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Tue 5 May 2020 01:48 PM

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We'd be better off closed, say Dubai restaurants

F&B groups claim to be losing AED1 billion a month and have asked for rent relief to survive the crisis

We'd be better off closed, say Dubai restaurants

Restaurants claim to be facing severe negative cashflow due to rental obligations and employee liabilities amid strict Covid-19 restrictions which limit their seating capacity to 30 percent in line with social distancing measures.

Restaurants in Dubai are losing more money by being open than by remaining closed, according to a letter signed by over 100 industry leaders including Marriott International, Tim Hortons, Sunset Hospitality and Solutions Leisure - and which account for over 50% of people working in the F&B sector and 10% of the city’s population. 

In the letter seen by Arabian Business, the restaurants claim to be facing severe negative cashflow due to rental obligations and employee liabilities amid strict Covid-19 restrictions which limit their seating capacity to 30 percent in line with social distancing measures.

"The F&B sector was hit first and hit hardest due to social distancing. Fear of the virus and the long-term need for physical distancing will mean that most restaurant and café businesses will not have sufficient income to cover monthly expenses to reopen,” reads the letter addressing Secretary General of the Executive Council of Dubai, Abdulla Mohammed Al Basti.

"We must inform you that in fact, it would be more damaging to open for business now thereby losing more money with rent and employee liabilities than to choose to remain closed. That is what all restaurateurs are faced with especially when landlords are trying to force full rental payment liability with the implementation of stage 1 of the reopening plan announced,” it says, urging the government to “intervene and find a solution together”.

The restaurants also claim to be losing over AED1 billion a month in staff salaries, housing and benefits, excluding rent - which can be as high as AED1 million a year - and operational costs, according to the letter, which predicts recovery no earlier than Q1 next year.

“This level of liability is not sustainable without assistance. We will remain loss-making for many months after the lockdown is lifted and be the last to get back to any kind of normal because of the expected social distancing enforcement guidelines,” the letter says, requesting for new legislation to help during the crisis. 

Relief fund

Among the requests are:

  • Extend the relief to freeze facility/loan repayments with no added penalty or interest incurred for the rest of 2020
  • Reduce fees charged by aggregators to restaurants
  • Existing licences to be automatically extended through to end March 2021 for a year at no charge
  • Waiver of the tax charged on the purchase of licensed beverages up to the year-end once restaurants are allowed to open for business again
  • Restaurant operators to be allowed to keep the full municipality tax charged to customers of 7% for the remainder of the year. 

It also urges the Dubai government to set up a relief fund to help restaurants “simply survive,” and references similar measures taken by governments in the UK, US and European countries whereby they have provided subsidies and/or loan guarantee schemes to help businesses cover staffing requirements. 

The restaurants have founded the Middle East Restaurant Association (MERA), a non-profit DIFC entity with a primary focus on the UAE, to discuss and guide the implementation of a relief fund until no further social distancing is required.

"Your Excellency, we believe these critical measures proposed in the Appendix will protect countless businesses, save tens of thousands of jobs and ensure the long-term health of our sector and the wider economy due to the large.

"We need your support to assist businesses to reopen and stay open and to keep as many of the employees living and working in Dubai as possible,” the letter concludes.

Over 200,000 people work in Dubai’s F&B sector, with more than 11,000 F&B related trade licenses registered at DED. ​

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