Transactional brands must adjust their business models to retain traffic, according to Antonio Gonzalez
Increasingly growing food delivery businesses will stabilise 40 percent of Dubai’s F&B industry, according to the CEO of Dubai-based Sunset Hospitality, which operates brands such as Black Tap, Azure and Drift beach clubs.
Speaking to Arabian Business, Antonio Gonzalez said the rise of food delivery businesses has not affected his brands but will pose a challenge for transactional F&B outlets which do not focus on the dining experience.
“Not in our case, [it hasn’t affected us] because of the type of brands that we operate and own, but it’s a trend that is going to continue growing and it’s not going anywhere. The delivery business is going to stabilise around 40 percent of the industry in the long term, and will affect mainly what I call transactional brands which don’t create this whole experience,” he said.
Gonzalez said those outlets will have to adjust their model to retain their traffic.
“All the brands we run are experiential, where we focus on table service, we focus on music, decoration; you don’t get that with just delivery. But brands that are transactional, they have to adjust their model because the convenience of delivery will take away a lot of the traffic they had in the past so that’s only going to be growing until we achieve maturity,” he said.
In January this year, Samer Hamadeh, founder of Dubai-based Aegis Hospitality, which runs Stereo Arcade and Akiba Dori, said home delivery has “hurt more businesses than people realise”, with only strong concepts surviving in what he called the “age of the paper bag”.
Take out taking off
In April 2019, a report by consultants Capital Economics showed that delivery firm Deliveroo supports over 3,200 jobs across the economy of the UAE and generates AED533 million in revenue.
The report focuses on the increased revenues generated by restaurants and their suppliers, the spending of Deliveroo riders and employees, the spending by Deliveroo on its suppliers, and the tax generated by Deliveroo’s overall operations.
Of the jobs it supports in the UAE restaurant sector, 2,400 are in chain restaurants and 820 are in independent restaurants.
In May 2019, global restaurant brand Nando's reported a double digit growth in its delivery business in the UAE this year as service standards improve. Nando’s UAE’s delivery business in Q1 rose by 16 percent compared to the year-earlier, representing 22 percent of its total revenue, according to its managing director George Kunnappally.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.