Ahead of The Big F&B Forum 2017, the region’s F&B leaders reveal what they need to secure a successful tomorrow.
Catering News brought together a group of F&B professionals at Flow in Jumeirah Emirates Towers, to set the agenda for the third edition of the Big F&B Forum, taking place on Monday 30 October at Westin Dubai Mina Seyahi. Some of the key topics brought under the spotlight were the need for more innovation in terms of concepts and brands; limited and expensive real estate and the barriers this poses for the development of the industry, a need for a more engaged, better trained talent pool; and why the industry need to procure produce at lower prices in a more sustainable way. According to the panel, a need for more transparency and support from the authorities underpins these topics, particularly given that food and beverage is becoming increasingly central to achieving the targets and objectives set out by regional governments.
One of the topics that came to the fore during the debate, was a need for more innovation in the F&B industry in the Middle East. With a host of franchised brands from the US, UK and Australia and a limited number of independent, creative concepts, the market is crying out for local entrepreneurship according to the experts. Sarah-Jane Grant, director of hospitality design firm LXA commented: “The same concepts are being replicated out of London but I think there’s an opportunity for local talent to create something unique for our market.”
Stefan Breg, director of food and beverage, Europe, Africa and Middle East, Marriott International added: “This market has in the past, had a habit of offering a lot of brands that are the same – Americana brands and not enough entrepreneurs creating cool new things. I don’t think the market is set up for it very well, so how can we address that?”
Even when restaurateurs do create their own concepts rather than bringing in franchised brands, too often innovation is lacking and the go-to solution is to imitate other successful concepts on the market, such as Zuma, says Naim Maadad, chief executive of Gates Hospitality. “Everyone wants to do sushi, everyone wants to do Asian and that becomes a benchmark,” he comments. “We should all have our own locations, our own venues and really develop those for our audience rather than copying.”
A major barrier to innovation according to the panel, are landlords and owners. Sarah-Jane Grant, director, LXA commented: “I think we really scupper the opportunities in this market for enterprise with the hold landlords have on entrepreneurs, so we need to see how we can mix it up again.”
Maadad added: “We should never think we are owned by the landlord – this mindset needs to change.”
However, sky-high real estate costs limit who can open a restaurant and where, meaning the most talented entrepreneurs may not get the opportunity to contribute to the F&B landscape, or if they do open a restaurant, they have to compromise their creativity. Ryan Hattingh, partner, Atelier EPG comments: “Rentals are prohibitive. We have been offering secondary sites that are double the price of what we’re paying in New York – this has to change.”
“I think there will be a huge shift in the market in the next two years, which isn’t necessarily a bad thing because the market is saturated and there aren’t that many consumers” – Ryan Hattingh, Atelier EPG
He adds that landlords don’t have to lower their prices because there are investors and developers in the market who are willing to pay – after all, small investors can’t compete with the big government-backed developers who are bringing the world’s best brands into the market. However, according to Abdul Kader Saadi, managing director, Glee Hospitality Solutions, there is less competition for real estate than before, which could have an impact on pricing.
“I think this was the case but not anymore. For every location, you may have had 10 people waiting, but now you’ll only have two. I think we do have entrepreneurs in the region but the cost of doing business is extremely high, which makes it difficult to survive,” he says, adding that restaurant closures are indicative of what’s going on in the market. “It’s starting; we’re going to see a lot more closures by December and it will take a year or two.”
Hattingh warns of a “fall-out” in the coming years as less successful concepts close down in the midst of strong competition, however he believes this could also provide opportunities. “I think there will be a huge shift in the market in the next two years, which isn’t necessarily a bad thing because the market is saturated and there aren’t that many consumers.”
Dubai doesn’t have the population of the global cities it looks to compete with, such as London, Hong Kong and New York and only a small percentage of the population can afford to eat out, say the experts. Farah Sawaf, owner, Soul Communications commented: “In the UAE we think a concept that works in New York is easily replicated but it’s not. We aren’t sitting on the same population, even if we have seven or eight million people, you have to look at your market segment. When you look at that you realise you’re not playing with a lot of footfall.”
Michael Kitts, director of culinary arts, The Emirates Academy of Hospitality Management added: “I think Dubai is going crazy in terms of the cost of living and there’s only a small percentage of people that dine out on a regular basis – how on earth can people afford it?”
High rents, utilities and visa costs are also having a major impact on value for money for the consumer. Breg commented: “Every meal in Dubai seems to cost $100. I think we need to look at value, particularly before VAT comes in.”
A contributing factor is that ROI targets are too short-term, says Lopez of Bull&Roo. “I think patience is important for the operator and owner. F&B doesn’t have a short time period – you have to think long-term. Often people get greedy and want return on investment within 12 months.”
“I think Dubai is going crazy in terms of the cost of living and there’s only a small percentage of people that dine out on a regular basis – how on earth can people afford it?” – Michael Kitts, The Emirates Academy of Hospitality Management
With the cost of living soaring and the impending introduction of VAT, consumers are being more modest in their spending habits and so restaurants will have to become more affordable to survive. Glee Hospitality’s Kader Saadi says that Dubai restaurants are still being supported by a few big spenders, however Aijiro Shinoda, brand chef, Atisuto, says this is no longer the case. “People aren’t showing off now compared to five years ago – the big spenders aren’t around,” he comments.
Grant of LXA adds: There’s a real opportunity – people will pay in the Middle East but we’re paying such inflated prices that if we can bring it to something more affordable, maybe that would motivate more people to eat out.”
Another interesting point Grant made, was that many of the staff working in the industry don’t understand what good service is because they don’t eat out themselves. She commented: “I think a simpler option for investing in your staff would be taking them to a restaurant that’s good and showing them what good service is. You’ve got big salary gaps and these guys aren’t eating the type of food or absorbing themselves in the type of service that’s available in the restaurants where they work.”
Maadad of Gates Hospitality added: “We need talent that actually understands the industry. A lot of staff don’t really engage.”
Restaurateurs crave a talented workforce that will stay with and progress through the company, however, too often in the Middle East, staff are poached quickly and are difficult – and expensive – to replace. Because of the high costs of recruitment and rent, allocating enough budget to payroll is a challenge, so often staff are underpaid and demotivated, meaning service suffers. Lopez of Bull&Roo said: “If you invest in your staff and your training and want them to stay for a long time, someone else will come along and offer them double the salary for a promoted position.”
Fast promotions also mean a skill gap can emerge at managerial level, which impacts the quality of service across the board. Kader Saadi, Glee Hospitality said: “Someone comes into the country as a waiter and 12 months later they are an assistant manager because people are poaching; because your guy left you, you’ve had to promote out of desperation. Unfortunately, you can’t put a sign up asking for 10 waiters – it’s all imported labour and it takes time to train them.”
“I think we really scupper the opportunities in this market for enterprise with the hold landlords have on entrepreneurs, so we need to see how we can mix it up again” Sarah-Jane Grant, LXA
One thing Rebecca Viani, head of franchising at AWJ Investments called for was more external training programmes for staff. “If there were training programmes available, we could send our staff – especially the managers or the people looking to become managers. We have an internal training department but we’ve got 800 employees so there’s only so much we can do.”
An opportunity Kader Saadi suggested, was introducing more part time staff, however some of the barriers are that they have to be on a parent’s visa and must have an NOC. Kitts of Emirates Academy also suggested that there are issues with millennials and “hard graft”.
For Nathalie Haddad, founder of The Right Bite, having staff working their way up through the industry is the best way to create a sustainable talent pool in the region. “It’s easier to work from down upward,” she said. “Here, restaurant owners and investors have studied the business but they don’t really know it inside-out. I think it’s important that we create a culture here that allows people to really learn the business.”
The Big F&B Forum will take place on Monday 30 October 2017 at Westin Dubai Mina Seyahi. For speaking, sponsorship and attendance enquiries, please contact Crystal@bncpublishing.net. The agenda for the forum will be unveiled in next month’s issue of Catering News Middle East.
