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Feeding the fast food fix
15/06/2010

Dubai: In a region where the ancient food staples of rice, flat breads and kababs still figure large around the family dinner table, a mushrooming McWesternised menu of greasy burgers, sandwiches and fried chicken is offering an exotic alternative to the Oriental ordinary.

And there appears to be no satisfying the bottomless Middle Eastern appetite for American fast food. Health issues aside, yes, Dubai wants fries with that.

Tasty, cheap and as the name suggests — fast — the fast service restaurant industry in Dubai is growing at double the global pace by some accounts, leading to a supersizing of new store plans in an estimated $1 billion (Dh3.67 billion) fast food market across the UAE.

In the United States, fast food is set to cross the $200 billion mark in 2010, according to a report prepared in December 2009 for the International Franchise Association.

In Dubai, Al Futtaim Group Real Estate has worked closely with international fast food chains to bring globally recognised brands into its extended retail family.

On the second-level concourse of Al Futtaim's 1.9 million-square-foot Dubai Festival City against a backdrop of brightly lit corporate logos, hungry patrons are cuing in droves at the food court for the latest Wendy's/Arby's meal deals.

Not saturated

Newly opened on May 11, the eatery is the first of many stores planned for the region by a corporation that believes the culinary quickie market in Dubai is far from being over saturated.

"Reaching this milestone opens the door for more rapid international expansion," Roland Smith, CEO of Wendy's/Arby's Group, said in a press release marking the Dubai opening.

"We completed comprehensive research last year that shows we have the potential for more than 8,000 restaurants outside North America.

"We are confident that restaurants with combined Wendy's and Arby's menus will help us fully capitalise on this significant long-term growth opportunity by providing a compelling business model business model for prospective franchisees around the world," Smith said.

To expand its existing 10,000-restaurant empire, the group signed a 10-year development agreement with the Al Jammaz Group "for the construction of approximately 80 dual-branded restaurants over the same time period with an initial focus on development in the United Arab Emirates."

Global fast-food leviathan McDonald's is also eyeing UAE expansion to add to its 32,000 outlets around the world.

Rafic Fakih, managing director of the franchisee firm Emirates Fast Food Corporation, told Gulf News that the firm is opening a raft of new McDonald's restaurants in the UAE this year and next.

Emirates Fast Food currently operates 78 outlets across the country with an employee roster of 1,800.

"We are constantly looking to expand and increase the number of McDonald's locations around the UAE.

"Seven new restaurants have opened so far this year with seven more restaurants planned to open by the end of the year," Fakih said.

"Based on our expansion studies and market requirements, we are planning on opening 15 more restaurants in 2011."

Sales are expected to rise in 2010 over last year by low double digits in the UAE.

Fakih said "that McDonald's sales this year will be seven per cent to 10 per cent higher than last year. Other contributing factors are the improved customer sentiment in the UAE and tourists flocking into the country for various festival and events."

With a total of 149 fast food outlets listed in Dubai Yellow Pages, the race to cash in on an ever- expanding cultural phenomenon has a long list of competing entrants with 11 new food outlets set to open in 2010 alone at Dubai Festival City.

The demand for North American food is not led by residents from that continent visiting Dubai —food customers are mainly from the Middle East and Asia, he said.

Committed to food

"North Americans are only about one-half of a per cent of our total footfall," Miles said. "One of the reasons for them to come here is they know that we're committed to food."

Philip M. Evans, Director of Commercial and Retail Leasing, Al Futtaim Group Real Estate, is the group's secret weapon when it comes to securing recognisable brand name eateries and regional distributors looking to set up in Dubai.

The first fast food outlet deal signed by Dubai Festival City was American brand Baskin Robbins in May 2006, he said.

"We're trolling the world for exciting new brands," Evans, a UK expatriate, said.

But there has to be a healthy mix of eateries to ensure a balanced menu that offers something for everyone in a city touting an expatriate population from more than 180 nations.

"There's the question of how many burger places can you have," Evans said. "There are only so many burger places you can do to get that overall complement of food just right."

He likened the food component of Dubai Festival City to a major tenant such as the mall complex's 260,000-square-foot Ikea, which also has its very own and very popular restaurant famous for its Swedish meatballs.

The eateries are "an anchor tenant made up of many tenants," Evans said.

The strategy to offer a wide variety of food choices has also led to major brands from other countries setting up, he said, such as Karam Beirut from Lebanon, Café Nero from the UK, Yo Sushi from the UK and Spur from South Africa.

In addition to the Wafi Gourmet located in the new food pavilion on the water, Evans is particularly proud that his organisation has signed a deal with UK cooking sensation Jamie Oliver to set up a new eatery later this year.

Out of comfort zone

Evans said it is the first time Oliver has set up a restaurant outside his home country.

Dr Cedwyn Fernandes, Associate Professor of Economics and International Business at Middlesex University Dubai, said as more eateries are established in Dubai, so are new family behaviour patterns.

"Visiting a mall as a family evening out is now an established tradition in the region. Whatever the reasons, most trips end with a meal at the specialist restaurants in the mall or mainly in the ubiquitous food court," Fernandes said.

Inexpensive meals are appealing to families on tight budgets.

"The key to the success of fast food restaurants in these recessionary times is the price. A family of five eating at McDonald's would spend an average of Dh125 compared to Dh300 in a regular restaurant — not fine dining — at the mall," he said.

With a reported nine million tourists visiting Dubai in 2009, fast food restaurants benefit greatly from the influx of customers who are already familiar with their brand burgers due to global marketing campaigns.

"Food franchises deal with the problem of asymmetric information by standardising chains worldwide that gives the customer a confidence in what they are getting into and what to expect.

"Given the number of visitors to the region and especially the UAE food franchises attract a lot of these tourists."

Fernandes said he isn't surprised by the rapid spread of fast food in the UAE given that outlets are usually owned and operated by large distributors in the Middle East and not individual franchise owners with only one restaurant.

"In the region, unlike in most parts of the world, most food franchises are owned and operated by big business groups which are able to take advantage of the economies of scale and invest in many outlets. "Most fast food chains have begun to follow a Starbucks saturation strategy and blitz every conceivable location with an outlet," he said.


Source: RestaurantNews.com

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