, Frankie’s Italian Bar and Grill, Trader Vic’s and Trader Vic’s Mai Tai Lounge in the region, vice president strategy Tiina-Maija Bergman notes that nowadays it is “increasingly about discounts and special offers — people are more careful with their spend and are demanding the very best deals.

“For stand-alone restaurants such as ours, this translates into tough trading conditions,” she admits. We cannot afford the same level of freebies or discounts as a hotel-affiliated restaurant can.”

According to multiple chain-outlet operator BinHendi Hospitality’s vice president, Naveed Dowlatshahi, the financial slowdown was “a wake-up call for everyone”.

“For those whom are established operators, such as BinHendi, we went back to basics and concentrated on giving excellent service and fantastic quality food.

“Looking at manpower was crucial,” he adds. “We worked hard on training and development, to become leaner and consolidate that excess fat.

“But if you look at the smaller players who were in it to just earn a quick buck while times were good, they naturally suffered and the majority either went bust or focused their business elsewhere,” he notes.

Meanwhile Gourmet Gulf, the UAE operator of brands such as Yo! Sushi, Morelli’s Gelato, Gourmet Burger Kitchen and California Pizza Kitchen, has seen both positives and negative results from the downturn.

“The overall business landscape has changed significantly,” notes president Antonio Bautista.

“Today, we are in a better position to negotiate rents and suppliers are more receptive to price reviews.

“But on the other side of the spectrum, consumer footfall has decreased in some areas.”

It’s not only stand-alone chain outlet operators that have felt the pinch over the past year; hotel groups who have ventured into the chain F&B outlet arena have also seen the impact of increasingly wary Middle East customers across their brands.

Rezidor Hotel Group is one such firm which has developed own-brand outlets.

“The idea was to create a portfolio of restaurant concepts that are original, exciting, modern and drive revenue,” explains group area vice president Marko Hytönen.

“In Europe, there is growing pressure [for hotels] to run restaurants as a profitable unit, as independent bars and restaurants — outlets that have relevance and make sense,” he adds.

“Experience shows that the genuine application of a concept, combined with consistency and high quality, will naturally result in a sharp increase in the number of covers.”


Today Rezidor boasts three own-brand concepts: contemporary Italian concept Filini Bar and Restaurant; modern French brasserie Verres en Vers; and “young and vibrant” eatery RBG (Red Bar and Grill), the youngest Rezidor concept, which made its Middle East debut at Park Inn Muscat last year.

Hytönen believes the Middle East has been impacted “to a lesser extent than other markets”, but notes that “although volume has remained high, we have seen a drop in the cover charges, particularly regarding high-value items”.

Undoubtedly there have been widely-felt effects from the financial slowdown, across all sectors, but how exactly has it affected F&B business in the region and what footing are they on going into a new year?

RMAL’s Bergman says that although the firm always monitored food costs, it is now assessing this area even more carefully.

“We have also had to make a few tough decisions whereby job combination has made some positions redundant,” she says.

“And our marketing spend has been affected; today we are being very careful about what we spend where, and when.”

Gourmet Gulf’s Bautista sys the firm has been lucky: “We have not been forced to close any locations, nor decrease our workforce; we have protected our margins by trimming cost on non-critical cost centres,” he explains.

BinHendi Hospitality, on the other hand, has closed outlets this year, but Dowlatshahi says these were “not necessarily closed because of the downturn, but moreover because wrong decisions were made when originally securing those sites”.

“And we made people redundant, but again not necessarily because of the downturn; some employees were let go because of the closures and others were let go to build efficiencies within the business,” Dowlatshahi clarifies.

Rezidor’s Hytönen notes that their outlets have also been affected, albeit for slightly different reasons.

“Falling occupancies have had a negative impact on our F&B outlets but we have tried to counter this impact by renegotiating with our suppliers, creating more value-added menus and maintaining a greater control of our labour costs,” he says.

So how confident are F&B outlet operators feeling about business going into 2010?

RMAL’s Bergman notes that the recent news of Dubai World’s debt restructuring has reminded operators they would do well to proceed with caution.

“In Dubai, the situation is back to ‘wait and see’ status, which is clearly reflected in the restaurant covers,” she points out.

Rezidor’s Hytönen urges similar care. “Signs are now pointing to the fact that the downturn has slowed, but due to the lack of visibility, the shape and size of 2010 is still hard to predict,” he admits.

“With such low visibility it is difficult to know whether the worst is over yet, but we are hoping for further improvements as we enter the new year.”

However there are many variables affecting the market, as Gourmet Gulf’s Bautista observes — and some of them are looking decidedly positive.

“I would say the economy has stopped deteriorating, the job market has picked up and that there are some attractive investment opportunities out there,” he says.

“These three factors have improved consumer confidence and renewed investment appetite.

“Of course, things are proceeding in a much more measured fashion that what we experienced up to summer 2007; nevertheless, signs are encouraging.”


BinHendi Hospitality’s Dowlatshahi agrees that tourism is on the up again, and notes: “Where there is tourism there will be a demand for restaurants. People have to eat — and once consumer confidence improves, so will spending-power.”

Whether the worst is over or not, there appears to be a cautious optimism coming from Middle East F&B operators going into the new year.

The key now is to capitalise on positive feeling amongst consumers with a solid strategy for 2010.

RMAL’s Bergman reveals the brand is currently looking for opportunities to develop further in the region.

“Although it is too early to discuss details, we are looking at expansion plan for Frankie’s and the Marco Pierre White Steakhouse and Grill brands in particular, as they are currently in minimal locations and we believe they will work well in other places,” she says.

Gourmet Gulf’s strategy for 2010 is two-fold, reveals Bautista: “Firstly, we plan to remain a premium choice in the casual segment by maintaining our philosophy of ‘value for money’.

“The second aim is to continue capturing the growth opportunities that the current business landscape has created.

“Today there are more sites available, the cost of construction has improved and the pool of talent found in the market is bigger,” he expands.

“Our plan for 2010 is to open 15 stores, and we are absolutely on target to achieve that.”

At BinHendi Hospitality, 2010 is all about “building further cost efficiencies”, according to Dowlatshahi.

“We are very much focused on developing the business,” he adds. “We have a diverse portfolio of 15 different F&B concepts and therefore have a competitive edge over other regional operators, in being able to place different concepts in different environments subject to demand.

“We will be focusing on expanding into Abu Dhabi and franchising our in-house brands such as Japengo, Café Havana and Sammach across the region.

“We’ve been inundated with interest from across the region and 2010 will be a year of growth in franchising as well as developing into key strategic areas within the UAE.”

Meanwhile Rezidor enjoyed “a record year of growth in the Middle East” in 2009, having opened eight new hotels and adding 2271 new rooms.

“By 2010 they will all be fully operational and we will begin to realise the potential from these openings,” asserts Hytönen.

“Additionally, following on from the launch of our Park Inn brand in the Middle East, 2010 will see the regional debut of our new fashion lifestyle brand Hotel Missoni, with the opening of Hotel Missoni Kuwait,” he continues.

“Having established such strong F&B concepts we plan to continue to look for opportunities to develop them in both our new and existing hotels.

“But it has to be right for the market and location in which we are operating, so the development will remain very much on a case-by-case basis,” Hytönen emphasises.

Although the region’s F&B operators remain clearly on their guard, there is nevertheless a welcome sense of optimism pervading the market place.

If these firms can ride this wave and extend that sense of positivity to the consumer, 2010 could turn out to be a much more profitable year than its predecessor for the Middle East’s food and beverage outlets.

Arabian Business: why we're going behind a paywall