The foodservice market in the UAE is expected to grow at a compound annual growth rate (CAGR) of 17.09 per cent, a new study showed.
A whitepaper by JLL, entitled “A Flavourful Journey: A Comprehensive Look at the Evolution and Trends in the UAE’s F&B Sector” quotes figures from Mordor Intelligence that show that the country’s food and beverages (F&B) sector is projected to grow to $43.98 billion by 2029 from $19.98 billion this year.
While a resilient tourism industry has boosted this growth, the ongoing surge in the F&B sector also benefited from a strong economy and the prevailing environment of competitiveness in the UAE where the three per cent GDP growth in 2023, is set to rise to four per cent and five per cent in 2024 and 2025, respectively. Government initiatives, favourable regulations, and a dynamic demographic, especially in newly developed locations have further bolstered the sector’s performance, especially in Dubai and Abu Dhabi, the report said.
Kostas Papadakis, Manager, Foodservice Consulting, MENA at JLL, said: “Propelled by a sturdy increase in domestic and international tourism as well as a growing multicultural consumer base, the UAE’s F&B sector today doesn’t only mirror economic growth but also a dynamic culinary evolution. From the rapid expansion of fast food to the flourishing fine dining scene and the rise of specialty coffee, the diversity and innovation in the UAE’s F&B offerings showcase a market attuned to consumer preferences and global trends. Moreover, from the sector’s commitment to sustainability, personalised dining experiences, and the success of homegrown concepts, it is clear that the nation’s gastronomic landscape is becoming a global powerhouse, further enhancing the UAE’s diversification strategy.”
In Dubai, the expansion of inland areas, such as City Walk, Jumeirah 1, Dubai Investment Park, Dubai Hills, and Dubai Creek, and the development of the commercial, industrial, and residential sectors in these locations have significantly contributed to the strengthening trajectory of the foodservice industry in the city. On the other hand, the sector’s growth in Abu Dhabi stems from the flourishing tourism industry and the increasing demand from residents in areas with new attractions and entertainment concepts, such as the vibrant Al Mamsha Promenade on Saadiyat Island, the addition of Al Reem Mall and Reem Central Park on Al Reem Island, and the Yas Bay Waterfront on Yas Island.
In line with the growing prominence of Dubai and Abu Dhabi in the region’s culinary scene and food culture, the foodservice categories have also evolved in tandem with consumer demand. Fast food retained the largest market share in H1 2023 in Dubai and Abu Dhabi, comprising around 36 per cent and 35 per cent of the foodservice market, respectively. Dubai’s higher cost of living relative to other cities influences residents’ dining preferences, directing them towards more affordable dining options like fast food. In Abu Dhabi, the rapidly expanding industrial areas in the city, such as Musaffah, have propelled higher demand for the segment as its quick service model caters to the needs of busy workers seeking convenient meals during their work breaks.
The heightened emphasis on convenience has also boosted the popularity of all-day dining, casual dining, and fast casual categories, with all-day dining in Dubai and Abu Dhabi witnessing a 40 per cent and 30 per cent annual increase in 2022, respectively, while the number of new fast-casual units in both cities jumped by 40 per cent over the same time frame.
Fine dining continues to expand, with Dubai witnessing an annual growth of almost 20 per cent in 2022 and an additional 8 per cent increase in H1 2023 as emerging areas become a hotspot for high-quality culinary experiences. Moreover, the number of five-star hotels in Dubai is also supporting the growing landscape of the fine-dining segment, as they increased from around 59,000 keys in 2021 to over 66,000 keys in 2023, marking an 11 per cent growth rate and accounting for approximately 43 per cent of the total existing hotel stock. Similarly, Abu Dhabi witnessed a remarkable 33 per cent annual increase in new fine dining units in 2022 and an additional 11 per cent rise in H1 2023. The expansion of areas previously renowned for fast food and casual dining destinations, like Yas Island, into sophisticated fine dining venues is a prime example of this growth.
The growing preference for specialty coffee and high-quality brews has led to a steady rise in new Refuel and Relax units in Dubai, with a strong surge of 25 per cent in 2022, while Abu Dhabi saw a moderate 12 per cent increase in the same period.
As consumers become more informed and emphasise the importance of health, wellness, and sustainability, there is a greater inclination towards F&B brands that align with their environmental and ethical values. Food transparency has emerged as a strategic differentiator in the UAE’s competitive F&B market, with an increased focus on the origin of ingredients and the environmental impact of food choices. Personalised dining experiences where chefs can showcase their talent and share their stories, knowledge, and passion for their craft are also gaining momentum.
Consumers are increasingly seeking meaningful experiences, and new foodservice concepts provide opportunities to forge connections and build a sense of community, bringing together individuals with similar interests and values. Furthermore, the explosion of homegrown concepts in the UAE’s culinary landscape in recent years and their subsequent success in international markets is further enhancing the reputation of the country’s culinary offerings on the global stage.