Language selection

Search

Foodservice profile – United Arab Emirates

April 2020

Executive summary

The United Arab Emirates (UAE) is a federation of seven emirates with a population of 9.7 million in 2018, 8.5 million (89%) of whom are expatriates (non-UAE nationals). In 2030, the UAE's population is expected to reach 10.5 million, an increase of 21.9% from 2015, which is attributed mostly to the high demand for labour in the two main cities of Abu Dhabi and Dubai. Ongoing construction and demand for labour have attracted workers from the region and around the world.

The UAE's gross domestic product (GDP) was US$414.2 billion in 2018, which represents 0.7% of the world economy.

Dubai was the fourth most visited city of the world in 2018 with 16 million visitors. Despite an influx of foreign nationals with money to spend and open to foreign food varieties, the foodservice sector is facing a slowdown as increased competition and weaker consumer expenditure have impacted operator margins. Expo2020 Dubai will offer positive prospects for the foodservice sector. Consumer demand for foodservices is expected to continue growing steadily due to continuing out-of-home consumption and food delivery. Canada will participate in Expo2020.

In 2018, the UAE was Canada's eighth largest agri-food and seafood export destination in the world and the largest agri-food and export market within the Middle East and North Africa region (MENA). Canada currently has no known key market access issues with the UAE.

The UAE foodservice market is dominated by restaurants and fast food restaurants are set to represent a rapidly growing share of the industry's restaurant channel.

Note: This report focuses on profit operators rather than cost operators (institutional catering sector: education, healthcare or hospital).

Consumer profile and foodservice trends

With a population of approximately 9.7 million and a gross domestic product (GDP) of US$414.2 billion in 2018, the UAE represents 0.7% of the world economy. The Gulf Cooperation Council (GCC) is undergoing large-scale economic development and diversification, including notably Saudi Vision 2030 and UAE Centennial 2071.Footnote 1 The UAE is a very young country with people between 16 and 54 years accounting for 77.9% of the overall population in 2017. Children and teenagers accounted for 21% of the population, while seniors (people over 65) accounted for just 1.1% of the population. Young and middle-aged adults are particularly busy with work/life and perceive eating out as part of their daily routine. The UAE is thought to have the highest number of food and beverage outlets per capita in the world.Footnote 2

In 2018, Dubai was ranked the fourth most visited city in the world with 16 million visitors, which provides a huge opportunity for the UAE foodservice market, in particular niche products. In 2018, the UAE was Canada's eighth largest agri-food and seafood export destination (Can$506 million) in the world and the largest agri-food and seafood export market in the MENA region. Canada currently has no known key market access issues with the UAE.

A number of initiatives have been taken to develop the tourism industry in the emirates, including Dubai Tourism Strategy 2020, Sharjah Tourism Vision 2021 and Ajman Strategic Plan for Tourism 2015-2021. Dubai ranked among the top 20 tourism destinations in the world on the Travellers' Choice Destinations 2018 list published by TripAdvisor. According to the 2017 World Travel and Tourism Council Report, the travel and tourism sector made a direct contribution to the country's GDP amounting to US$8.8 billion in 2017 and that is forecast to increase by 5.0% in 2018, and by almost 4.1% per annum from 2018 to 2028. The UAE government states that 5.4% of the country's total employment is directly aligned with the travel and tourism sector, and its share is expected to rise by 2.4% per annum in 2020.Footnote 3

The foodservice sector in the UAE is facing a slowdown as increased competition and weaker consumer expenditures are impacting operator margins. Across the foodservice sector, 2018 remained a challenging year for players seeking to maintain their top-level revenue targets along with their profit margins. Implementation of the Value Added Tax (VAT: charging 5% tax on all eligible business transactions) in the country triggered key operational challenges that required players in the sector to adjust to new processes, as well as training and hiring employees for VAT implementation and management of this new system.

As the retail segment is facing challenges with dropping sales for retail tenants in key malls, malls have increased visitor experiences by offering retail space for entertainment venues such as cinemas and play areas for children.

Third-party delivery platforms and meal delivery plans have become vital channels for any foodservice operator in the country seeking to sustain order volume. There has been increased competition in the delivery sector itself, with key platforms such as Zomato and Talabat, which cater to mainstream customers, and UberEats and Deliveroo, which target their unique set of consumers.

Key local franchise partners continue to hold strong positions in the market. Their long-time presence and long-held supply chain efficiencies and relationships have helped these players adapt to changing market dynamics. New market entrants continue to trust these players to launch their concepts in the UAE.

The consumer foodservice sector is expected to continue to grow steadily due to continuing out-of-home consumption and food delivery among the country's largely expatriate-dominated population. Additionally, tourists will remain a key target for fine and casual dining players offering distinguished experiences and cuisine options. Expo2020 will also offer positive prospects for the foodservice sector.Footnote 4

Based on retailer reports and market observations, it is anticipated that the demand for natural, organic, healthy and "free-from" products in the GCC region will steadily increase. Disposable incomes, more health-conscious consumers and UAE government initiatives to lower obesity are expected to accelerate the demand for these food products over the coming years.Footnote 5

Foodservices: profit operator sales

The UAE foodservice market is dominated by restaurants, where fast food restaurants are set to represent a rapidly growing share of the industry's restaurant channel.

In this report, eight foodservice subsectors have been grouped together to form the "for profit" sector: accommodation; leisure; mobile operators; pubs, clubs and bars (PCB); restaurants; retail (on-trade only); travel; and workplace cafés. They are operated by either independent or chained consumer foodservice providers.

In 2018, the UAE's foodservice sector recorded US$10.6 billion in sales. Restaurants were the largest foodservice subsector, reaching US$6.2 billion and accounting for 58.5% of the total foodservice sector, with a compound annual growth rate (CAGR) of 5.8% from 2015 to 2018. This subsector is expected to reach US$7.6 billion by 2022 with a CAGR of 5.0%. The accommodation subsector ranked second in terms of sales value (US$1.6 billion) in 2018, followed by PCB venues (US$969.0 million), workplace cafés (US$694.6 million) and travel (US$661.2 million). All subsectors grew from 2015 to 2018 and are expected to continue growing (ranging between a CAGR of 4.4% and 21.9%) from 2019 to 2022.

Value sales and growth of the United Arab Emirates' foodservice sector by subsector, in US$ million
Subsector 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Accommodation 1,285.2 1,576.1 7.0 1,684.7 2,015.2 6.2
Leisure 128.3 155.2 6.5 165.0 194.9 5.7
Mobile operator 2.2 15.3 90.4 20.3 36.7 21.9
Pub, club and bar 789.9 969.0 7.0 1,034.3 1,245.2 6.4
Restaurant 5,263.5 6,232.0 5.8 6,563.7 7,601.5 5.0
Retail (on-trade) 270.4 317.6 5.5 333.8 384.5 4.8
Travel 532.2 661.2 7.5 709.9 858.6 6.5
Workplace cafe 602.5 694.6 4.9 725.9 826.3 4.4
Total 8,874.3 10,621.0 6.2 11,237.5 13,162.9 5.4

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Within the restaurant subsector, fast food restaurants recorded the highest sales of US$3.7 billion in 2018, followed by full service restaurants (FSR) at US$1.9 billion. Growth in both outlets represented a CAGR of 6.0% and 5.5%, respectively, from 2015 to 2018; both outlets are forecast to grow at a CAGR of 5.2% and 4.7%, respectively, from 2019 to 2022. Fast food restaurants will remain one of the most promising markets within the UAE foodservice sector. Continued economic prosperity is allowing FSR visits to become a regular occurrence for family or social occasions. A lesser focus on price is allowing consumers to prioritize halal food and quality. Traditional Middle Eastern and local food and drinks lead in FSR. Consumers are beginning to demand a healthier product mix from operators. Casual dining is the most popular dining format in the channel as it provides quality food at affordable prices. Coffee and tea shops recorded a CAGR of 5.4% from 2015 to 2018. The top five coffee and tea shops consisted of Starbucks Corporation (13.4% share), Costa Coffee (8.8%), Tim Horton (8.4%), Dunkin' Brands Group Inc.(6.8%) and Seattle Coffee Co (2.4%). Despite 69% of consumers preferring chain coffee and tea shops, 31% still prefer to visit independent outlets because of their uniqueness and the craft food offered.Footnote 2

Within the accommodation subsector, hotels and motels recorded the highest sales of US$1.6 billion in 2018, accounting for 98.6% of total sales within the accommodation subsector. Growth in hotels and motels reached 7.0% from 2015 to 2018 and they are forecast to grow at a CAGR of 6.2% from 2019 to 2022.

Within the PCB subsector, pubs and bars recorded the highest sales with US$724.9 million in 2018, followed by private member and social clubs (US$149.6 million). Pubs and bars grew at a CAGR of 7.4% from 2015 to 2018, and are forecast to grow at a CAGR of 6.7% from 2019 to 2022.

It is worth noting that within the mobile operator subsector, vans (or food trucks) demonstrated the highest growth among all outlets at a CAGR of 218.6% from 2015 to 2018 and significantly increased sales to US$13.2 million in 2018 from US$0.4 million (the lowest sales value among all outlets) in 2015. Food trucks have become an integral part of many festivals that are held during weekends in the UAE.

Value sales and growth of the United Arab Emirates' foodservice sector by subsector and outlet, in US$ million
Subsector Outlet 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Accommodation Bed and breakfast 1.5 1.8 5.4 1.9 2.2 4.7
Guest houses 3.1 3.7 6.5 3.9 4.6 5.5
Holiday parks 6.8 8.2 6.5 8.7 10.2 5.6
Hostels 4.6 5.6 6.8 5.9 7.1 6.0
Hotels and motels 1,266.6 1,553.6 7.0 1,660.9 1,987.2 6.2
Others 2.7 3.2 5.7 3.3 4.0 5.9
Leisure Entertainment 20.2 24.2 6.2 25.6 30.0 5.4
Venue 85.8 104.0 6.6 110.7 131.0 5.8
Visitor attractions 22.4 27.0 6.5 28.7 33.9 5.7
Mobile operator Other mobile operators 1.8 2.1 5.7 2.3 2.6 5.0
Vans 0.4 13.2 218.6 18.0 34.1 23.7
Pub, club and bar Nightclubs 80.7 94.5 5.4 99.7 116.6 5.4
Private member and social clubs 124.7 149.6 6.3 158.6 186.0 5.5
Pubs and bars 584.6 724.9 7.4 776.0 942.6 6.7
Restaurant Coffee and tea shops 499.2 584.5 5.4 613.8 705.0 4.7
Full service restaurants 1,657.9 1,949.5 5.5 2,040.4 2,341.0 4.7
Ice cream parlours 30.4 35.4 5.2 37.0 42.2 4.5
Fast food restaurants 3,076.0 3,662.6 6.0 3,872.5 4,513.4 5.2
Retail (on trade) Bakers 55.5 64.5 5.1 67.3 76.6 4.4
Convenience stores 6.6 7.7 5.5 8.1 9.3 4.6
Delicatessens 4.8 5.5 4.8 5.8 6.7 5.0
Department stores 15.0 17.6 5.6 18.5 21.4 4.8
Garden and home Improvement centres 1.9 2.2 4.9 2.3 2.6 4.2
Other retail 7.3 8.6 5.7 9.1 10.5 5.0
Service station forecourts 34.2 40.1 5.4 42.0 48.1 4.6
Supermarkets and hypermarkets 145.1 171.3 5.7 180.6 209.4 5.0
Travel Air 530.5 659.2 7.5 707.7 856.0 6.5
Sea 1.7 2.0 6.9 2.2 2.6 6.1
Workplace Government 87.1 102.1 5.4 107.2 123.1 4.7
Industrial 297.5 346.5 5.2 362.5 413.7 4.5
Retail, financial and offices 217.9 246.0 4.1 256.2 289.5 4.2

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Foodservice sector: chain franchises versus independent operators

Despite the faster growth of chain franchises in the UAE, independent operators outnumbered chain franchises in sales, accounting for 63.6% of sales in the foodservice sector in 2018 compared with chain franchises at 36.4%. Independent and chain franchises grew at a CAGR of 6.1% and 6.4%, respectively, from 2014 to 2018 and are expected to continue to do well at a CAGR of 5.3% and 5.6%, respectively, from 2019 to 2022.

Within the restaurant subsector, independent restaurant sales reached US$3.8 billion, while chain restaurants reached US$2.4 billion in 2018. Growth in all subsectors among both chain and independent operators was steady with a CAGR ranging from 5.4% (independent retail on-trade) to 90.4% (independent mobile operators) between 2015 and 2018. Growth in all subsectors is expected to continue to be steady over the 2019 to 2022 period.

Chains are better equipped to adapt to changing consumer trends and are valued by many consumers from a diverse array of nationalities in the country for their familiarity and standardized offerings. Therefore, many international foodservice brands have entered the Emirati market. The country's considerable expatriate population has allowed globally recognized Western brands to flourish in the channel, with American-founded companies making up the top five operators exclusively. McDonald's, the market leader, maintains a 10.2% share of the total fast food channel, followed by Doctor's Associates Inc. (Subway) with 6.0%, Yum! Brands Inc. with 5.1%, Restaurant Brands International with 4.5% and CKE Restaurants (parent company of Hardee's and Carl's Jr) with 2.6%. However, with 22% of consumers visiting a fast food restaurant because of their children, attracting children continues to be an effective means of obtaining transactions from their parents. Increasing concerns regarding obesity levels could create higher demand for "healthy fast food." The UAE foodservice market is likely to be fertile ground for health-focused fast food operators such as Salad Box, Freshii or Grabba Green.Footnote 2

Historical and forecast sales of the United Arab Emirates' foodservice sector: chain franchises versus independent operators, in US$ million
Chain vs Independent Subsector 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Chain Accommodation 522.8 642.6 7.1 687.5 824.6 6.2
Leisure 106.2 128.5 6.5 136.6 161.5 5.7
Restaurants 2,028.2 2,432.6 6.2 2,572.6 3,014.0 5.4
Retail (on-trade) 140.7 165.7 5.6 174.4 201.5 4.9
Subtotal for chain 2,797.9 3,369.5 6.4 3,571.1 4,201.6 5.6
Independent Accommodation 762.5 933.4 7.0 997.2 1,190.6 6.1
Leisure 22.1 26.7 6.5 28.4 33.4 5.6
Mobile operators 2.2 15.3 90.4 20.3 36.7 21.9
Pub, club and bar 789.9 969.0 7.0 1,034.3 1,245.2 6.4
Restaurants 3,235.2 3,799.4 5.5 3,991.1 4,587.5 4.8
Retail (on-trade) 129.7 151.8 5.4 159.4 183.0 4.7
Subtotal for independent 4,941.6 5,895.7 6.1 6,230.6 7,276.5 5.3
Total for chain and independent 7,739.5 9,265.2 6.0 9,801.7 11,478.1 5.1

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

In 2018, fast food restaurants had the most chained outlets (franchises) at 996 in the UAE's foodservice sector, followed by coffee and tea shops (847), supermarkets and hypermarkets (474), full service restaurants (399) and hotels and motels (369). Hotels and motels demonstrated the highest growth at a CAGR of 3.7% from 2015 to 2018.

Number of chained outlets in the United Arab Emirates' foodservice sector, 2015-2018
Chain: subsector Outlet 2015 2016 2017 2018 CAGR* % 2015-2018
Accommodation Hotels and motels 331 344 357 369 3.7
Leisure Entertainment 55 56 56 57 1.2
Venue 245 248 249 251 0.8
Visitor attraction 173 175 175 176 0.6
Restaurant Coffee and tea shops 802 817 832 847 1.8
Full service restaurants 390 393 396 399 0.8
Ice cream parlours 243 244 245 246 0.4
Fast food restaurants 963 974 985 996 1.1
Retail Bakers 33 33 33 32 −1.0
Convenience stores 52 53 53 53 0.6
Department stores 26 26 26 26 0.0
Service station forecourts 259 262 263 266 0.9
Supermarkets and hypermarkets 461 464 468 474 0.9

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

In 2018, full service restaurants had the most independent outlets (4,589) in the UAE's foodservice sector, followed by coffee and tea shops (3,545), fast food restaurants (1,176), hotels and motels (911), and pubs and bars (903). Vans (food trucks) within the mobile operator category recorded the highest CAGR of 236.9% from 2015 to 2018.

Number of independent outlets in the United Arab Emirates' foodservice sector, 2015-2018
Independent: subsector Outlet 2015 2016 2017 2018 CAGR* % 2015-2018
Accommodation Bed and breakfast 70 71 71 71 0.5
Guest houses 91 92 92 92 0.4
Holiday parks 15 16 16 16 2.2
Hostels 100 101 101 101 0.3
Hotels and motels 814 845 877 911 3.8
Others 45 45 45 45 0.0
Leisure Entertainment 16 16 16 15 −2.1
Venues 94 94 95 95 0.4
Visitor attractions 39 39 40 40 0.8
Mobile Operator Other mobile operators 49 50 51 52 2.0
Vans 4 27 103 153 236.9
Pub, Club and Bar Nightclubs 126 126 126 127 0.3
Private member and social clubs 271 273 273 273 0.2
Pubs and bars 898 899 900 902 0.1
Restaurant Coffee and tea shops 3,351 3,414 3,477 3,545 1.9
Full service restaurants 4,520 4,543 4,563 4,589 0.5
Ice cream parlours 78 78 78 78 0.0
Fast food restaurants 1,141 1,152 1,163 1,176 1.0
Retail Bakers 243 245 246 248 0.7
Convenience stores 61 61 61 61 0.0
Delicatessens 65 65 65 66 0.5
Department stores 10 10 11 11 3.2
Garden and home improvement centres 48 48 49 49 0.7
Other retail 52 52 53 53 0.6
Service station forecourt 44 44 45 45 0.8
Supermarkets and hypermarkets 428 431 433 434 0.5

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Dine-in vs take-away foodservice channels

In 2018, foodservice sector sales included the dine-in channel with US$8.0 billion, accounting for a 75.4% share, while the take-away channel recorded US$2.6 billion in sales, accounting for the remaining 24.6% share. Within the take-away channel, collection (pickup) sub-channels reached US$1.9 billion, representing a 17.6% share, while delivery sub-channels reached US$0.7 billion, representing 7.0%. Dine-in and take-away grew at a CAGR of 4.5% and 4.8%, respectively, from 2015 to 2018. The delivery take-away sub-channel reached the highest CAGR of 5.8% over the same period. Although the majority of revenue is spent on dine-in transactions across all restaurant sector channels, future value growth is set to occur from a thriving take-away market.

Due to the extreme heat in the UAE during the summer, food delivery is ingrained into the lifestyle of UAE consumers. Naturally, food delivery apps like Deliveroo, Zomato, Talabat and UberEats are growing rapidly in the country, and this is expected to drive the accelerated growth of take-aways in 2017-2022 across all channels. This relatively high proportion of take-away transactions highlights the greater importance placed on convenience by consumers. Within the fast food restaurant sector, 44% of meal occasions occur on the premises, with the remaining 56% being made up by take-aways.Footnote 2

Sales value and growth by channels: dine-in vs take-away, in US$ million
Channel Sub-channel 2015 2018 Share % 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Dine-in Dine-in 6,701.9 8,004.0 75.4 4.5 8,461.8 9,898.5 3.6
Take-away Collection take-away 1,575.5 1,869.9 17.6 4.4 1,974.8 2,298.6 3.5
Delivery take-away 747.11 747.1 7.0 5.8 800.8 965.9 4.4
Sub-total for take-away 2,172.3 2,617.0 24.6 4.8 2,775.7 3,264.5 3.8
Total 8,874.3 10,621.0 4.6 11,237.5 13,162.9 3.7

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Market opportunities for Canadian exporters

Exporters are strongly advised to work with trade commissioners, local import agents, distributors and end users to make sure their products are in compliance with the UAE's regulations and all proper documentation has been completed. For more information, please consult the Food export requirements library (Canadian Food Inspection Agency) and Doing business in the United Arab Emirates (Canadian Trade Commission Service).

Conclusion

Consumer foodservices are expected to continue growing steadily due to continuing out-of-home consumption and food delivery among the country's largely expatriate-dominated population. In 2018, Dubai was the fourth most visited city in the world, with 16 million visitors. The UAE foodservice market thus represents a huge opportunity. In 2018, the UAE was Canada's eighth largest agri-food and seafood export destination in the world and the largest agri-food and export market within the Middle East and North Africa region (MENA). The UAE's foodservice market provides opportunities for the Canadian foodservice industry and agri-food and seafood suppliers to expand into the UAE and to compete with other existing international food franchises, along with local foodservice companies.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be accessed through the International agri-food market intelligence page.

For additional information on Gulfood 2020, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and agri-food Canada
ben.berry@canada.ca

Resources

Foodservice profile – United Arab Emirates
Global Analysis Report

Prepared by: Hongli Wang, Market Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2020).

Photo credits
All photographs reproduced in this publication are used by permission of the rights holders.
All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada.

To join our distribution list or to suggest additional report topics or markets, please contact:

Agriculture and Agri-Food Canada, Global Analysis
1341 Baseline Rd, Tower 5, 3rd floor
Ottawa ON  K1A 0C5
Canada
Email: aafc.mas-sam.aac@canada.ca

The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada (AAFC) assumes no liability for any actions taken based on the information contained herein.

Reproduction or redistribution of this document, in whole or in part, must include acknowledgement of agriculture and agri-food Canada as the owner of the copyright in the document, through a reference citing AAFC, the title of the document and the year. Where the reproduction or redistribution includes data from this document, it must also include an acknowledgement of the specific data source(s), as noted in this document.

Agriculture and Agri-Food Canada provides this document and other report services to agriculture and food industry clients free of charge.

Report a problem on this page
Please select all that apply:

Date modified: