The restaurant industry in UAE has never gone through such a bad phase. The sharp fall in sales and stringent restrictions on in-dining have made the going tough. As per Prakash Adtani, owner of Dubai restaurant Tum Tum Asia, in 2020, an emergency fund helped him survive the testing times. Just like him, many restaurateurs got through the challenges of 2020 and emerged stronger. Here’s how you can too:
Top 4 challenges faced by UAE restaurants and how to overcome them
1. Sky-high rentals
In these times, you just cannot afford to pay huge rentals. As per the data by consultancy Restaurant Secrets, the average rent for a prime location from Dubai to Jumeirah can cost you anywhere between $70 to $275 per square foot. It’s too expensive, as even an average restaurant requires a space of 1500 to 5000 square feet.
Solution
Does shifting to a nearby location affect your sales? Consider factors such as your target customers, cost of procurement, and your menu prices. If none of these factors pose a threat, then the best move would be to shift your restaurant. Look for a building, a location where rentals are low.
2. High food costs
Are you worried about the surge in prices of food materials? When compared to last year, the prices of wheat have shot up by 30%. For soybeans, it’s a whopping 80%. (Source: Gulfnews). A rise in the cost of raw materials reduces the profit margins, and it becomes a challenge for restaurateurs.
Solution
The first step in saving costs of food material is by reducing wastage. With inresto SCM, India’s leading digital inventory management platform, you can cut down food wastage to the minimum. You can track your inventory levels in real-time from any location. It sends you real-time alerts when you are about to run out of stock of any item. Once you place the fresh order, the stock levels get updated automatically.
Any kind of pilferage and theft can also be avoided with this technology solution. In short, the SCM software helps you compensate for the rise in food prices.
This way, you can enjoy huge cost savings in terms of overall grocery costs.
3. Drop in the number of tourists
Of late, are you experiencing a sharp fall in tourist visitors? Post the outbreak of the second wave of Covid-19, UAE has imposed strict restrictions on tourists traveling from other countries. Hence, unlike earlier times, you cannot expect tourists from different parts of the world to visit your restaurant.
Solution
Increase your local customer base. With effective customer retention techniques like loyalty programs and campaigns, you can keep your local customers coming back for more.
Also, with the UAE and Israel signing the Abraham Accord, the peace pact, you can expect a huge number of Israeli tourists visiting the UAE. So adding Kosher food to your menu can attract a lot of Jewish tourists. Also, keep a check on dishes that have not found favour among your diners. With inresto POS, now you can easily find out the most selling and non-performing items. The software provides you with reports with which you can analyse your customer base and performance. Based on the results, you can keep your focus on the relevant things like top-selling dishes and remove those least-selling ones from your menu.
4. High aggregator commissions
Do you feel the pinch of excessive commissions charged by third-party food delivery firms?. As per Bhanu Pratap Rathore, managing partner at GrowthX Advisors, the food aggregators in UAE charge up to 35% on order. Paying such huge commissions can make a major dent in your profit margins.
Solution
Let customers order their favourite dishes directly from your restaurant. Thus, launch your restaurant’s own food delivery platform. Technology partners like inresto can build a personalised website for your restaurant.
- Share the news of the launch on your restaurant’s official Facebook and Instagram pages.
- Hire a team of efficient delivery staff to deliver the food to customers’ doorstep. Prompt delivery and excellent service will help you earn a reputation in the market.
- Entice your diners with personalized offers on the website. For, e.g., offering 25% off on online orders only through your website can attract many customers, and you will avoid aggregator commissions. While offering discounts, notify your customers through real-time push notifications. Also, you will avoid customer complaints on delayed delivery, rude behavior due to third-party delivery staff, etc.
Parting Words
When the going gets tough, the tough get going. The saying holds quite true for UAE restaurants. The diners have become very demanding. By clinging to the traditional systems, you can no longer make profits. Therefore, it’s imperative to offer both in-dining and online ordering facilities. With a modern-day digital restaurant management system, provide your customers with an exceptional dining experience. In addition to catapulting your sales, it also helps you gain the upper hand over your competitors.
