A dramatic rise in home delivery options, inexperienced operators and ‘short-sighted’ landlords are most significant challenges faced by Dubai’s F&B sector, according to Samer Hamadeh, the founder and managing partner of Aegis Hospitality, a Dubai-based nightlife and restaurant management company.
In an interview with Arabian Business, Hamadeh – whose concepts in the emirate include the popular Arcade Stereo and Akiba Dori – said that while he does not believe the Dubai F&B market is as saturated as other cities around the world, it is unique in having to cope with the extremely high rate of growth of home delivery options.
“Home delivery has hurt more businesses than people realise. [This] is why only strong concepts are surviving in the age of the paper bag,” he said. “That’s actually how I develop F&B brands. I ask myself if the concept is new and necessary or if it’s old and needs an update.
“There’s no right formula for standing out, but understanding your customer will help get you there. You can’t beat word of mouth.”
Cost of inexperience
In Hamadeh’s view, a more serious problem facing the industry stems from a minority of “short sighted” landlords and “inexperienced operators who accept ridiculous terms”.
“High rents are a reflection of lack of experience, instead of being a reflection of something more logical, like guaranteed footfall,” he said.
“New hotels, malls and locations with zero footfall charge rent based on ‘market rates’, which I find ludicrous in a developing market. Rents should be charged based on formulas and not ‘what the neighbours charge’.”
If Dubai’s industry is to have a “snowball’s chance in hell of thriving, not just surviving”, Hamadeh said that landlords and tenants should work together to fine tune offerings so that customers receive the experience they pay for.
These issues, along with a lack of financial planning, have led to businesses failing early on, and, according to Hamadeh, are in turn a reflection of a lack of relevant experience, which he said is “the most important factor” in a place such as Dubai.
“You might be an incredible under-18 football player but once you’re on the pitch with a veteran, you’re going to learn the hard way that experience is what, more often than not, wins matches. The F&B industry is no different,” he said.
“You have experienced layers who set the trend and get others excited about the potential of success, but the pros don’t divulge all their past failures,” he added.
“The new guys jump in and realise quickly that it’s not a level playing field, so they quit. Some try again but the majority just move on.”