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BIG BUSINESS FOR DUBAI’S FOOD RETAIL SECTOR IN HOLY MONTH OF RAMADAN

On 29th of June, according to Islamic lunar calendar, the month of Ramadan will start. Muslims throughout the month observe fast for the whole day, which is broken by eating dates after offering the evening (Maghreb) prayers, further to which “Iftar” or the evening meal is taken. The permission for food intake continues till the morning time before the sunrise, when the last meal also called “Suhoor” is consumed before embarking on the next day’s fast.

In line with rest of the Islamic world, in Dubai as well, preparation for Ramadan seems to be in full swing. On the center stage of the euphoria are the myriad restaurants, eateries and food outlets, which are generally swarmed with hoards of people after the evening prayer. Though regular meals are available, it is Iftar (and Suhoor) buffet deals, which are expected to be high on the wish list of individuals, who are keeping fast. Interestingly many Non-Muslims from South East Asia, Far East and Europe are also seen to be equally jubilant during the festive Ramadan season, signifying the cultural cohesion of the city.

Keeping a tab on the irrepressible Iftar and Suhoor Buffet deals circulating across every possible platform in Dubai; at Research Konnection, this week our research endeavor has been focused towards understanding the food retail sector of Dubai with an emphasis on its vibrant restaurant landscape, visible vigor during the Ramadan season and the overall gross impact, which it would render on the economic constructs of the city. The research has also been complemented with a short online survey of the 600 residents, equally split into Muslims and Non-Muslims and one to one discussions with around 25 managers of restaurants in Dubai to get a closer look at the consumption dynamics in the emirate, in the context of Ramadan. Some of the key insights of the research have been mentioned below.

Restaurant Landscape in Dubai

Dubai is believed to be embraced with one of the very dynamic restaurant landscape, driven by huge influx of tourists throughout the year complemented with general propensity among its over 3 million residents towards (2 million are locals and rest one million are tourists and residents from other emirates such as Sharjah and Ajman etc., who stay in the emirate at any point of time) working, eating and hanging out. Dubai boasts over 6000 restaurants, which could be roughly divided into Arabic (Lebanese, Syrian etc.), European (Italian, French and English), Desi (Indian and Pakistani), Asian (Chinese, Thai, Filipino etc.) along with Bar Food, Sea Food, Fast Food and Steak Houses etc. based on cuisines served. Besides, the emirate also has a range of Japanese, Afghan, Persian, Turkish and Russian restaurants. The vividness of the restaurants is believed to be the reflection of rich demographic quotient of Dubai, housing over 200 nationalities.

In terms of the price involved, the city seems to have lot to offer. At one hand, there are budget restaurants, which are relatively more concentrated in places such as Bur Dubai, Karama, Nahda, Quasis and Deira etc. offering a full meal within the range of AED 35 -100 (USD 9.5 – 27.2). On the other side of the spectrum, there are upmarket posh restaurants, more visible in places such as Dubai Marina, Downtown Dubai, Jumeirah and Sheikh Zayed Road etc., where a meal for a person might cost over AED 500 (USD 136). In between there is a range of other mid to high range restaurants, which in conjunction with the other two counterparts, offer ample opportunities for all kinds of residents and tourist in the emirate to satiate their taste buds.

Ramadan and Food Sales

Like every Ramadan season, the upcoming one is believed to boost restaurant sales, as indicated from our discussions with near around 11 restaurants managers. Every one unanimously suggested that even though restaurants won’t be open during morning hours and sales would be restricted to just takeaways; during the evening and late night hours, the sales in the restaurants are supposed to skyrocket. Some of them have revealed that the sales during Ramadan could even be 5 times of the usual average, thanks to the Iftar and Suhoor deals, which oversee footfalls in big volume.

A significant part of the sales is also expected to generate through business cliental as most of the mid to high level companies located in the emirate have a norm of hosting Iftar dinners for its employees. Similarly higher business is anticipated for Shisha cafes as many individuals prefer indulging in Shisha post dinner. Unsurprisingly, most of Shisha cafes also offer Iftar/Suhoor deals to capitalize on this trend.

Market Survey

Our market survey endorses the anticipated rise in restaurant sales, which is expected during the Ramadan time period. On being asked about availing the deals, 87 percent of the Muslims replied that they would like to avail it at least once a week. Interestingly, 48 percent of their non-Muslims counterparts also showed interest in availing the same. Unsurprisingly the expected frequency is less among Non-Muslims as they mainly prefer such deals during weekends to get a feel of the exhilaration, which the city is charged with. On being asked about the most preferred price option, the response was slanted more towards budget option, though there have been substantial takers for higher alternatives as well.

  Figure 1: Shows the weekly frequency of respondents for availing the Ramadan meal deals

Figure 2: Shows the willingness of respondents to pay in AED for the Iftar/Suhoor deals

Research Findings and Conclusion

As indicated from the research, the impact of Ramadan on the restaurant landscape in Dubai should be substantial. Food retail, which is a key component of Dubai’s economy, will get further encouragement from its close linkage with other sectors such as retail and tourism.

Sales across food courts in various shopping malls in Dubai will increase as most of the residents will visit them for Eid shopping and hence refer taking their meal over there. It has been observed during previous Ramadans that most of the restaurants and fast food joints in Deira City Center, Mirdiff City Center, Mall of Emirates and Dubai mall etc. stay jam packed during the festive month. Though the research survey has not captured and quantified the sentiments of the incoming tourists, but without doubt they will also contribute significantly towards further sales.

Restaurants along with other food retail outlets in Dubai will get further boost from the overlapping of ongoing FIFA World Cup with the month of Ramadan. Our last week’s research has indicated that the soccer fever in the emirate will translate into higher footfalls and sales for restaurants, sports bars and shisha cafes in Dubai. Given that most of the matches are scheduled between 8PM to 2 AM Dubai timings, it will give an extra impetus to residents to go out and watch their favorite jersey over a range of favorite food, drink and shisha flavor.

The report has been compiled by Research Konnection, a Dubai based market research and feasibility study advisory. The market research initiative has been undertaken as a part of the agency’s weekly endeavor to figure out an interesting dimension of Dubai and evaluate its overall impact on the emirate’s economy.

The given research in tandem with previous research work indicate that food retail sector seems to be robust in the emirate on the backdrop of rise in economic activities and per capita income, large volume tourist inflows and euphoria associated with events such as Ramadan and FIFA World Cup 2014. This also demonstrates that emirate at the moment offer a fertile ground for investors or businesses looking to foray into the given sector. If you are a local/international food retail business or individual investor looking into entering into the sector in Dubai/UAE feel free to konnect with us. For information drop us a mail at waqas@researchkonnection.com and we will revert back.

Author: RKonnect
The author is the Managing Director of Research Konnection, a Dubai based market research and consulting firm that helps local and international companies to identify emerging business opportunities and successfully expand in the Gulf region. The author can be reached at waqas@researchkonnection.com
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