Foodservice Profile – United Arab Emirates

Macroeconomic profile and consumer trends

In 2020, the United Arab Emirates' (UAE's) total population was 9.3 million people. The UAE's gross domestic product (GDP) was US$ 380.6 billion. Consumers per-capita income continued to grow despite economic difficulties from 2016-2020. In 2020, however, due to the pandemic, UAE real GDP fell by −5.9% from US$ 421.1 billion in 2019 to US$ 380.6 billion. In 2021, the UAE's GDP has slightly recovered, growing back by 2.3% to US$ 411.6 billion.

The UAE's economic growth was significantly negatively impacted in 2020, mainly due to pandemic-related travel restrictions and oil output cuts. Being an oil-dependent nation and as the oil sector underperformed in 2020, the UAE experienced a major economic slowdown, which resulted in increases in unemployment, economic uncertainty, and dampening consumption. This led to a major exodus of the county's migrant worker population, noted by its population decrease of −2.3% in 2020 from 9.5 million in 2019. The government has taken to a fiscal stimulus plan to support businesses and the economy as well as looking for increasing ways to diversify the economy away from oil.^{Footnote 1}

The UAE is characterized a high degree of economic freedom and a favourable business environment, especially within the MENA region. Although relations with some regional peers have improved, tensions continue to exist with others, causing economic recovery from the pandemic to likely be below its peers, whilst its reliance on the oil and gas industry remains a risk. Poverty amongst low-skilled migrant populations is likely to persist, whilst health indicators continue to deteriorate. Rapid deployment of 5G however, will increase opportunities for online retailed and e-commerce activities and open new channels for the foodservice market.^{Footnote 2}

The United Arab Emirates foodservice market

UAE was the 2nd largest foodservice market within the Arab Gulf Cooperation Council (GCC) region with a sales value of US$ 10.4 billion, behind Saudi Arabia at US$ 13.8 billion in 2020. Whereby, within the five markets reported throughout the Middle Eastern & North African (MENA) foodservice region, Egypt was the largest market with the highest growth with a CAGR of 5.3%, followed by Morocco at a CAGR of −5.2% between 2016 to 2020. Egypt was the only reported market to not experience a negative growth rate in 2020, with Saudi Arabia falling the greatest with a CAGR of −8.3%. Growth within the UAE is expected to rebound by a CAGR of 6.1%, while Saudi Arabia's growth will also rebound by a CAGR of 12.4% (2021-2025).

The UAE foodservice sector has seen a sales value decrease of a CAGR of 7.3% between the period of 2016-2020, reaching UA$ 10.4 billion in 2020. The effects of the pandemic had a drastic negative impact on all categories of consumer foodservice in the UAE in 2020, primarily due to the impact of national lockdown restrictions which meant that businesses could not serve eat-in customers for long durations of time. Furthermore, when lockdown restrictions were lifted, outlets were required to have more stringent health and hygiene processes to reduce the spread of the pandemic. Foodservice companies also needed to maintain social distancing measures in their premises even when lockdown restrictions were lifted, which meant outlets that relied on indoor seating, such as full-service restaurants, cafés/bars, and to a certain extent, limited-service restaurants could not open at full capacity.^{Footnote 3}

Consumer fear of the pandemic also led to declining demand as customers refuse to travel far from home or put themselves into possible contact with the virus. Perceptions of hygiene also meant that consumers had more confidence in chained foodservice services as these operators often had a more comprehensive hygiene procedure as compared to independent street stalls/kiosks which suffered negative hygiene perceptions.

In addition to already suffering from falling oil prices, the pandemic led to further decreased consumer expenditure, making consumers more price sensitive. The consumer base in the UAE also shrank significantly as many expatriates and migrant workers left the sheikdom after experiencing heavy salary reductions or were let go during the pandemic crisis, meaning many expatriates could not afford the relatively high cost of living in Dubai, leading to a significant decrease in the population of UAE in 2020.

A large proportion of consumer foodservice sales switched to retail in 2020, as consumers entered periods of long home seclusion, which led to increased interest in home-cooking that outlasted the periods of lockdown. This led to retail and consumer foodservices both overwhelmingly adopting online sales in 2020 as a response, which saw a rapid increase in home deliveries from consumer foodservice outlets.^{Footnote 3}

Vaccination roll-out began at the end of 2020, which will have a positive impact on the foodservice market as it restores consumer confidence in returning to foodservice outlets. As well, as the pandemic situation improves, UAE's economy will also be expected to improve as it is heavily reliant on the recovery of its tourism industry. The postponed Expo 2020, which is being held from October 2021 to March 2022 is expected to provide a well-needed boost to the UAE economy, attracting tourists and business travel. The event will also provide an opportunity for growth in consumer foodservice due to the need for catering and the increased number of tourists vising the UAE during this six-month event.

In 2020, consumer foodservice through retail was the UAE's largest distribution channel by location with value sales of US$ 4.9 billion, representing a total share of 47.2% with a CAGR of −7.5% between the period of 2016-2020. Standalone consumer foodservice was the second largest in value sales, totalling to US$ 3.1 billion, representing a total share of 30.2% with a CAGR of −1.6%, the highest growth among all channels. Smaller foodservice channels include lodging with value sales of US$ 1.8 billion, followed by leisure (US$ 394.7 million), and travel (US$ 155.4 million). With the aftermath of the pandemic, and the lessening of restrictions, all subsectors are expected to rebound and grow by a CAGR ranging from approximately 3-11% (2021-2025).

Full-service restaurants (FSRs) were the largest category with a sales value of US$ 5.7 billion, which accounted to 55.0% of total consumer foodservice sales in 2020. Within the full-service category, Asian restaurants held the largest sales, valued at US$ 2.1 billion, or 37.6% of sales within FSRs. This was followed by Middle Eastern restaurants (US$ 1.1 billion), North American restaurants (US$ 847.8 million) and European restaurants (US$ 593.4 million). European restaurants experienced the most decline with a CAGR of −12.0% while Pizza restaurants experienced the least fall in growth, with a decline of −5.3%. All full-service restaurants are expected to experience growth from a range of 4-8% from 2021 to 2025.

Limited-service restaurants (LSRs) were the UAE's 2nd largest category by foodservice sales with a sales value of US$ 2.3 billion or 22.4% of total sales in 2020. Within the LSR sector, Burger restaurants represented the largest sales, valued at US$ 691.2 million or 29.8% of LSR sales, followed by Middle Eastern restaurants at 19.6% (US$ 455.6 million), Chicken restaurants at 18.9% (US$ 439.1 million), and bakery product restaurants at 17.2% (US$ 398.0 million). Other smaller categories within this channel consisted of the remaining share of 14.4% (US$ 334.5 million), which included pizza, Asian, ice cream and fish restaurants. Among limited-service restaurants only pizza restaurants and convenience stores saw non-negative growth, with respective CAGR's of 0.3% and 0.0% between from 2016 to 2020, while Fish restaurants saw the greatest decrease with a CAGR of −12.3% in the same period. All categories under limited-service restaurants are expected to grow at a range between 2-9% from 2021 to 2025.

In 2020, cafés and bars were the UAE's 3rd largest subsector within the foodservice industry with a sales value of US$ 2.2 billion (21.5% of total sales). Within cafés and bars, bars/pubs were by far the largest category with a sales value of US$ 1.6 billion or 71.6% of foodservice sales. This was followed by cafés at 14.1% (US$ 314.8 million), and specialist coffee and tea shops at 13.0% (US$ 288.9 million). All restaurants under the cafés and bars category saw decreases in CAGR between 2016 to 2020 and are expected to rebound and experience growth ranging from 5-12% from 2021 to 2025.

Foodservice: chain franchises versus independent operators

Independent foodservice operators dominated the foodservice industry in the UAE with value sales of US$ 7.4 billion in 2020. However, it saw a decrease in growth rate of −8.0% from the sales value of US$ 10.4 billion in 2016. This was influenced by the effects of the pandemic crisis as operators were forced to close doors to eat-in customers and prescribe and implement more stringent health and hygiene processes to avoid the spread of infection. Recovery is expected to be slow, and operators are not expected to recover to pre-pandemic sale levels in 2021. However, independent operators are expected to fully recover by 2025, with a CAGR of 5.9% during the period of 2021-2025.

In 2020, chain franchises in the UAE foodservice industry had a total value sale of US$2.9 billion with a CAGR of −5.5% (2016-2020) and an expected CAGR of 6.7% (2021-2025). Chain franchises are expected to see strong growth as foodservice sales rebound following the pandemic crisis, experiencing greater growth in the next period (2021-2025) then independent operators at an expected CAGR of 6.7%, to reach US$ 4.3 billion by 2025.

Despite domination by independent operators, they were also the most vulnerable to the effects of the pandemic crisis in 2020 compared to their chained counterparts as they lacked the robust support systems necessary to address the changes that chained services have. Without any global or national strategies to follow, independent operators found it difficult to adapt to pandemic changes, especially since many independent operators did not have an online presence prior to 2020. Another challenge that independent operators faced was implementation of hygiene measures and new health and safety procedures, as they lacked any prior strategies to follow. The result was that consumer demand for chained franchises increased as trust in established health and hygiene practices were implemented upon reopening in 2020-2021 while on the other hand many independent players were unable to support themselves during the pandemic and were forced to close permanently.

Channel growth will be driven mainly by the rising number of transactions, mostly from the increase of higher tourism rates and the growth in expected business visits to the country, especially during large events such as the Expo 2020 Dubai held in late 2021-2022. However, continued effect of the pandemic crisis, due to its increasing number of variants, continues to effect domestic consumer spending, which is recovering slowly. Nevertheless, as the world continues to open up and health restrictions lessen, consumers are expected to eventually return, and consumer foodservice sales are expected to recover.

In 2020, independent foodservice sales amounted to US$ 7.4 billion, decreasing by a CAGR of −8.0% from US$ 10.4 billion in 2016. However, it is expected to bounce back in the next period 2021 to 2025, with an expected CAGR of 5.9% from a predicted US$ 8.9 billion in 2021 to US$ 11.2 billion in 2025. Full-service independent restaurants were the largest independent operator category, with sales of US$ 4.7 billion, representing 63.6% of total independent foodservice sales in 2020. This was followed by cafés/bars, with a sales value of US$ 1.8 billion, representing 24.3% of total sales, and limited-service restaurants with a sales value of US$ 830.2 million, representing 6.2% of total sales in 2020. All operators within independent foodservices experienced a negative CAGR from 2016-2020, attributed to the pandemic crisis, with cafés/bars being hit the hardest, suffering a decrease in CAGR of −8.7% from 2016-2020, while surprisingly street stalls/kiosks suffered the least decrease by a CAGR of −1.6% from US$ 58.9 million in 2016 to US$ 55.3 million in 2020.

Within independent full-service restaurants, Asian restaurants held the largest foodservice sales, amounting to US$ 2.0 billion or 41.5% of full-service restaurant sales in 2020. This was followed by Middle Eastern restaurants, which held a 12.7% (US$ 944.2 million) sales share, European restaurants, which held a 7.6% (US$ 562.7 million) sales share, and North American restaurants, which held a 7.4% (US$ 548.4 million) sales share. European restaurants experienced the worst decrease with a CAGR of −12.0% from 2016 to 2020 while Asian restaurants experienced the least decrease with a CAGR of −7.2% for the same period. Pizza and Middle Eastern restaurants are expected to experience the greatest growth in the next period with an expected CAGR of 5.7% and 5.6% respectively from 2021-2025.

Under independently operated cafés/bars, bars/pubs dominated foodservice sales despite the pandemic crisis, with sales valued at US$ 1.6 billion, amounting to 86.9% of cafés/bar sales in 2020. Bars/pubs, however, saw the 2nd greatest decrease in sales growth as attributed to the pandemic and represented by a CAGR of −9.0% from 2016 to 2020. Juice/smoothie bars saw the greatest decrease in growth with a CAGR of −11.9% during the same period.

For independently operated limited-service restaurants, Middle Eastern restaurants held the largest sales, valued at US$ 432.9 million or 52.1% of total limited-service restaurant sales in 2020. This is followed by Burger restaurants at 17.2% (US$ 142.4 million) of sales and Bakery services at 12.7% (US$ 105.3 million) of sales.

In 2020, chained foodservice sales amounted to US$ 2.9 billion, decreasing by a CAGR of −5.5% from US$ 3.7 billion in 2016. However, it is expected to bounce back in the next period 2021 to 2025, with an expected CAGR of 6.7% from a predicted US$ 3.3 billion in 2021 to US$ 4.3 billion in 2025. Limited-service restaurants were the largest chained operator category, with sales of US$ 1.5 billion, representing 51.0% of total chained foodservice sales in 2020. This was followed by full-service restaurants, with a sales value of US$ 966.3 million, representing 33.1% of total sales, and cafés/bars with a sales value of US$ 421.9 million, representing 14.5% of total sales in 2020. Most operators within chained foodservices experienced a negative CAGR from 2016 to 2020, attributed to the pandemic crisis, with full-service restaurants being hit the hardest, suffering a decrease in CAGR of −7.7% from 2016 to 2020, while surprisingly self-service cafeterias experienced sales growth by a CAGR of 5.8% from US$ 28.5 million in 2016 to US$ 35.7 million in 2020.

Within chained limited-service restaurants, burger restaurants held the largest foodservice sales, amounting to US$ 548.7 million or 36.9% of limited-service restaurant sales in 2020. This was followed by chicken restaurants, which held a 13.3% (US$ 388.8 million) sales share, and bakery products restaurants, which held a 10.0% (US$ 292.7 million) sales share. Middle Eastern restaurants experienced the worst decrease with a CAGR of −21.4% from 2016 to 2020 while pizza restaurants experienced a growth in CAGR of 1.0% for the same period. Fish and burger restaurants are expected to experience the greatest growth in the next period with an expected CAGR of 8.7% and 8.3% respectively from 2021 to 2025.

Foodservice channels

UAE's foodservice channels had sales valued at US$10.4 billion in 2020. Although overall foodservice value sales and the number of transactions both considerably decreased in 2020 because of the pandemic, online foodservice sales exploded and stepped up considerably to cushion the financial blow for many companies. In 2020, online foodservice sales grew from US$ 494.8 million in 2016 to US$ 1.6 billion in 2020 representing 11.2% of total foodservice sales and oversaw a growth in CAGR of 23.7% from 2016-2020. Full-service and limited-service restaurants both experience double digit growth in online sales during the period, with a respective CAGR of 19.1% and 24.4% in the same period. Online foodservice sales are expected to continue to grow more rapidly than offline sales, as more and more consumers have resorted to the internet to order food in order to practice social distancing and other pandemic related practices.

Although eat-in sales fell considerably as outlets were forced to close during national lockdowns, sales through home delivery and to a lesser extent takeaways spiked as consumers looked online for obtaining meals. Many players, especially those in the limited-service restaurants and cafés/bars were able to quickly adapt to home delivery in order to meet customer demand in 2020. Full-service restaurants also began to expand into home delivery, including those such as high-end restaurants, many of which had not offered home delivery or takeaway options before the outbreak of the pandemic. For example, the high-end restaurant COYA, which sold Peruvian cuisine, embraced home delivery to stay connected to its consumer base despite the restaurant having to close during lockdown.^{Footnote 4}

In 2020, eat-in remained the most popular service sub-channel with sales reaching US$ 7.1 billion or 68.2% of total foodservice sales, followed by home delivery at 16.7% (US$ 1.7 billion) of total sales and takeaway at 14.3% (US$ 1.5 billion) of total sales. Overall, foodservice sales decreased as a result to the global pandemic in the UAE, however home delivery experienced the least fall in growth, with a CAGR of −0.7% between 2016-2020, as opposed to eat-in services which experienced the greatest decrease, with a CAGR of −9.2% during the same period. Drive-through and home delivery services are expected to experience the greatest growth in the next period (2021-2025) with a respective CAGR of 8.3% and 5.2%.

Through home delivery, restaurants in the UAE began relying on online delivery platforms that offer efficient third-party delivery services, and new limited-service restaurants have been finding success in establishing cloud or ghost kitchens. These are outlets that prepare food for online delivery but offer no dine-in facility. This model has gained traction in the UAE and is particularly attractive for operators challenged by high rents or have insufficient resources to expand across all cities for greater reach and faster delivery. One example of such cloud kitchens is Kitopi, operating 30 cloud kitchens through the MENA region, UK and the US. Full-service restaurants have also found success in cloud kitchens, with many creating online services as expansions to their dine-in services.^{Footnote 5}

The Oven Market, based in Dubai was a foodservice concept that was launching November 2020 that has appealed to a growing number of consumers in the UAE. It sets up a new three-way high-tech platform designed to connect home-cooked food lovers with top rated home-cooks in the same area. The platform connects consumers with home-cooks registered on the platform, and provides packaging, hygiene set-ups, delivery, and marketing support. The app targets consumers that enjoy home-cooking, which has steadily increased in popularity after the pandemic and has the potential to disrupt the full-service restaurant business as well as restaurant delivery services. It has reached success in the UAE, and the company responsible is developing a strategy for expansion which it plans to implement in the future.^{Footnote 4}

Top 10 foodservice companies in the UAE

In 2020, Yum! Brands Inc was the UAE's top food service company with value sales of US$ 295.4 million, representing a 2.9% share of the foodservice market. McDonald's Corp was the second largest foodservice company with value sales of US$ 265.8 million, followed by Restaurant Brands International Inc (US$ 247.0 million), Doctor's Associates Inc (US$ 132.9 million), and Starbucks Corp (US$ 113.8 million). These top 5 company's, accounted for 10.3% of the total foodservice market in the UAE.

Company sales and shares from within the full-service restaurant channel is highly fragmented within the UAE In 2020, the top five full-service operators represented a total market share of 5.8%, which included Yum! Brands, Inc. (1.7%), followed by Brinker International Inc (1.6%), Al Khaja Group (0.9%), Nando's Group Holding Ltd (0.9%), and Cravia Inc (0.7%). International brands are marking their presence, some examples include Nando's, Texas Roadhouse, PF Chang's China Bistro, and the Cheesecake Factory.

In the UAE, International company sales from within the limited-service channel are growing including Jollibee's, Papa John's, and Wendy's. In 2020, the top QSR operators represented a large market share of 38.4%, which included McDonald's (11.5%), Restaurant Brands International Inc (10.7%), Yum! Brands Inc (8.5%), Doctor's Associates Inc (5.7%), and CKE Restaurant Holdings Inc (2.0%).

In response to the pandemic, many leading performers in consumer foodservice began expanding their online platforms, apps, and home delivery services in 2020. These services were key to success in 2020 as they allowed companies to reach their customers even while they were at home during lockdown or isolation periods. Leading operators such as McDonald's focused heavily on improving their delivery services in 2020, increasing new ways consumers could purchase their items. The average price of online transactions increased as consumers ordering from home were more interested in meal options than light snacks or beverages. High-end restaurants began offering home delivery options, which attracted many consumers who would normally feel intimidated by the idea of dining in one of Dubai's luxury restaurants or five-star hotels. These services could potentially become a permanent addition to high-end restaurants' service options in future periods.

For more information

The Canadian Trade Commissioner Service:

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.

• Find a Trade Commissioner

More agri-food market intelligence:

International agri-food market intelligence
Discover global agriculture and food opportunities, the complete library of Global Analysis reports, market trends and forecasts, and information on Canada's free trade agreements.

Agri-food market intelligence service
Canadian agri-food and seafood businesses can take advantage of a customized service of reports and analysis, and join our email subscription service to have the latest reports delivered directly to their inbox.

More on Canada's agriculture and agri-food sectors:

Canada's agriculture sectors
Information on the agriculture industry by sector. Data on international markets. Initiatives to support awareness of the industry in Canada. How the department engages with the industry.

For additional information on Gulfood 2022: (Dubai, February 13 to 17) please contact:

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

Resources

• Euromonitor International, 2022
• Euromonitor International, February 2021. Consumer Foodservice in the United Arab Emirates
• Euromonitor International, March 2021. Economy, Finance and Trade: United Arab Emirates
• Euromonitor International, February 2021. Full-Service Restaurants in the United Arab Emirates
• Euromonitor International, February 2021. Limited-Service Restaurants in the United Arab Emirates
• Euromonitor International, May 2021. PEST Analysis: United Arab Emirates

Foodservice Profile – United Arab Emirates
Global Analysis Report

Prepared by: Richard Lin, International Market Research Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2022).

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@agr.gc.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.