The GCC F&B Sector

An Enticing Opportunity
April 2017

GCC F&B Sector Report © ARDENT Advisory 1

GCC F&B Sector Report © ARDENT Advisory 2
 Table of Contents
Foreword 4

Key Takeaways 5

F&B Market Overview 7

GCC F&B Market Size 8

Average Spend on Food Service Categories 9

Investment Thesis 11

Demand Drivers 11

Key Risk Factors 14

M&A and PE Deals 16

Trends in F&B Sector in the GCC 19

Country Profiles 23

United Arab Emirates 23

Saudi Arabia 28

Qatar 31

Oman 34

Kuwait 36

Bahrain 38

Major F&B Players in the GCC 41

Kuwait Food Company 41

Kout Food Group 42

Herfy Food Service Company 43

GCC F&B Sector Report © ARDENT Advisory 3

 Foreword

When thinking about the most lavish and exotic Among all the GCC economies, the UAE’s F&B
Food and Beverage (F&B) markets in the world, market expanded the fastest during 2010–2015, at
one name that comes to the mind is the GCC. This a CAGR of 12%; this was closely followed by Saudi
region has built a strong brand identity in the F&B Arabia and Qatar at 9.9% and 7.4%, respectively. In
space, which has benefited its food service market Saudi Arabia, an increasing population is one of the
and strengthened its foothold in the F&B industry major drivers of huge demand for food and
in recent years. beverages, especially in the fast food and cafe
segments. The rising number of tourists from the
The F&B sector is also one of the major
US and Europe is also fuelling the demand for
beneficiaries of the GCC governments’ economic
western casual dining concepts.
diversification drive, wherein the tourism sector
has been allocated substantial funding, which in With the increased preference for healthy foods,
turn has been driving the food service market. The dietary habits of people are changing. This has led
GCC F&B market expanded at a CAGR of 10% to the emergence of new concepts such as organic
between 2010 to 2015 to reach a market size of and gluten-free food and healthy fast food choices
US$21.9 Bn. This growth is expected to be further such as salads and baked fries. Also, as people
propelled by upcoming events such as the Expo become more tech-savvy and begin to value
2020 Dubai and FIFA World Cup 2022, making the convenience and speed of service, various online
GCC’s F&B market the preferred investment cluster food ordering portals have emerged. An inclination
in future. towards home-grown brands and a thriving cafe
culture are also playing a role in shaping up the
However, as the growth of the GCC economies is
F&B market in the GCC.
closely linked to oil revenues, the global oil price
rout has negatively affected the region’s progress. We believe that though the UAE and Saudi Arabia
With reduced purchasing power, the GCC currently account for more than 85% of the
population is favouring fast food and cafes over region’s F&B market in terms of value, Qatar,
full-service restaurants (FSRs). Moreover, the entry Kuwait, Bahrain and Oman are striving to enhance
of various international fast food brands in the their market presence as well. With the rise in the
region offering a wide range of food services now number of F&B hubs in Qatar and Kuwait, major
have the consumers spoilt for choice. Nevertheless, international F&B players are flocking to these
we remain optimistic as we believe that an markets to tap their potential. Led by these market
expected oil price recovery during 2017–2018 enablers, the GCC F&B market is set to witness
would lead to an increased spending on the fine strong growth to reach a value of US$34 Bn by
dining category. 2020.

Sharad Bhandari
Managing Partner

GCC F&B Sector Report © ARDENT Advisory 4

 Key Takeaways

 The GCC F&B sector has witnessed robust  With various upcoming events such as the
growth, driven by an increasing population, Expo 2020 Dubai and FIFA World Cup 2022,
growing tourism and rising disposable significant resources are being invested to
income. boost the hospitality sector, with F&B being
the frontrunner.
 Dubai, being the UAE’s gastronomic capital, is
growing at a strong pace, closely followed by  The culture of consuming coffee has
Saudi Arabia, which is witnessing increased become strongly ingrained among the GCC
preference for fast food among its population. population, especially in the UAE, Saudi
Arabia and Qatar, leading to a significant
 Despite the oil price decline, Saudi Arabia’s
rise in the number of cafes in these
F&B sector maintained its growth pace as its
countries.
population showed increased preference for
fast foods over FSRs.  Apart from the leading GCC economies,
countries like Qatar, Kuwait and Bahrain
 As westernisation influences people’s dietary
also offer a promising investment domain in
habits, Emiratis are increasingly opting for
the food service sector, which is evident
western dining concepts.
from the rising number of F&B clusters in
 With rising health awareness, people are these countries.
willing to pay more and shift towards healthy
 Food festivals across the GCC are capturing
food options such as gluten-free products and
headlines for introducing novel concepts
organic foods.
such as celebrity chefs, food trucks and
 The surging demand and the ease of entry ‘dining in the air’, thus creating a unique
into the GCC F&B market have intensified dining experience.
competition, leading to a rise in the number
 Rising real estate prices and a shortage of
and variety of food outlets.
skilled chefs are some of the major
 To boost the retail and tourism sectors, the challenges faced by the GCC’s F&B sector.
government is investing in the construction of
 As the GCC’s F&B sector witnesses rapid
malls, theme parks and residential properties.
growth, several investors are eyeing a
market share through M&A and private
equity (PE) deals.
GCC F&B Sector Report © ARDENT Advisory 5
GCC F&B Sector Report © ARDENT Advisory 6
 Market Overview
The Food and Beverage (F&B) market in the GCC includes full-service restaurants (FSRs; fine
dining and casual dining), fast food/quick service restaurants (QSR), and cafes and bakeries

Fine Dining Hakkasan, La Petite Maison, Nobu, Zuma, and Catch are some of the top fine
dining outlets in the GCC. Being premium in nature, most of these restaurants
are operated by Michelin-starred chefs, and the average amount spent ranges
from AED675 to AED900. Rhodes 44 in Abu Dhabi, featuring Gary Rhodes, is one
such restaurant.
Casual Dining
This category has witnessed robust growth in the UAE, Saudi Arabia and
particularly in Qatar owing to high demand for a premium, branded experience
at a moderate price. Chili’s, The Cheesecake Factory, TGI Friday’s (TGIF), Tao
and McCoys are some of the casual dining restaurants in the GCC. Owing to the
high demand for western-style casual dining, many popular US brands are
foraying in the GCC market.
Fast Food/ QSRs
These offer low-cost food options, with focus on the speed of service. Some of
the most diverse QSR brands in the GCC are Domino’s, Subway, KFC, Wendy’s
and Papa John’s. As this segment continues to thrive, local QSR brands and the
concept of food vans/trucks are gaining traction.

Cafes/bakeries
Café Bateel, Starbucks, PAUL, Tim Hortons and Costa coffee are a few of the
renowned brands in this category. Apart from branded chains, home-grown
brands such as Shakespears and others are gaining prominence.

Figure 1: The GCC F&B market by number of Figure 2: The GCC F&B market size by value of
outlets under each category (2015) each category (2015)

QSR/Fast Foods
6.5%
QSR/Fast Foods
22.8%
19.2%
Full Service
39.7%
Restaurants 43.3%
52,855 Cafes and Bakeries
US$ 21.9 Bn
Cafes and Bakeries

Full Service
34.6% 33.7%
Lounges and Bars Restaurants

Source: Euromonitor, Ardent Advisory Source: Euromonitor, Ardent Advisory

In 2015, QSRs had the highest market share of 43%, followed by cafes and bakeries at 34.6%. As the most
populous country in the GCC, Saudi Arabia has the highest demand share in the total F&B market, with
more than 30,000 food outlets.

GCC F&B Sector Report © ARDENT Advisory 7

 Growing population and rising tourist footfall led Rising tourism and the upcoming events such as the
to rapid expansion of the GCC’s F&B market in Expo 2020 Dubai and FIFA World Cup 2022 have
2010–2015 fuelled the growth of F&B industry in the UAE and
Qatar. Anticipating an increase in tourist footfalls,
Eating out has become a major attraction in the
governments of these emirates have initiated
GCC. With limited options available for
projects for the construction of more malls and
entertainment, the culture of eating out has taken
theme parks. Such steps offer numerous
precedence in the GCC. The high expat population
opportunities for global as well as local F&B brands.
has further added to the demand for assorted
cuisines and new dining concepts. This has given Moreover, the franchise market in the GCC has
impetus to the demand for global cuisines, displayed healthy growth, especially in the fast food
boosting the number of F&B outlets. Since the category. QSR is estimated to account for 40% of the
industry gained momentum, the market has franchise market in the GCC, and the overall F&B
witnessed strong growth in all food service franchises for all categories are expected to grow by
categories, including fine dining, casual dining, 25% in the coming years.
QSRs, and cafes and bakeries. However, any thriving industry faces challenges at
Flourishing on the back of rapid urbanisation, an some point, and the GCC F&B market is no exception
expanding multicultural young population and to this. The market faces several concerns such as
rising income levels, the GCC’s F&B sector was high costs, growing competition, labour shortage
valued at US$21.9 Bn in 2015. Saudi Arabia and the and high dependence on food imports. The market
UAE are the largest markets accounting for over has been significantly resilient to these challenges
85% of the total food service market in the region. and continues to grow at a fast pace, with bright
In the last five years, the UAE’s F&B market grew at prospects. By 2020, the GCC F&B market size is
the fastest rate of 12.1%, followed by Saudi Arabia expected to expand at a CAGR of 9.2% to reach
and Qatar at 9.9% and 7.4%, respectively. US$34 Bn.

Figure 3: The GCC F&B market size (US$ Bn)

The UAE and Saudi Arabia account for approx.
90% of the F&B market in the GCC

Figure 4: F&B market size 2015 (US$ Bn)

18.2
2015 2020f UAE Saudi Arabia
12.0 11.5
2.4
2.0
7.2
3.0
US$ 12 Bn 5.7
US$ 7.2 Bn
1.0 1.6 1.0 1.6 0.3 0.6 0.4 0.6
3.9
2.1
KSA UAE Kuwait Qatar Oman Bahrain

Source: Respective Government site, Ardent Advisory Cafés/bars Full-service restaurants Fast food
Note: f-forecasted
Source: Euromonitor, Ardent Advisory

GCC F&B Sector Report © ARDENT Advisory 8

 Growing income and improving living standards Dubai is one of the major tourist attractions, and this
have increased average spend on food and drinks makes visitors a major contributor in boosting the
overall demand for food and drinks. Particularly in
As per a survey conducted by Caterer Middle East,
the UAE, though the demand for fine dining concept
in the Arab world, the average spend per person on
is high, QSR and casual dining are among the
restaurant food was US$40–60 in 2014, up from
preferred F&B choices for residents. Qatar closely
US$20–40 in 2013. This growth in spending is
follows the UAE in terms of average spend on food.
largely driven by rising income levels and higher
As Qatar gears up to host the FIFA World Cup 2022,
demand for quality ingredients. As people shift
preparations in Doha’s F&B landscape appear in full
towards more organic and gluten-free ingredients,
swing to meet the expected rise in demand. With the
they are willing to pay more for healthier food
construction of 130 new hotels underway, the hotel
options. The average cost is the highest in the fine
restaurants and catering (HORECA) segment is set to
dining category, followed by casual dining, cafes
grow, which in turn would lead to the launch of
and bakeries, and fast food.
several new F&B brands.

Figure 5: Average spend on fine dining (US$)A Figure 6: Average spend on casual dining (US$)A

405 135 135

108
216 216
67.5 67.5 66.4
95 68 83 81 81
54 27 20
23 14 12 16 11 9 8

Dubai Abu Doha Kuwait Riyadh Jeddah

Dubai Doha Abu Dhabi Riyadh Jeddah Kuwait
Dhabi

Highest Price Lowest Price Highest Price Lowest Price

Figure 7: Average spend under QSR/fast food Figure 8: Average spend under cafes and
(US$)A bakeries (US$)A

99.6 94.5 94.5

54 54
81
43.2 40.5
33.2
27 40.5 40.5
22
8 9 7 7 10 14 11
4 5 5 4

Dubai Doha Abu Dhabi Jeddah Kuwait Riyadh Kuwait Dubai Abu Dhabi Doha Riyadh Jeddah

Highest Price Lowest Price Highest Price Lowest Price

Note A - Average Spend (cost for 2). The price ranges are from secondary sources such as Zomato, Roundmenu, and Tripadvisor.

GCC F&B Sector Report © ARDENT Advisory 9

GCC F&B Sector Report © ARDENT Advisory 10
 Investment Thesis
Growing population, increasing disposable income and burgeoning tourism industry are driving
the growth of the GCC’s F&B market

Favourable demographics continue to fuel the Youth population constitutes a significant portion of
demand for F&B in the region the demographics in the GCC. More than 40% of the
people in the GCC are below the age of 25 years,
The population in the GCC countries is large and
with Qatar having the highest proportion of youth
have high cultural diversity. With a population base
population in the region, at 84%, as of 2015.
of 52.6 million as of 2015, the population growth in
the GCC is one of the fastest in the world, rising at Figure 10: Age breakdown (% of population)
a CAGR of 3.1% during 2010–2015. Population
growth rate in the GCC is four times higher than 2015 2020f
that in emerging economies, seven times higher 2.8% 3.3%
than in China, and ten times higher than in Europe.
By 2020, the region’s population is forecast to 25.4% 24.0%
reach 59.1 million. Low mortality and high fertility
rates, a thriving healthcare sector and the growing 52.6 Mn 59.1 Mn
influx of expats are the major factors driving
population growth. 71.9% 72.8%

Figure 9: Population growth rate (2000–2014) 0-14 15-64 65+ 0-14 15-64 65+
Source: Economist Intelligence Unit, IMF
275%
220% Note: f-forecasted

70% 68% 65%

50%
Owing to a young population base, marketers are
13% 18% 16% 8% 3% focused more on creating new concepts and brands
in the F&B sector to attract this age group. Also, with
USA
Qatar

Oman

India

Brazil
UAE

KSA

Germany
Bahrain
Kuwait

China

a concurrent growth in the working population, the

instances of business meetings, team lunches and
Source: IMF, World Economic Outlook Database
conferences have increased. Thus, as these
The GCC’s multi-cultural population is attributed to favourable demographic trends continue, the
the vast expat base constituting about 52% of the demand for the F&B sector will continue to increase.
population. The UAE accounted for the highest
With growing affluence, consumers are willing to
percentage of non-national population, with expats
spend more on food and drinks
comprising 88% of the population, followed by
Qatar (85%), Kuwait (70%), Bahrain (52%), Oman Leveraging its oil and gas sector, the GCC econ0my
(44%) and Saudi Arabia (33%). Moreover, the witnessed strong growth to reach a value of US$1.66
continued influx of working-age expats is expected trillion in 2015. Driven by the flourishing economy,
to augment the working-age population. The rising the region’s per-capita income grew faster than that
expat population is driving the demand for multiple of other developing nations, thus boosting demand
cuisines and culinary choices in the region. in its F&B sector. As of 2015, Qatar recorded the
highest per-capita income globally.

GCC F&B Sector Report © ARDENT Advisory 11

 Growing tourism and events such as Expo 2020
Figure 11: GDP, per capita current prices (US$)
Dubai and FIFA World Cup 2022 have accelerated
F&B demand in the GCC
The tourism industry in the GCC accounts for approx.
5.7% of the region’s combined GDP. The tourist
32,110
26,480 26,725 arrivals in the region increased at a CAGR of 5.5% in
22,259 21,288
2010–2015. Known for housing some of the world’s
finest hotels and tourism facilities, the region has
received an increased number of visitors, and this
2012 2014 2015 2016e 2018f
provides ample opportunities for a thriving F&B
Source: IMF
sector. Tourist arrivals in the region are expected to
Note: e-estimated & f-forecasted
reach 74 million by 2020, providing further impetus
The development of various urban centres is to the foodservice demand.
another factor driving growth of the F&B sector.
Riyadh, Dubai and Abu Dhabi are the three richest Figure 12: Tourist arrivals in the GCC (in million)
cities in the Middle East, with Riyadh having
residents with the highest disposable income, 27.4
2015 2020f
followed by Jeddah and Dubai.
21.0 20.0
However, with the fall in oil revenues, per-capita
14.5
income declined in 2015. To recoup the sluggish 11.4 12.1
economic momentum, the government has 5.8
5.4 5.0
undertaken diversification efforts. By 2020, the 3.1 4.0 2.2
GCC’s economy is expected to be worth about
US$2 trillion. This would be a positive for consumer
KSA UAE Bahrain Kuwait Qatar Oman
spending in the retail and F&B sectors.
Source: WTTC
Note: f-forecasted

Table 1: Top richest cities in the GCC, 2014

Saudi Arabia and the UAE are leading the tourism
landscape and thus significantly contribute to the
Total disposable Disposable growing share of demand for the F&B sector. By
GCC cities income (US$) income per
million capita (US$) 2020, Saudi Arabia would welcome more than 25
million religious tourists to perform Hajj and Umrah
Riyadh 67,772 11,700
at the city of Mecca.
Jeddah 38,925 10,234
Realising the strategic importance of the tourism
Dubai 29,695 12,543
sector as a driver of the non-oil economy, countries
Abu Dhabi 17,780 13,496 such as Saudi Arabia and Qatar are increasingly
Doha 10,911 11,046 emphasising its development. Also, factors such as
Muscat 7,500 6,520 better ranking in the Tourism Visa Openness Index
and hosting of Expo 2020 Dubai in the UAE and FIFA
Kuwait City 3,978 11,429
World Cup 2022 in Qatar are driving a major influx of
Source: Zawya Research
visitors across the region.

GCC F&B Sector Report © ARDENT Advisory 12

 Expo 2020 Dubai is expected to attract around 25 F&B is one of the main beneficiaries of hospitality
million tourists to Dubai, 70% of which would be infrastructure expansion drive in the GCC
international visitors. Similarly, in Qatar, the
Restaurants and hotels are the major business points
number of tourists is expected to reach 3.7 million
for the F&B sector in the GCC. In response to the
by 2022; therefore, the Qatar Tourism Authority
rising demand for accommodation, the governments
has allocated US$20 Bn for developing the tourism
are increasing investments in hospitality
infrastructure to meet the growing demand.
infrastructure. The F&B sector would be the main
With the aim of transforming the region into a beneficiary of this investment, thereby boosting the
year-round tourist destination, construction of demand for various F&B brands and concepts.
various theme parks and resorts is underway. In the Following are some top projects across the GCC that
UAE, many such parks have commenced operation would boost the F&B sector.
in a 60-km radius from Dubai airport. These include
Bollywood, LegoLand and Motiongate (a Major projects across the GCC boosting the F&B
Hollywood-inspired theme park). industry

 Mall of the World in Dubai, the UAE, plans to

add 20,000 rooms to the city across 80 hotels
and 20 hotel apartments.
 Ras Al-Hadd, an eco-themed project in Oman,
would feature five-star hotels, resorts and retail
stores. It would include 100 rooms, 50 hotel
villas, 150 residential villas and an area of 7,000
m2 for a market souq.
 Deira Islands in Dubai, the UAE, is a 15.3 km2
waterfront city that would add over 23,000
Further, Al Ahli Holding Group plans to launch a hotel keys and 31,000 apartment keys to the
city.
20th Century Fox World theme park and resort in
Dubai by 2020. In August 2016, IMG Worlds of  Jeddah Gate, Saudi Arabia, is a mixed-use
Adventure, the world’s largest indoor theme park, project spread over 413,000 m2, featuring
also opened in Dubai. With the success of these hospitality outlets.
projects, Saudi Arabia also plans to open theme  Dubai Creek Harbor at the Lagoons would
parks in collaboration with Six Flags Entertainment feature 22 hotels, with 4,400 rooms apart from
Corporation. Development of these theme parks other establishments.
will lead to a surge in demand for the F&B in the  Place Vendome, Qatar, would be used for
GCC. conducting opening and closing ceremonies
during the FIFA World Cup 2022. It would
include two five-star hotels, service apartments
and entertainment units, and up to 400 retail
outlets.
 Heart of Europe, Dubai, the UAE, would house
six hotels and various F&B brands.
 Palm Boardwalk, Dubai, the UAE, is a shopping
and dining destination, featuring cafes and
restaurants, with a view of the Arabian Gulf.

GCC F&B Sector Report © ARDENT Advisory 13

 Growing popularity of global F&B brands is salaries to expats, making them more inclined
driving demand for western food in the GCC towards switching jobs. The supply of junior chefs is
more strained as compared to those employed at
With over 75% of the population living in urban
higher positions in the F&B sector. With regard to
areas, the GCC is one of the most urbanised
skill set, chefs with kitchen roles specialising in
regions of the world. The growing economic
bakery and confectionery items are the most difficult
prosperity and employment opportunities in the
to find. Specialists in regional cuisines are also short
region have led to internal migration and influx of
in supply. As the sector employs a large proportion of
expat workers. Urbanisation levels in Qatar, Kuwait
expat workers, the government’s emphasis on
and Bahrain are as high as 98%, 92% and 88%,
nationalisation of jobs has adversely affected the
respectively. The growing influence of urban
industry.
lifestyle has transformed the eating patterns of
people, thus increasing the demand for F&B With competition intensifying, F&B market’s
services in the region. A strong inclination towards growth pattern is changing
Western-style casual dining has further helped
With a growing appetite for F&B in the GCC
boost the entry and growth of international fast
countries, establishing restaurants is not much of a
food joints in the region.
challenge. No entry barriers and flexible regulations
With sustained efforts towards making the UAE are fuelling competition. In response to the growing
one of the most popular tourist destinations, the demand, new players are entering the industry
Dubai government has been hosting food festivals. through various online channels as well. To win the
Dubai Food Festival (DFF) is the truly citywide food competition, F&B vendors are going the technology
fest of the Middle East, celebrating Dubai as a way, by launching food apps with multiple options
gastronomic capital. The festival hosts assorted for consumers. Moreover, as new food concepts are
food-related events to promote and popularise now being developed frequently, the players are
Dubai’s unique food landscape. The 2016 DFF finding it difficult to continuously innovate and
organised its first Dubai Restaurant Week, offering maintain their market share.
a platter from 30 of the popular fine dining outlets
Another aspect of the changing growth pattern is
in the city.
that as the market is moving towards saturation,
Risk Factors various F&B outlets are not hesitant to shut down in
case of poor market response. Around 20% of the
Although several factors favour the growth of F&B F&B companies in the UAE are expected to close by
in the GCC, certain challenges continue to 2017. Factors such as softer economic recovery,
decelerate the sector’s growth momentum. intense competition and sustainable demand are
Attracting and retaining young talent pose a leading to frequent instances of closure and opening
challenge to the GCC’s F&B sector of new food outlets. This has prompted the players in
the region to cater to the diverse F&B demand.
The GCC’s F&B sector is labour-intensive and
Further, the F&B growth pattern is changing as more
involves people at all levels, from primary
and more F&B outlets cluster around luxury
production to retailing. Thus, the demand is
residential complexes, malls and community centers.
constantly high for chefs, waiters and other service
Not only new concepts are gaining acceptance but
staff. Owing to high competition in the industry,
demand for existing ones is also increasing. For
workers have numerous job options to choose
instance, Tom & Serg, a casual dining outlet that
from, thus leading to high attrition. Also, Asian
opened in 2013 in Dubai, plans to open more outlets
countries such as India and China offer attractive
in the coming years owing to positive response.

GCC F&B Sector Report © ARDENT Advisory 14

 High dependence on food imports makes the High rentals in retail space have made F&B
region susceptible to global price risks landscape more competitive
To meet the growing consumption needs, the GCC Higher lease rates makes it difficult for F&B players
is heavily dependent on food imports. The region in the GCC to reduce their operational and
has unfavourable conditions for food cultivation, administrative costs. The retail rates differ according
such as harsh climate and lack of arable land. But to the retailer, unit location, unit size, type of mall
with the rising population and food being and its location. For prime locations, the rate of retail
considered as the prominent mode of space is much higher than the general rate prevailing
entertainment, the food import bill is on the rise. in the market. For instance, for all super-prime malls
in Dubai, the rent averaged AED6,000/m2, which is
much higher than the normal rate of AED1,600–
Figure 13: Food imports in the GCC (US$ Bn)
5,000/m2 for other malls in the UAE.
53.1

39.6
36.3
29.5
33.7 Figure 14: Retail rentals in the top GCC cities
(US$)
2,095 2,095

1,360

2013 2014 2015 2016e 2020f 790 735 816 754 874 816 773 900

Source: Economist Intelligence Unit

Note: e-estimated & f-forecasted
2013 2014 2015
In 2015, total food imports reached US$36.3 Bn,
growing at 7.7% from the previous year. In value Dubai Abu Dhabi Riyadh Jeddah
terms, Saudi Arabia was the leading food importer,
Source: JLL (for Q3 Y-o-Y)
with approx. 61% share, followed by the UAE
(13.7%), Kuwait (9%), Oman (8.2%), Qatar (5.2%)
In Dubai, between 2013 and 2014, rentals increased
and Bahrain (2.7%).
by almost 54%, depicting a significant gap in the
As a food-importing region, the GCC has been at demand and supply for retail space. In light of future
risk due to rising food prices. For instance, the events such as the Expo 2020 Dubai and FIFA World
global food price rise in 2008 had a strong impact Cup 2022 in Qatar, the demand for commercial
on the region's food policy. Apart from being the space has been rising, leading to a surge in prices,
reason for fiscal deficit, such high dependency can given the limited supply in the short run. The lease
lead to significant demand gaps, thereby hindering cost component has thus become one of the major
the growth of its F&B sector. Moreover, challenges for entering into the region’s F&B market.
dependency on desalinated water indicates that
the region cannot rely on its domestic food
production in the long term. Although the
potential for growth of agro-processing industries
exists, this food dependency would continue in the
future owing to the limitation posed by harsh
weather condition.

GCC F&B Sector Report © ARDENT Advisory 15

 M&A and PE Deals
With rapid growth in the GCC’s F&B sector, many investors are vying to capture a share through
M&A and PE deals

M&A Deals PE Deals

Between 2011 and June 2016, 19 M&A deals took A total of 12 PE deals were finalised between 2011
shape in the GCC’s F&B sector. Of these, only 14 and 2016. Since the F&B sector has grown at a robust
were completed, while the remaining five were in pace, over 80% of these deals were executed via
the process of finalisation. Over 30% of the deals stake purchase in the target F&B company. Saudi
were struck between 2015 and 2016, showing early Arabia and the UAE are leading the investment spree
signs of consolidation in the market. for PE deals, and together captured a 42% share in
terms of deal volume.
Figure 15: The GCC’s share in number of M&A Figure 16: The GCC’s share in number of PE
deals in F&B sector (2011-2016) deals in F&B sector (2011-2016)

10.5% 8.3%
8.3%
15.7%
41.7%
19 Deals 12 Deals

73.6% 41.7%

UAE Kuwait KSA KSA UAE Kuwait Qatar

Source: Thomson Research Source: Zawya Research

With the growing popularity of online food delivery Around 50% of the total deals were in the casual
services, this segment has considerable potential. dining category, while 25% were in the QSR
HungerStation, an online food delivery service, was category. With rapid westernisation, casual dining
acquired by Hellofood, a division of Food Panda. and fast food segments are attracting investors’
Moreover, the UAE is witnessing substantial attention to the F&B landscape in Saudi Arabia, the
traction in the FSR segment. Owing to a thriving UAE and Qatar. US-style casual dining is a promising
tourism sector, the fine dining category presents investment area, given its high demand. Top deals in
an attractive scope for M&A activities. For the above segments include the following: NBK
instance, in 2015, Marka PJSC acquired Reem Al Capital Partners’ acquisition of Amo Hamza, the
Bawadi Group, a Dubai-based FSR operator, for largest seafood casual dining chain in Saudi Arabia,
about US$85 Mn. Marka intends to open two and Carlyle Group MENA Fund’s acquisition of 42%
company-owned outlets in Dubai and Abu Dhabi stake in Almar Foods, a fast food chain in Saudi
and three franchise outlets in Al Ain, Saudi Arabia Arabia. The acquirers have expressed interest in
and Bahrain. Investors are also eyeing the cafe expanding their regional presence in the GCC’s F&B
segment given the growing culture of coffee market.
consumption among Emiratis. In 2016, Fajr Capital
Ltd acquired Cravia Inc LLC, a F&B company
operating multiple brands.

GCC F&B Sector Report © ARDENT Advisory 16

 List of M&A and PE Deals in the GCC
As the F&B sector in the GCC is growing at a fast pace, various investors are eyeing a market
share through M&A and PE deals

In June 2016, Dubai-based Adeptio LLC, an investment consortium led by Mohamed Alabbar, agreed to acquire
a 69% stake in the Americana Group (Kuwait Food Co.) from Al-Khair National Stocks and Real Estate for about
US$2.4 Bn. However, during November 2016, the Saudi Arabian Public Investment Fund acquired 50% stake in
Adeptio AD Holdings that holds some of the major brand franchises such as Pizza Hut and KFC, as acquired
from the Americana Group.

Table 2: Completed M&A Deals across the GCC Table 3: Completed PE Deals across the GCC
(2011-2016) (2011-2016)

Acquirer Company Target Company Target Company Transaction

Fund Name
(In F&B Sector) Stake

UAE-based Eathos Sushi Art Group The Carlyle Group Alamar Foods, Saudi
Buy (42%)
MENA Fund Arabia

Fajr Capital Ltd Cravia Inc LLC

Riyada Enterprise
Mani Foods Industry
Development Fund Buy
Marka PJSC Reem Al Bawadi Group LLC, UAE
(RED)

Belhasa Hospitality NBK Capital Al Faysal Bakery,

800 Pizza Buy
LLC Mezzanine Fund Kuwait

Pinnacle Restaurant NBK Capital Equity Amo Hamza, Saudi

Leila Restaurant Buy
Mgmt Co Partners Fund II Arabia

Hellofood Saudi NBK Capital Equity Shakespeare and Co.,

HungerStation Buy (49%)
Arabia Partners Fund II UAE

Diamond Lifestyle Ltd Al Faris Restaurant NBK Capital Equity Sanabel Al-Salam,
Buy (21%)
Partners Fund I Saudi Arabia
Investor Group Kudu Corp
Jadwa Food and
National Catering Co Gulf Union Foods
Investor Group Beverage Sell (30%)
Ltd WLL Company
Opportunity Fund

MAF Ventures LLC Gourmet Gulf LLC Gulf Capital Equity

Chef Middle East Buy (100%)
Partners II
Gulf Capital Pvt JSC Chef Middle East LLC Multi Brands for
GCC Equity
Trading Company Buy (100%)
Partner III Fund
RMAL Hospitality Marco Pierre White Grill Limited
PJSC Stake
Awani,
Awj Investments
Bahria and -NA-
Audacia Capital Al Safadi Ltd
Operation Falafel
Source: Thomson Research Source: Zawya Research

GCC F&B Sector Report © ARDENT Advisory 17

GCC F&B Sector Report © ARDENT Advisory 18
 New Trends in F&B Sector in the GCC
Increase in organic food consumption, popularity of home-grown brands, growing culture of
celebrity chef-owned restaurants and a rise in online food ordering are some of the recent trends
in the GCC F&B sector

Rise in health awareness is driving demand for Witnessing the shift in preference towards healthy
healthy and organic food in the GCC diet, fast food chains in the region are offering
healthy meals in an effort to maintain their products’
Baked fries instead of French fries, frozen yogurts
appeal. For instance, the fast food chain Elevation
instead of ice creams and fresh juices/coconut
Burger offers organic, grass-fed beef burger and fries
water in place of carbonated drinks are being
cooked in olive oil. ‘Gluten-free’ is becoming a big
increasingly offered and preferred in the QSR
trend in the region, especially the UAE, with many
segment in the GCC. Health experts in the region
food joints, mostly five-star hotels, serving gluten-
have observed a surge in lifestyle-related health
free pizzas and burgers. Organic and gluten-free
disorders such as obesity, diabetes and
meals are thus becoming popular in the GCC F&B
cardiovascular diseases. Rising instances of such
market.
health issues have led to an increased awareness
among the people, prompting them to reconsider Home-grown brands are in vogue among Emirati
their eating habits. They are willing to pay higher populace
for organically certified food products. Therefore,
Although the GCC F&B market has been largely
the demand for premium and healthy food options
driven by international chains, the emergence of
has been increasing.
single-unit operations such as Tom & Serg and
Roberto’s and smaller networks such as Tree Cafe
are changing the F&B demand landscape. Besides
the global food brands, the growing popularity of
home-grown chains in the GCC proves that the
region can become the hub for world-class food
industries. People are increasingly looking for
exciting dining options, which global food chains
may not necessarily offer. Moreover, local eateries
tend to have a better understanding of regional
tastes and a strong affiliation to community ties.
According to Frost & Sullivan, the organic food Around 20% of the F&B market in the UAE is home-
market in the GCC is set to reach US$1.5 Bn by grown. However, this share is expected to increase
2018, increasing at a CAGR of 19.5% from US$300 with the rising demand for local chains as people
Mn in 2009. Recognising this demand, the increasingly appreciate the tastes offered by home-
government has been pursuing the development of grown brands.
organic farms. Currently, the UAE has eight organic In the 2015 DFF, the ‘Beach Canteen’ concept
farms, and the country’s Ministry of Environment showcased 10 home-grown food brands serving
has set a target of dedicating about 3,000 hectares Emirati cuisines. Similarly, Shawarma BoTeela is a
of agricultural land to organic farming. Similarly, in unique concept of home-grown brand in Qatar that
Qatar, five such farms are being developed, given serves traditional food with modern flavour.
that it is the fastest-growing food consumption
market in the region.

GCC F&B Sector Report © ARDENT Advisory 19

 The GCC restaurants are looking for more star A thriving coffee culture is boosting the demand
power through the concept of celebrity chefs for cafes in the GCC
Celebrity chefs have become a part of the food With around 40% of the population in the GCC falling
events and food fests organised in the GCC. in the range of 15–34 years, the cafe culture is picking
Beginning from the DFF, the concept is gaining up fast. Whether it is about visiting a new cafe,
popularity among the people. Cookery shows catching up with a friend or a business meeting, the
hosted by top-notch chefs have been quite trend of going to coffee houses is rising among the
popular. The idea behind this concept was to populace. From local street cafes to exclusive outlets
create an experience of dining with your favourite such as Costa Coffee and Starbucks, drinking coffee
celebrity. has become a style statement, especially for
youngsters in the region.
A 17-day culinary celebration was held in Dubai,
where the presence of celebrity chefs received a The coffee market in the Middle East represents
warm response from the visitors. At events such as approximately 4.5–5 Mn 60-kg bags, which is
‘Dining with Stars’ and ‘Chef Master Classes’, growing faster (6–10%) than the global average of
people get a chance to interact with their favourite 2.5%. In 2014, the Middle East and North Africa
chefs. Some top celebrity restaurants in the UAE (MENA) accounted for 8% (US$6.5 Bn) of the US$85
include Bread Street Kitchen by Gordon Ramsay, Bn of global spend on coffee, with the UAE being the
Signature by Sanjeev Kapoor, Nobu by Nobu largest among them. The UAE spent US$121 Mn on
Matsuhisa, Whitehouse Steakhouse and Grill by coffee in 2014, and this is expected to grow by 35%
Marco Pierre White, and Toro Toro by Richard over the next five years. This is largely due to rapid
Sandoval. Moreover, at the Sharjah Food Festival expansion in the number of cafes (counting to more
2016, celebrity chefs including Vineet Bhatia and than 5,000) and growth in the country’s coffee trade.
Nirmine Hanno also made an appearance. This The International Coffee and Tea Festival held in
trend of celebrity chefs is not confined to the UAE Dubai is a one-of-its-kind globally recognised event
alone but is also thriving in Kuwait, Qatar and other in the Middle East.
GCC economies. In Qatar, primarily Doha, this
concept has an international culinary appeal. Nobu
Doha located in the Four Seasons Hotel is one of
the world’s largest celebrity chef restaurants.

Some top celebrity chefs in the GCC

Gary Rhodes Nobuyuki Matsuhisa Vineet Bhatia

GCC F&B Sector Report © ARDENT Advisory 20

 People are increasingly favouring Street Food cuisines available, visitors will get to taste the
Concepts and Food Trucks delicacies in both dine-in and drive-through formats.
Nomad Kitchen Food Truck in Kuwait is another such
The 17th annual Hotel Show Dubai explored the
example. In 2016, Qatar’s Ministry of Economy and
evolving F&B landscape of the region through a
Commerce (MEC), with the aim to encourage
conference of the Middle East-based chefs and
vendors to operate food trucks, invited about five
restaurants. The event unveiled that an inclination
business owners to apply for the license to set up
towards enjoying street food, which is cooked
food trucks in the country. However, Qatar Museums
quickly and served in a relaxed environment, is
in 2016 and Qatar International Food Festival (QIFF)
picking up fast. As people do not wish to eat in a
had popularised the food truck concept in Doha even
sophisticated environment at all times, such quick
before this initiative.
snacking options are gaining wide acceptance in
the region owing to their good taste, affordability High penetration of smartphones and internet is
and convenience. driving growth of online food ordering platforms
The GCC governments’ initiatives to foster The GCC has one of the highest smartphone
entrepreneurship at the grass-roots level are penetrations globally. As convenience and speed are
driving growth in the number of street F&B the most integral proposition for dining out, online
vendors in the region. These initiatives were in the food-ordering platforms continue to gain traction.
forms of small kiosks, roadside stalls, etc. On the With the growing proportion of young and tech-
global level, with a total of 2.5 billion people being savvy population, the GCC is set to witness robust
served by street food everyday, a new concept of demand for these platforms, with the UAE and Saudi
selling street food emerged in the form of food Arabia leading the growth.
trucks. Although the GCC F&B market is still in
Otlob.com, one of the leading online food delivery
infancy in terms of the trend of food trucks, this
platforms in Saudi Arabia, offers a menu of around
trend is expected to thrive at a faster pace.
400 restaurants on its app. As a part of Food Panda
Global, Hellofood established its presence in Saudi
Arabia in 2013, expanding to 13 cities and covering
major F&B brands. On similar lines, in 2015, the Food
Panda Group launched its food-ordering app in Saudi
Arabia. In the same year, Food Panda fully acquired
24.ae, an online food-ordering marketplace in the
Middle East, to expand its presence in the fast
growing online food delivery market. With this
increased demand, the online food delivery market
in Saudi Arabia would reach US$218 Mn by 2020.
In 2015, Roundup, a 54 East company, launched the With more than six million internet users, e-food
first food truck marketplace in Dubai. The concept ordering is catching up fast in the UAE as well.
became an excellent mode of entertainment Foodonclick.com was the first company to come up
among people. Hence, within one year of its with the concept of online food delivery in the UAE.
operation, the company signed an agreement with Since its launch in 2010, it has collaborated with
its Saudi partner in 2016. The company aims to around 750 restaurants and cafes, adding more than
deploy 45–75 food trucks in Saudi Arabia by the 10 new outlets every week. clickformeal.com and
end of 2017. talabat.com are some of the other platforms
Last Exit in Jebel Ali, by Meraas, is a first-of-its-kind emerging in the GCC in response to the growing
gourmet food truck park, which opened in 2016 in demand for online food ordering.
Dubai. With Asian, American, Italian and Mexican
GCC F&B Sector Report © ARDENT Advisory 21
GCC F&B Sector Report © ARDENT Advisory 22
 United Arab Emirates
The UAE’s F&B market grew the fastest among all the GCC countries, driven by rising
affluence, booming tourism sector and high expat population

F&B market in the UAE has charted a robust With a wide range of restaurants catering to assorted
growth path, expanding at a CAGR of 12.1% in tastes and preferences, the UAE, particularly Dubai
2010-2015 and Abu Dhabi, is recognised as a vibrant dining hub.
The predominance of its F&B industry is evident
A growing and diverse population, increasing
from the fact that even during the economic
tourist footfalls and improving living standards
downturn, the convenience, indulgence and social
have significantly enhanced the demand for F&B
opportunities found in eating out exceeded the
market in the UAE. With people increasingly eating
savings from home cooking. Euromonitor predicts
out or visiting cafes with family, friends or
that with continued growth in affluence, given the
colleagues, foodservice has become a vital part of
strong affinity for out-of-home dining, consumers in
the Emirati lifestyle. A strong tourism sector is yet
the UAE will prefer eating out for a major part of
another factor driving the nation’s flourishing
their weekly meals.
foodservice market. Dubai, one of the most
prominent tourist destinations, attracted over 14.2 Growing importance of tourism as envisaged in the
million visitors in 2015, up 7.5% from that in 2014; UAE 2030 Vision is driving the retail sector
the city is now gearing up to receive a footfall of
With the negative effects of fluctuation in its oil
about 20 million by 2020. Driven by this demand,
revenue, the UAE has acknowledged the urgency of
the market is expected to reach a value of US$11.4
adopting a diversification strategy. By 2020, the
Bn, by 2020 .
country aims to earn approx. 65% of its revenues
Figure 17: The UAE F&B market by category from the non-hydrocarbon sectors; hence, tourism
industry is at the centre of its diversification plans.
(2010) (2015)
The UAE is thus leveraging on its strength in
developing its retail sector, with F&B at the
30% 28% forefront.
37%
42%
US$4.0 Bn US$7.2 Bn
As per the 2015 F&B report by CBRE, on an
30%
average, UAE residents spend approx. AED68
32%
per person per mall visit on food and drinks

Cafés/bars Full-service restaurants Fast food

The UAE’s robust foodservice landscape has placed
Source: Euromonitor, Ardent Advisory the country as the third biggest F&B spender in malls
globally. Retail locations such as malls are the
Valued at US$7.2 Bn in 2015, the UAE F&B market preferred places for establishing foodservice outlets
has expanded at a CAGR of 12.5% over the last five as nationals as well as tourists visit shopping malls
years. Lounges or bars/cafes, the country’s top for leisure activities. Furthermore, to accommodate
growing category, occupied the maximum share of the rising footfall, the country plans to increase its
42% in 2015. With a retail sales value of US$2.9 Bn, total room supply by 20,000 rooms to reach 160,000
pubs/lounges/bars accounted for approx. 80% of rooms by 2020.
the total sales, while cafes and specialty coffee
shops took up 20% share.

GCC F&B Sector Report © ARDENT Advisory 23

 Most malls have plans to increase the number of Coffee culture is well established in the UAE, with
F&B outlets to attract more visitors and gain a international chains dominating this market. Rising
higher share of tourist spending. The government demand for home roasters and growing affinity for
is also investing in various tourism and retail- personalisation are the two major factors driving the
related projects which are likely to have a positive coffee market in the UAE. The trend is inclined more
impact on the F&B sector. towards home-grown or in-shop roasters as opposed
to the franchise model. In response to this demand,
Tourism and retail-related projects in the UAE the number of coffee shops over the last few
decades has risen to over 2,200, with many more in
 Dubai Mall, a major retail and leisure the pipeline.
destination, is a critical part of empowering the
UAE’s tourism industry. It has around 200 F&B
outlets and plans to expand further. More than 50% of the new retail brands
established in Abu Dhabi and Dubai are either
 The Mall of the Emirate in Dubai also has plans
coffee shops or other F&B outlets
to add 12 F&B outlets to its existing portfolio.
 Hilton Worldwide in the UAE would increase its
F&B outlets by adding 34 more outlets to the
existing 117 restaurants. Figure 18: The UAE market value of specialty
coffee shops and juice bars (US$ Mn)
 Located on Dubai Water Canal Project, Marasi 413
447
Business Bay is slated to be completed by 2023. 378
351
318
It would include a lavish F&B ambience, 270
greeting visitors with floating restaurants and
cafes.
32 35 43 48 53
27

The growing trend of organising food festivals has 2010 2011 2012 2013 2014 2015
added a new appeal to the region’s F&B market.
Specialty Coffee Shops Juice Bars
DFF is a one-of-its-kind event attracting people
from across the world. Representing Dubai as the Source: Euromonitor, Ardent Advisory
gastronomic capital of the UAE, the food festival In addition to the expanding coffee market, the tea
showcases an assortment of cuisines and novel market is witnessing a growing demand, largely due
food concepts. to the country’s demographic composition. The high
proportion of South Asian population, especially
Coffee shops have become a new hotspot for
Indians and Arabs, in the expat group have a taste for
social interactions
consuming various blends of tea with typical snacks.
Coffee has been associated with Saudi Arabia since Capitalising on this demand, Filli Cafe, a UAE-based
the 15th century. Dubai is home to thousands of tea brand, has gained much popularity not only
coffee shops, ranging from old-style cafes that among nationals but also overseas. Serving almost
serve traditional Arabic coffee or qahwa (a bitter 6,000 cups a day, the cafe offers saffron tea, hard-
brew flavoured with cardamom) to international boiled, ginger, black or plain tea varieties as some of
chains such as Starbucks and Costa Coffee. the favourites.

GCC F&B Sector Report © ARDENT Advisory 24

 According to the International Conferences & The UAE’s fast food segment competes with the
Exhibitions LLC, the UAE’s exhibition showcasing fine dining segment by offering convenience,
speciality tea and coffee and related products, the affordability and taste
UAE is the world’s largest re-exporter of tea; also,
As a quick alternative to full meals, the western fast
more than 19,000 kg of tea per day is consumed
food franchises are expanding their presence and
across the country. In line with the growing
thus fuelling growth of this segment. Convenient to
demand for this beverage, the Lipton Jebel Ali
carry and eat, fast service and taste are the main
factory has increased its production capacity,
propositions for the growing demand for fast food.
becoming the largest tea factory under the brand
Among the fast food category, American fast food
Unilever.
has the largest value share of 30% (US$646 Mn),
The juice bars market has also witnessed a healthy followed by Middle Eastern, chicken and bakery fast
demand. With a growing preference for healthy food segments.
beverage options such as fresh or canned juices
Figure 19: Market value of fast food by type
and smoothies, juice bars are seen as upcoming
2015 (US$ Mn)
segments in the UAE’s beverage market.
243
Growing international tourism is driving the 219
377
203
demand for bars and lounges 170 183
319
343
291 389
142 261 356
In the cafes and bars category, bars and pubs 193 329
283 297 437
accounted for the largest share of the food service 257 350 384
316 319
market in the UAE. This is primarily attributed to 271
522 572 646
359 437 458
the growing population of western expats and
tourists. However, the sale of alcoholic beverages 2010 2011 2012 2013 2014 2015
is highly regulated; it is limited to the number of
guests in their respective hotels or non-Muslim
Burger Middle Eastern Chicken Bakery Others
residents with a personal liquor license. Therefore,
bars and pubs are mostly connected to hotels to Source: Euromonitor, Ardent Advisory
make these services easily accessible to tourists.
New five star brands such as Paramount, Westin,
McDonald’s is the leading brand in the burger fast
St. Regis, and W Hotels and Resorts were recently
food category, followed by Burger King, Hardee’s
inaugurated in the UAE. These are likely to further
and Wendy’s. California-based The Habit
drive the bars and pubs segment in the country.
Restaurants has signed its first international
franchise agreement with Dubai-based Food Quest
Restaurant to launch 50 outlets of The Habit Burger
Grill. In 2015, KFC was the top brand in the chicken
fast food category. Moreover, the Middle Eastern
cuisine is quite prevalent in the UAE, dominated by
the fish fast food category. Bakery fast foods such as
sandwiches, rolls, cakes and pastries have a
substantial demand in the UAE. Also, within each
category of bakery products, numerous options have
emerged to meet the demand for assorted foods.

GCC F&B Sector Report © ARDENT Advisory 25

 Single-product speciality stores such as Choux In the Middle Eastern category, traditional Emirati
Pastry, Macaron and Snacking Chic are booming in delicacies are offered in addition to international
the UAE. Tim Hortons is an example of a successful cuisines. Higher proportion of Asian and European
bakery fast food chain in the UAE. The store has expats has led to an increased demand for these
gained popularity, with its elaborate range of cuisines. A growing tourist population also plays a
baked products, breakfast snacks and lunch, and major role in defining the demand for such cuisines.
coffee beverages.
Home-grown FSRs account for 62% of the total
With a combination of international and FSRs
traditional flavours, Middle Eastern cuisine has
With the growth of various new home-grown brands,
the maximum share of demand in FSR category
the market now has multiple food options at the
The FSR category has the second-largest share in domestic level. People are increasingly enjoying the
the UAE’s F&B market, driven by rising disposable customisation and hence shifting from imported
income and increasing presence of international concepts to embrace home-grown brands. Outlets
fine dining brands. During 2010–2015, the FSR such as Café Blanc and Mezze House offer traditional
segment expanded at a CAGR of 9.9% to reach Arabic food in a trendy style. Independent FSRs are
US$2 Bn. The Middle Eastern cuisine had the the leading F&B service providers, accounting for
highest share at 29%, followed by European, Asian 62% of the UAE’s total food service market.
and North American cuisines at market share of
24%, 18% and 15%, respectively. Eating out at Figure 21: The UAE market share of chains vs
independent outlets (US$ Mn)
upscale food joints has also become a style
statement and an integral part of social norm. 7,213
6,465
5,944
5,163
Figure 20: Market value of FSRs by cuisine type 4,734 2,760
2,476
2,277
1,789 1,980
CAGR 2010 to
2015 (%) 3,667 3,989 4,453
2,945 3,183
9

606.6 11 2011 2012 2013 2014 2015

510.4
Independent Outlets Restaurant chains
393.2 9
332.6
248.9 11 Source: Euromonitor, Ardent Advisory

10
Middle European Asian North Pizzas Restaurant chains are growing faster owing to
Eastern American
demand from international tourists who prefer
Source: Euromonitor, Ardent Advisory familiar cuisines and are influenced by strong
marketing tactics of the international brands. As a
Middle Eastern cuisine is the most famous among result, domestic franchises of these brands are
Emiratis, with a growing preference for Lebanese expanding their base in the UAE.
mezze, Persian kebabs and Moroccan meatballs.
Qbara, Khan Murjan and Lalezar are some of the
top fine dining restaurants serving Middle Eastern
specialties.

GCC F&B Sector Report © ARDENT Advisory 26

 Independent chains in the fine dining category Higher disposable income, growing health
have to compete on pricing to attract more consciousness and demand for innovative food
consumers. Despite being expensive, the branded options are driving premiumisation in the F&B
chains in the FSR category are gaining popularity sector
owing to the Emiratis’ preference for international
The young, affluent and well educated population
fine dining cuisines.
mix in the UAE is increasingly expressing interest in
Higher demand for takeaways and home delivery healthier and more expensive fast food options.
services has enabled the growth of F&B Moreover, people are willing to switch to alternative
food options and also spend more on these items.
High penetration of internet and smartphones is
This is fuelling the demand for innovative and
aiding the growth of online food delivery
healthy food options. In response to this new trend, a
platforms. In the UAE, smartphone penetration
few new ventures have begun to offer healthy fast
stood at 175% in 2015, which is driving the growth
food alternatives in the UAE.
of third-party online food ordering/delivery
applications. Growth in healthy food options in the UAE
 Kcal Extra, the Dubai-based chain, runs six
“healthy fast food restaurants” that serve a
An average UAE resident spends approx.
wide range of salads and baked chicken, and
US$915 per year on takeaway compared to
provides calorie information for each dish.
approx. US$1,100 in the USA
 Lemonade, a California-based restaurant,
opened two new branches in Dubai, Richy’s and
Circles, which offer custom-made salads, bagels
and other health foods.
Figure 22: Market value of home delivery and
takeaway services in the UAE (US$ Mn)  Firin Gluten-free Bakery is a first of its kind in
123.1 Abu Dhabi that offers gluten-free products in a
112.1
92.9
104.9 cafe environment. The cafe also serves organic
88.5
79.0 tea and coffee and plans to launch a new range
of healthy breakfast.
 Café at Comptoir 102, offering an array of
organic and gluten-free dishes, is redefining the
2010 2011 2012 2013 2014 2015 UAE’s healthy eating scene by growing its own
produce as well as hiring a nutritionist for
Source: Euromonitor, Ardent Advisory
healthy cooking.
The country’s online food ordering market is still at
 Kraft Foods plans to modify the formula of its
a nascent stage and increased at a CAGR of 9.3% in Capri Sun drinks to replace the high-fructose
2010–2015. However, the trend of third-party corn syrup with plain sugar.
online food ordering services is expected to rise in
future as these enable many small and
independent FSRs to reach out to the wider
population. Some leading third-party online
ordering services are Zomato.com,
foodonclick.com, talabat.com and 24h.ae.

GCC F&B Sector Report © ARDENT Advisory 27

 Kingdom of Saudi Arabia
Saudi Arabia leads the F&B market in the GCC, with a market value of about US$12 Bn. QSRs
and cafes are the fastest growing F&B segments in the kingdom

Growing influence of urban lifestyle provides Saudi Arabia is among the world’s largest coffee
impetus to Saudi Arabia’s F&B market consumers
Growing population, increasing consumer spending Coffee is a popular drink in Saudi Arabia and a
and public sector investment in malls, hotels and symbol of hospitality in the country. Saudis have
restaurants are driving growth in the F&B sector. been highly receptive to European-style cafes which
Moreover, the effects of globalisation on the sector has led to the growth in demand and consumption of
are quite evident, with the increasing coffee. The country imports around 10,000 tonnes of
modernisation in lifestyles and food preferences. coffee annually, while the per-capita consumption of
This has led to a shift in people’s dietary coffee is 3 kg per year. Led by the high coffee
preferences from the traditional Arabic cuisine to consumption, the cafe market in the kingdom
international flavours. expanded from US$2.4 Bn in 2010 to US$3.9 Bn in
2015. Moreover, coffee chains, both international
Saudi Arabia’s F&B sector expanded from US$7.5
and local, are leveraging the growth potential in
Bn in 2010 to US$12 Bn in 2015, at a CAGR of 9.7%.
Saudi Arabia through innovations in their offerings.
The fastest growing category within the sector is
cafes, followed by QSRs. In contrast, the fine
dining segment has expanded at a slow pace owing
to the increased popularity of QSRs and decline in Top coffee chains in Saudi Arabia
disposable income resulting from sluggish oil
revenues. Nevertheless, with improving economic Costa Coffee Mochachino Starbucks
prospects and the likely positive demand growth
by 2020, the size of the F&B market is expected to
reach US$18.2 Bn.
Dr. Café Tim Hortons Caribou

Figure 23: F&B Market size in Saudi Arabia Figure 23: Number of F&B outlets in Saudi
Arabia
(2010) (2015)
7,456 8,798
2,244 5,355 6,319

1.4 2.4 12,351 10,924 11,110 11,301

10,742

US$ 7.5 Bn 3.6 5.7

US$12 Bn
13,815 13,996 14,180 14,366 14,553
2.4 3.9

2010 2012 2013 2014 2015

Fast Food Cafes Full Service Restaurants Fast Food Full Service Cafes

Source: Saudi Tourism Information, Euromonitor, Ardent

Source: Saudi Tourism Information, Euromonitor, Ardent Advisory Advisory

GCC F&B Sector Report © ARDENT Advisory 28

 Saudi Arabia has captured 60–65% of the total and Burger King but also several other independent
fast food market in the GCC players such as Burgeronomy, Hamburgini, 12 Burger
and The Burger Box. In the chicken fast food
Saudi Arabia accounts for the largest share of the
segment, Al Baik brand leads the market, followed
total fast food market in the GCC, with US$5.7 Bn,
by KFC. A growing trend of takeaways and drive-
as of 2015. The fast food channel offers quick,
through service has also expanded the fast food
affordable, filling and tasty snacks options to
sales. Moreover, the global chains have followed the
consumers, given that apart from shopping and
strategy of customisation and localisation through
eating out, the country has limited options for
intelligent modifications in their menus. One such
entertainment.
example is McArabia Grilled Chicken sandwich
With the growing popularity of fast foods and offered by McDonald’s.
casual dining, American fast food chains dominate
the market, especially in the upscale fast food Top fast food brands in Saudi Arabia
segment. Various local brands such as Herfy, Al-
Beck and Shawaya House are also leveraging the McDonald’s Burger King Little Caesar
potential demand for fast food, creating a strong
presence in Saudi Arabia’s fast food landscape.

Figure 24: Market size of fast food by type, US$

Mn (2015) Herfy Shawaya House Wimpy’s Burger

Bakery
14%
31% Burger
10%
US$ 5.8 Bn Middle Eastern Growing tourism and hospitality industry is driving
19% Saudi Arabia’s F&B market
Asian & Chicken
26% Religious tourism the key growth driver of Saudi
Others Arabia’s F&B sector. In 2014, about 19 million
Source: Euromonitor, Ardent Advisory tourists visited Saudi Arabia, of which 50% were
headed for Hajj and Umrah. This number is expected
to increase to 25–30 million by 2025, boosting the
Bakeries of all types are present in large numbers contribution of religious tourism to the non-oil sector
across the country, as bread is the staple food in GDP to more than 5.4% as of 2016. Considering the
Saudi Arabia. Bakeries accounted for 31% of the growth prospects, the Saudi Arabia government is
total fast food market in 2015. Burgers accounted focusing on improving and expanding infrastructure
for the second-largest share at 26% in 2015. While in the hospitality and retail segments, which are the
Artisanal bakeries, with a market share of 67% backbone of the F&B sector.
(2014), is the largest player in the bakery segment,
McDonald’s is the largest player in the burger
segment. The growing popularity of burgers has
not only boosted the sales of brands such as Herfy

GCC F&B Sector Report © ARDENT Advisory 29

 The number of hotel rooms in Saudi Arabia As an oil-dependent economy, Saudi Arabia is a rich
increased from 140,000 units in 2010 to 299,500 nation. A high disposable income has also played an
units in 2014. The country’s tourism department important role in boosting the demand for the
has forecasted to increase the number of rooms to country’s F&B industry.
401,360 by 2020, with a total investment of
International hospitality exhibitions and F&B
US$38.4 Bn. This would boost the demand for
focused events are attracting global F&B brands
quality food products, particularly in five star
hotels. In 2013, Reed Sunaidi Exhibitions, a joint venture
between Reed Exhibitions and Sunaidi Expo,
The boom in the hospitality sector has attracted a
launched its first trade event on the F&B industry in
number of international hotels chains such as Dusit
Saudi Arabia. The event is held in December every
Thani, Shangri-La, JW Marriot, Radisson Blu,
year since 2013, with emphasis on making Saudi
Double Tree by Hilton and Swiss-Belhotel. The
Arabia one of the prominent and preferred retail
world’s largest hotel Holiday Inn, with 5,154 rooms
destinations in the region. The Saudi Food Forum is
in five towers, will be operational in Makkah by
another noteworthy F&B event in the country,
2018.
attended by both local and international players in
Globalisation is transforming the lifestyle and the food service market.
eating habits of Saudi youths
Saudi Arabia is one of the largest unexplored
In the last two decades, Saudi Arabia has markets in the Gulf for natural and organic products.
experienced rapid socio-cultural changes owing to But as people become more health conscious in
robust economic growth, globalisation and terms of what they are eating and how their food is
growing consumerism. Not only the Saudis have being cooked, there is an immense potential for
started to travel and explore but the growing natural food products. Leveraging on the growing
population of expats has also led to the influx of demand for natural food, Saudi Food Forum also
western culture and food habits. Moreover, the exhibited organic companies such as Bio Ice, Organic
number of working women in Saudi Arabia bio Free, Darin, Hasad and Organic Campagnola
increased by almost 86% between 1999 and 2012 Soup. The exhibitors came from across 27 countries
to reach 647,000. This further increased the including Germany, Spain, South Africa and United
potential of ordering food from outside as women Kingdom.
had less time for cooking at home.

GCC F&B Sector Report © ARDENT Advisory 30

 Qatar
As an F&B hub in the GCC, Qatar’s foodservice industry is witnessing robust demand and
expansion in the number of local and global food brands

The F&B industry is set to benefit from Qatar’s Qatar has also been showing resilience as a tourist
economic diversification plans destination amid the challenges faced by the global
tourism industry.
Qatar aims to become a leading country in the GCC
in terms of economic growth. After winning the bid
Figure 25: Tourist arrivals in Qatar (in million)
to host FIFA World Cup 2022, the country’s sports
and tourism sectors have grown rapidly. This has
3.7
benefitted its F&B market, making it one of the 3.4
2.9 3.1
2.6 2.8
most promising and attractive segments in the
region. According to Business Monitor
International (BMI), the expansionary fiscal policy
of the Qatari government and growing population
base are driving food consumption that is expected
2013 2014 2015 2016e 2017e 2018f
to increase at a CAGR of 5% between 2016 and
2019. Backed by this growing demand for food, Source: Euromonitor, Ardent Advisory
Qatar’s F&B landscape has over the years attracted Note: e-estimated & f-forecasted
various local and international food chains. Qatar’s
F&B sector is expected to reach US$1.5 Bn by 2020 In a bid to host the FIFA World Cup 2022, Qatar has
from US$1 Bn in 2015. been investing in infrastructure expansion to
accommodate and entertain tourists. As per Qatar
In comparison to the UAE and Saudi Arabia,
Vision 2030, the country envisages to leverage this
Qatar’s F&B sector is still at a nascent stage.
opportunity to carve a distinct position in the
However, robust economic growth averaging at
foodservice and hospitality landscape of the GCC.
3.3% and rising affluence levels (highest GDP per
For 2016, the number of hotel rooms is estimated at
capita in the world) have strengthened the outlook
23,000, a 27% growth over that in 2015. Some of the
for a rise in spending on food and beverages. Urban
most recent openings include DoubleTree by Hilton
lifestyles also have a strong influence on the eating
Doha – Old Town and Shangri-La Hotel Doha. This in
patterns of people, leading to a rise in demand for
turn has resulted in a growing demand for restaurant
westernised diets and global culinary choices.
and cafe chains in the country.
An expanding tourism industry is the most
Growth in the number of malls and preference for
significant driver for Qatar’s F&B market
international flavours are favouring growth of the
The Qatari government is providing significant F&B sector in Qatar
impetus to its tourism and hospitality sector.
Qatar is making substantial investments to expand
According to Qatar Tourism Authority (QTA),
its retail space by developing malls and shopping
Qatar received 2.93 million visitors in 2015,
districts. The City Centre, Lagoona mall, Villagio and
increasing at an annual average rate of 11.5% in the
Landmark together account for more than 100 F&B
last five years.
outlets.

GCC F&B Sector Report © ARDENT Advisory 31

 The Mall of Qatar, which opened recently, offers a Top cuisines served at Souk Waqif
culinary treat for consumers, with some of the
world’s choicest F&B brands under one roof. Once  Qatari Cuisine, served best by Al Tawash
fully operational, it will display the most elaborate
and lavish setup of foodservice chains across Qatar,  Mediterranean Cuisine, served best by Le
with 30% of the total space dedicated to food Gourmet Restaurant
outlets. Brands such as Cheesecake Factory, Babel,
Eataly, Greek Fresh, New York Fries, Sazeli, Texas  Yemeni Cuisine, served best by Al Bandar Aden
Roadhouse, TWG Tea Salon & Boutique and Zafran Restaurant
would be a few of them. The construction of new
malls such as North Gate, Doha Festival city,  Iraqi Cuisine, served best by Al Adhamiyah Iraqi
Ezdan, Al Markhiyaa and the Gulf Mall is currently Restaurant
underway, and these are likely to accommodate
 Syrian Cuisine, served best by Damasca
numerous F&B outlets.
With 590,000 m2 of gross leasable area, there is a  Indian Cuisine, served best by Royal Tandoor
high demand for premium restaurant chains in
Doha. Sensing this immense investment potential
in Qatar’s F&B landscape, scores of international Katara Cultural Village – It is the largest and
F&B brands such as Megu, Tse Yang, Pampano, multidimensional cultural project of Qatar that is in
Mango Tree and Burj Al Hamam are now emerging. line with the goals set in the Qatar Vision 2030. It
In addition, western-style restaurants are gaining houses some of the finest international restaurants
popularity in Qatar. symbolising culinary diversity. It presents diverse and
world famous cuisines with brands such as Mamig
Apart from malls, Doha has three main F&B
Armenian, U’sha Frshka, Al Jazeera Media Café and
clusters that has more than 110 F&B outlets
Ard Canaan.
Souk Waqif – It is one of the top tourist
destinations in Qatar. Apart from being a great Top F&B brands at Katara Cultural Village
shopping destination, it houses numerous
restaurants and shisha lounges. It is also one of the
biggest F&B hubs in Doha and hosts more than 42
food outlets.
Mamig Armenian Al Jazeera Media Café

U’sha Frshka Ard Canaan

GCC F&B Sector Report © ARDENT Advisory 32

 Pearl Qatar – Located 350 metres offshore of Growth in cafes and home-grown food business is
Doha's West Bay Lagoon area, it includes catching up fast
residential accommodation, hotels, marina and
Coffee plays an important role in Qatar’s F&B
retail areas. Considered as Doha’s “Riviera Arabia”,
culture, and the growing preference for freshly
it was developed by the Hospitality Development
brewed coffee provides a boost to cafes in the
Company (HDC). The outlets range from TGIF to
country. From the country’s first vegan cafe to the
Isla (a high-end Mexican restaurant), presenting an
innovative ones, coffee shops in Qatar are offering a
array of cuisines and wide food service categories.
diverse range of products. Per-capita coffee
Top F&B brands operated by HDC are – Megu,
consumption in Qatar reached 0.69 kg in 2015, while
Wafflemeister, Urban Jazz Kitchen, and Chocolate
total coffee consumption is estimated to reach 1,943
Bar.
tonne in 2020 from 1,670 tonne in 2015. As youth
constitutes more than 60% of the population, the
Top F&B Brands operated by HDC number of cafes are expected to further grow in the
coming years.
QIFF is constantly in the limelight for developing
an innovative food experience for visitors
The QIFF is the one of the most coveted annual food
fests, organised jointly by the QTA and Qatar
Airways, and hosts a range of F&B brands. The
seventh QIFF, held in 2016, offered exciting dining
options such as “dinner in the sky”, “Barbecue on the
Bay”, “Dinner on the Dhow” and “Instagram market”
American and Lebanese cuisines are the most (with 12 entrepreneurs selling their food items).
preferred cuisines in Doha Apart from these new concepts, celebrity chefs, a
International and American cuisines remain the live cooking theatre and food trucks also captured
most popular choices, representing nearly half of significant attention from food admirers.
the total number of outlets in Doha. Lebanese
culture has had a considerable influence on Qatar’s
F&B sector, leading to an increased demand for
Lebanese cuisine. This has also contributed to the
growing popularity of the shisha concept in Doha.
Although a variety of F&B concepts are emerging
in Qatar, certain gaps exist with regard to
European-style cafes, American fine dining and
pizzeria concepts. Irrespective of these gaps, the
flourishing tourism industry in Qatar will be the
main factor for F&B’s success stories in the future.

GCC F&B Sector Report © ARDENT Advisory 33

 Oman
The Oman government has introduced favourable regulations to promote the expansion of its food
service industry

Oman’s F&B industry is geared for growth In anticipation of this surge in tourist footfalls, the
government has initiated several hospitality
In the last five years, Oman’s F&B sector has
infrastructure projects. The dynamics of Oman’s
expanded at a slow pace of around 1.1% CAGR to
hospitality industry is changing, with the entry of
reach a market size of US$349 Mn in 2015. The
international luxury hotel chains. Anantara Group,
recent drop in oil prices has had a negative impact
The Kempinski and Fairmont Hotels, and Sheraton
on consumer spending which led to a lower
Hotel are some of the top chains.
demand in the country’s F&B sector.
With improved forecast for oil prices, Oman’s retail Table 4: Major tourism projects in Oman
industry has regained momentum. Also, with the
Project Description
Omani government giving high priority to its
tourism industry, the foodservice market is quite An integrated tourism complex
likely to expand further. To ease the process of F&B with an area of 2.5 Mn m2 valued
expansion, in 2015, the government has relaxed the The Wave Muscat at US$2.5 Bn. It would house
scores of restaurants and coffee
regulation for setting up of restaurants in Oman. As
shops
per the new regulations, restaurants are no longer
required to get an approval from the Ministry of Duqm Hotel A four-star business hotel with
Project 230 rooms, various facilities and
Tourism (MoT) for setting up business. Only
restaurants
tourism restaurants would have to seek approval
from the ministry. Oman Convention A US$1 Bn project housing
& Exhibition several hotels, business parks,
Government initiatives have led to increased Centre restaurants, cafes and shopping
malls
investments in the tourism sector
As tourism is one of the strategic pillars in Oman’s Source: Company Website, Annual report
economic development, by 2020, the government
plans to construct more than 20,000 hotel rooms to Tourism-oriented projects are not only confined to
accommodate the growing number of visitors. hospitality but also entail opening up of new malls
About 1.5 million international tourists visited which are one of the main sources of leisure for
Oman in 2015. The country is now gearing up to residents as well as tourists. One such project is the
welcome more than 2 million tourists by 2020. Mall of Oman, a US$470 Mn project, set to open by
2020. It will have a dining zone with five new casual-
dining restaurants serving global flavours, including
the Turkish Kosibasi restaurants. The Palm Mall
Muscat, a US$129 Mn project set to open by 2018,
will present various options in shopping, family
entertainment, F&B and leisure. As a venture of Al
Jarwani Hospitality, the mall would present a range
of F&B brands such as Yummi-Yummi Catering, MJ
Foods Production, Le Praline and La Mer Café.

GCC F&B Sector Report © ARDENT Advisory 34

 Themed restaurant concepts are emerging in Omani F&B businesses have adopted strategies such
Oman as customisation of food through local flavours, taste
for high-quality ingredients and dietary options. For
Oman’s foodservice landscape has transformed led
instance, Pizza Express chain in Oman has developed
by lifestyle changes, urbanisation and flourishing
a new concept called “Leggera”, wherein the food
tourism. As per the Oman Tourism Report, the
served under this category has less than 500 calories.
country’s hotels and restaurants industry is among
On the other hand, Subway introduced items such as
the fastest growing sectors in the GCC. Contrary to
chicken tikka, tandoori and flat bread to cater to
the limited culinary selection in the past, the
local tastes. On similar lines, New York Fries
appeal of new and exciting concepts is gaining
introduced “imli fries”, “butter chicken fries” and
ground. Amid several restaurants and cafes,
“chili beef fries.”
themed dining restaurants such as “The Jungle”
and “Love at First Bite” have also emerged. These However, Oman’s F&B sector is facing challenges
restaurants offer a variety of cuisines and owing to Omanisation and the lack of skilled
innovative ambiance to create a memorable employees which may limit the sector’s growth.
experience for the diners. Particular to Oman’s fast food industry, one of the
concerns is the ban on the issue of two-wheeler
Like elsewhere in the GCC, Omanis are willing to
licenses. Omani F&B businesses have been tackling
experiment with a wide variety of food and prefer a
this issue by helping their employees in getting two-
high level of customisation. This has led to higher
wheeler licenses from other countries such as the
demand for international fine dining concepts.
UAE. Although the sluggishness in oil prices reduced
People are also gradually shifting towards healthier
the spending capacity of the population, Oman’s
food options such as organic and gluten-free range
F&B industry, particularly the fast food category, has
of food. Being a multicultural city, Muscat offers a
shown resilience to emerge as a recession-proof
wide range of restaurants featuring Omani,
business. Nevertheless, the demand for F&B is
Lebanese, Moroccan, North African, Asian,
expected to increase in the future.
European and Continental cuisines.
Fast food and casual dining segments are gaining
traction
In the last decade, the fast food and casual dining
categories have undergone a major
transformation, driven by robust demand and
growing competition. Pizza Hut was the first
international fast food chain to open in Oman
about 30 years ago. Today, it has around 39 outlets
in the country, accounting for 40% share in the
overall fast food market and 60% share in the pizza
segment. Moreover, brands such as Subway,
Dominos, New York Fries and Italian coffee chains
are among the top QSRs, while Pizza Express, Bin
Mirza International, Steak Escape Sandwich Grill
and Spun Candy are famous in the casual dining
space. Fast food accounted for the largest share in
terms of number of outlets, followed by cafes and
casual dining segment.

GCC F&B Sector Report © ARDENT Advisory 35

 Kuwait
As global food franchises and local concepts are gaining prominence in Kuwait, its F&B
industry is a promising sector for investors

Kuwait’s government is making efforts to ensure preference for a culture of eating out is backed by
food security to boost its F&B sector high income levels. After the economic slowdown,
the per capita GDP of Kuwait is expected to grow
Dining out is a favourite leisure activity among
at 3.3% to reach US$32,671 between 2015 and
people in Kuwait, and this has led to the
2020. The youth population supported by a high
emergence of restaurants offering a variety of
per-capita income is more inclined towards
cuisines in recent times. Cuisines ranging from
western lifestyle, and this has led to the entry of
Chinese, Japanese, Thai, Italian, Indian, American
many international F&B players in the country.
and Lebanese are spread across more than 25,00
restaurants. Kuwait’s F&B market expanded to Growth in mall infrastructure is fostering
US$1 Bn during 2010–2015, at a CAGR of 4.6%, and expansion of F&B outlets across Kuwait
it is expected to reach US$1.5 Bn by 2020.
Famous malls such as The Avenues, 360 Kuwait,
With poor returns from the hydrocarbons sector, Marina and Salhia commercial complex house
Kuwait is trying to re-orient its economy through various foodservice outlets. For instance,
diversification. The economy is thus emphasising restaurants, cafes, food courts, sweetshops and ice
on the development of the tourism and hospitality cream parlours occupy a 25% share in The Avenues
sectors, and within this, F&B would be one of the mall. The mall is expected to undergo phase-three
main areas of development. Moreover, Kuwait expansion to significantly increase the number of
government has laid out a long-term plan to ensure F&B outlets, given the high footfalls in this space.
food security. It aims to enhance local farming Phase three would have six extensions, and the
production and processing to support the F&B Souk extension would be dedicated to various
business in Kuwait. In terms of private investment, restaurants and cafes.
Kuwait is one of the most promising regions, with
Kuwait’s F&B market presents numerous
the government providing various incentives and
opportunities for franchises and local concepts
subsidies to encourage local production.
Furthermore, the country’s National Development Restaurant chains such as McDonald’s, Domino’s,
Plan has identified tourism as one of the sectors for Cheesecake Factory, Costa Coffee, Red Lobster,
development. This will have a favourable impact on Olive Garden and Texas Roadhouse in addition to
Kuwait’s F&B sector. franchises and international brands have a strong
position in Kuwait. A growing trend of original food
Growing youth population and per-capita income
concepts is also catching up fast. Among the
are major drivers of Kuwait’s F&B industry
franchised food companies, Americana Group with
More than 50% of Kuwait’s population falls within brands such as KFC, Pizza Hut and TGIF dominates
the age group of 25–54 years, while around 40% is the market, with 175 outlets and accounts for 45%
below the age of 24 years. Moreover, the growing share in Kuwait’s F&B market.

GCC F&B Sector Report © ARDENT Advisory 36

 Local F&B brands in Kuwait are redefining Growing popularity of hospitality and food
themselves to move up the value chain in terms of exhibitions and emergence of online food
quality, ambiance, design and menu selection. ordering portals are boosting F&B market
Quality plays a major role in defining food choices
Various online platforms are emerging in Kuwait
as people are becoming conscious of what they
which are transforming the country’s F&B
eat. Sensing this trend, a local premium burger
landscape. Founded in 2004, Talabat.com is an
joint, Slider Station, opened in Kuwait. It is the
online food ordering portal that expanded across
world’s first conveyor belt burger joint offering
the GCC, within a few years of its inception.
classic and gourmet sliders and a range of
Moreover, Kuwaitis are becoming more active on
American tapas, grills, flat breads and high-end
social media. For instance, Yallawain.com is a
desserts. On similar lines, B+F Open Flame Kitchen,
Kuwaiti website focused on reviewing and rating
an upscale designer concept-focused outlet serving
local dining restaurants.
global cuisines, was also launched in the country.
In the last five years, the annual hospitality and
Expansion of F&B clusters is gaining traction in
food exhibition, Horeca Kuwait, has come a long
Kuwait
way in terms of increase in popularity and the
Taking cues from the US F&B market, a new trend number of exhibitors and visitors. The number of
of F&B clusters is gaining traction in the GCC, with exhibitors has grown from 35 to 60, and the
Kuwait being a major market. A restaurant cluster number of participants has risen from 100 to 250.
is a geographic conglomeration of various F&B Showcasing the live culinary event and judged by
outlets located in close vicinity. However, each top chefs from Italy, Germany, France, Saudi
food outlet has a separate menu and offers Arabia and Egypt, the exhibition presents
distinctive ambiance. substantial investment opportunities in Kuwait’s
F&B market.
Table 5: Upcoming F&B clusters in Kuwait

Number of
Name Location
Outlets

Arabella 36 Hawalli

Menus 7 Abu Halifa

Typhoon 60 Abu Halifa

Le Port NA Mahboula

Miral 45 Al Mangaf

Levels NA Al Mangaf

Source: Hodema, Ardent Advisory

GCC F&B Sector Report © ARDENT Advisory 37

 Bahrain
Over the last five years, Bahrain’s F&B sector has struggled amid political unrest; however, the
sector is poised for growth, with the government’s increased focus on the tourism sector

Bahrain’s F&B market expanded at a CAGR of 7% Over 12 million tourists are expected to visit Bahrain
from 2010 to reach US$387 Mn in 2015 by 2020; the government is thus making significant
investments to develop hotels and other
As one of the smallest F&B service markets in the
infrastructure.
GCC, Bahrain has immense potential to emerge as
a vibrant dining hub. The country has been one of One such investment is the expansion plan for the
the top destinations for Italian and Lebanese food Lost Paradise of Dilmun, a US$50 Mn standalone
over the last 30 years. The enthusiasm among water park, the largest in the Middle East. This park
people for dining out and appreciating global would feature various F&B outlets, including Arabian
flavours has enabled the country’s F&B players to Grill, Bubbles, Blue Lagoon Beach Bar, Mid Summer
serve items ranging from as exotic as caviar to as Café and Gilgamesh.
inexpensive as shawarma. Bahrain’s F&B market is
expected to expand to reach US$0.6 Bn by 2020
Table 6: Top three upcoming hospitality
from US$0.4 Bn in 2015, at a CAGR of 8.4% .
projects in Bahrain
The 2011 political unrest in Bahrain negatively
affected the growth of the tourism and F&B Project Overview of F&B
industries. Many restaurants closed down
permanently during the unrest. However, since Major attractions are the three
Dilmunia
then, the government is trying to revive the restaurants serving Chinese,
Masterplan
Thai and French specialties
industry by attracting both regional and
international visitors. Also, infrastructure The Avenues It will house more than 50
developments such as Dragon City Mall and The Bahrain restaurants and cafes
Avenues, extension of the City Centre, and It would feature rooftop
expansion of airport is expected to bolster Marassi Al
restaurants, outdoor bars,
Bahrain’s tourism sector. New investments such as Bahrain
lounges and cafes
the US$928 Mn project have been proposed to
Source: News Articles, Ardent Advisory
convert Hawar Islands into an eco-friendly resort
which is expected to transform the tourism With the expansion of both western and local
landscape in the kingdom. These proposed restaurants, significant opportunities await F&B
developments would greatly benefit the F&B market
sector. According to the 2013 Index of Economic Freedom,
Bahrain’s growing hospitality industry is driving Bahrain topped the list of the best free market
the expansion of various F&B ventures economies in the MENA, with an overall score of
75.5, making the country one of the best places to
As per the Bahrain Economic Development Board,
invest in the restaurant business. More than 100
the hotels and restaurants sector grew by 10.3% Y-
American franchise restaurants exist in Bahrain, with
o-Y, much above the average GDP growth rate of
the majority being fast food joints. Fine dining is also
5.6% in 2015.
a popular concept in Bahrain.

GCC F&B Sector Report © ARDENT Advisory 38

 As a result, the number of individual food joints vis- Top three most visited F&B hubs in Bahrain
à-vis chained outlets has increased in the country’s
F&B market. Besides a growing appetite for
 Adliya – Many F&B outlets in this area have
international flavours, local chains are popular
been transformed from old townhouses. Most
among people. Recently, two investors from
restaurants are located here.
Bahrain bought 50% stake in Hungry Bunny, a
Saudi fast food chain.  Seef – It is more of a cosmopolitan area, with
Bahrain’s F&B sector is on a growth spree the presence of branded restaurants, offering
American, Japanese, Lebanese, Indian,
With a wide variety of cuisines available ranging
Chinese and French cuisines.
from Chinese to Greek, Bahrain’s F&B sector has
been performing fairly well. Italian cuisine is among  The Diplomatic Area – Located in the heart of
the favourite ones, with the popular restaurant Manama, this area houses various upscale
choices such as Roma, Primavera, La Taverna, hotels and premium F&B outlets.
Cico’s, Ciro’s Pizza Pomodoro or Mamma Mia’s.
This is followed by Asian cuisines, particularly
those with a blend of western and eastern cuisines.

Apart from catering to people’s tastes, F&B players

in Bahrain are trying to brand the dining experience
by leveraging the concept of celebrity chefs. Rasoi
by Vineet is the first ever Michelin-starred chef
restaurant in Bahrain that was inaugurated in
October 2015. Moreover, Bahrain’s food service
industry emphasises on food quality as people are
increasingly preferring premium options. Bahrain’s
food service industry is evolving, with the rise of
the F&B clusters concept.

GCC F&B Sector Report © ARDENT Advisory 39

GCC F&B Sector Report © ARDENT Advisory 40
 Kuwait Food Company
With more than 1,700 food outlets, the Kuwait Food Company is one of the biggest F&B
franchises in the GCC

Business Description
Kuwait Food Company – Key Facts (2015)
Established in 1964, Kuwait Food Company Established 1964
(Americana Group) operates F&B outlets and
Location MENA (Kuwait)
manufactures food products under various brands.
Besides being the largest operator of restaurant Number of Outlets 1,700 (2015)
chains in the MENA, it is one of the most successful Key Brands KFC, Pizza Hut, Hardee’s,
franchise operators in the world. With a network of TGIF, Krispy Kreme, etc
over 1,700 outlets as of 2015, Americana Group has
Revenue US$ 3,217.3 Mn
developed 12 most recognised brands under
different food service categories, from fast food to Net Profit US$ 145.9 Mn
fine dining. Based out of Kuwait, the company has
leveraged its strong understanding of the varied Figure 26: Number of food outlets
F&B tastes and preferences of people in the GCC.
1,462 1,556 1,700
This capability has enabled it to develop six of its 1,233 1,301 1,366
home-grown brands, including Chicken Tikka, Fish
Market, Samadi, Maestro, Grand Cafe and Fusion.
The company has expanded operations across 13
countries and 105 cities.
2010 2011 2012 2013 2014 2015
Key Financials (Revenue, Operating Profit, Net Source: Company Website, Annual report
Profit)
During 2011–2015, the company’s revenues Figure 27: Net profit margin and revenue
increased at a CAGR of 4.3%, while its net profit 4000.0 15.0%
decreased. This decline is attributed mainly to the 9.5%
3000.0 9.1%
fall in sales of certain products owing to challenges 8.4% 9.0% 8.0% 10.0%
arising from economic and health-related issues, 2000.0
such as Avian Flu and Mad Cow Disease. In 2014, 6.7% 5.0%
1000.0 5.7% 5.8% 5.6%
the sales value grew 4.6 times that in 2004. The 4.5%
2,609 2,890 3,054 3,240 3,217
strong historical financial position, benefits of 0.0 0.0%
economies of scale and diversification strategy 2011 2012 2013 2014 2015
(number of outlets increased by 8% in 2014 y-o-y) Revenue (US$ Mn) EBIT Margin (%)
Net Profit Margin (%)
have helped the company achieve success today.
Source: Annual report of Americana (2014)

Latest News
• After much negotiations, in October 2016, Adeptio, a Dubai-based investment group, agreed to buy a 69%
stake in Americana Group at US$2.4 Bn from the Kharafis (a wealthy Kuwaiti merchant family)
• In 2015, the company launched its new canned beans factory in Egypt, with a production capacity of three
million cartons a year

GCC F&B Sector Report © ARDENT Advisory 41

 KOUT Food Group
Besides introducing the franchise of top global F&B brands in the GCC, Kout Food Group is also
developing local food concepts

Business Description Kout Food Company – Key Facts (2014)

Established in 1998, the Kuwait-based Kout Food Established 1998
Group is engaged in establishing, managing and
Location MENA (Kuwait)
operating international and local restaurant chains.
The company also provides catering services as Key Brands Burger King, Pizza Hut, Taco
Bell, Applebee’s, Costa Coffee,
well as import and export of food-related items.
etc
With “Hungry Bunny” as its first local franchise in
Kuwait, the company today holds the franchise Revenue US$ 351.256 Mn
rights of several international brands such as Net Profit US$ 19.588 Mn
Burger King, Taco Bell, Pizza Hut and Applebee’s.
Amid the growing popularity of these brands, the
Figure 28: Net profit margin and revenue
company has also nurtured some of its home-
400.0 8.0%
grown concepts such as “Scoop a Cone” and 6.2% 6.7% 6.1%
5.3% 5.2%
“Ayyame”. 300.0 6.0%
6.0% 6.2% 5.7% 5.7%
Key Financials (Revenue, Operating Profit, Net 200.0 6.0% 4.0%

Profit) 100.0 2.0%

247 261 308 372 376
Between 2011 and 2015, the company’s revenues 0.0 0.0%
increased at a CAGR of 8.7%, while its operating 2011 2012 2013 2014 2015
Revenue (US$ Mn) EBIT Margin (%) Net Profit Margin (%)
profit rose at a CAGR of 4.8%. Revenue from
Ayyame increased by over 25% in 2014 led by Source: Annual report of Americana (2014)
growing popularity of local F&B concepts. In
addition, total sales from outlets in the UK surged Global Expansion strategy
by 44% y-o-y and the business grew by over 6.5% As a key business strategy, in 2006, the company
in 2014. The immense popularity of “Kababji”, a began establishing its presence in the European
restaurant specialising in Lebanese cuisine, led to market, with London as its base. The company
the introduction of two more outlets. These factors expanded its portfolio in the UK, with the acquisition
have driven the Group’s strong performance in the of Little Chef Group and South West Coffee Ltd. in
recent years, with the expectation of further rise in 2014. Acquisitions of Costa Coffee and Subway
profits over the coming years. further expanded the company’s portfolio. In the
same year, the company entered the Kurdistan
market by opening the first Pizza Hut outlet in Erbil.
Latest News
• In 2014, the Group was recognised and awarded by the Applebee’s Global Convention as the fastest
growing franchisee in the MENA. It also received recognition at the BKMEA Conference for the highest
home delivery sales
• The company acquired seven additional locations for expansion of Pizza Hut outlets in Kuwait in 2015. It
has also opened six new Burger King outlets in Kuwait. The Kout Food Group partnered with Yum!Brands
and launched the first Pizza Hut Dine-in store in Iraq

GCC F&B Sector Report © ARDENT Advisory 42

 Herfy Food Service Company
As one of the largest food chains in Saudi Arabia, Herfy is competing with global food chains

Business Description
Herfy Food Company – Key Facts (2014)
Founded in 1981, Herfy Food Service Company
Established 1981
(Herfy) is the biggest and the fastest growing fast
food chain in Saudi Arabia, specialising in three Location MENA (Saudi Arabia)
major foodservice categories: fast food, bakery and Number of Outlets 301 (2015)
others, and meat processing. Restaurants occupied
Revenue US$ 245.7 Mn
a major share of business, with 85.2% of the total
revenues accruing from its 290 outlet chains as of Net Profit US$ 55.5 Mn
September 2015. With the number of restaurants
increasing at a CAGR of 8.1% from 2011 to 2014, Figure 29: Number of Herfy’s rented and
the company plans to add 25 restaurants every owned branches
year. The company has well captured the local
301
tastes and preferences, making the brand quite 257
188 200 207
popular among the Saudis. Considering its wide
180 187 226 266
presence in the GCC, Herfy is keen on increasing 168
the number of outlets in the MENA. 2011 2012 2013 2014 Sep/15

Key Financials (Revenue, Operating Profit, Net Rented Owned

Profit) Source: Annual report of Herfy Food Company (2014)

Between 2010 and 2014, the company’s revenues

increased at a CAGR of 12.2% and its net profit Figure 30: Net profit margin and revenue
surged at a CAGR of 14.2%. The vertical integration
(all services are performed in the production value 26.8% 27.1% 27.3% 28.5% 27.7%
300 30.0%
chain) done by Herfy has provided significant cost
250 25.0%
benefits to the company, thereby ensuring higher 200 20.0%
profits despite food inflation. The company has 150 22.5% 22.6% 15.0%
21.1% 21.6% 21.9%
responded well to the growing competition among 100 10.0%
50 155 173 194 229 246 5.0%
the fast food chains in Saudi Arabia by frequently
0 0.0%
introducing new options in its menu. 2010 2011 2012 2013 2014

Revenue (US$ Mn) EBIT Margin (%)

Net Profit Margin (%)
Source: Annual report of Herfy Food Company (2014)

Latest News
• In 2016, Herfy signed an Area Development Franchise Agreement with Greenland Services Ltd., a business
unit of Greenland Group of Bangladesh, to expand its business beyond the Middle East. The agreement
envisions opening up of 30 Herfy outlets in Bangladesh
• In 2014, the company was conferred the MENA Franchise Award for the “Best Saudi Franchise Brand”

GCC F&B Sector Report © ARDENT Advisory 43

GCC F&B Sector Report © ARDENT Advisory 44
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GCC F&B Sector Report 45