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With government investments in the Middle East Hospitality Industry, the region is seeing steady growth. What should you know about the region?
The Middle East Hospitality Industry is a Boom Market
Unquestionably, the Middle East hospitality and tourism industry is growing faster there than anywhere else in the world. Abu Dhabi is the world’s richest city, Dubai is the world’s fastest growing city, Kuwait is building Silk City (a 250 sq km city) which will rival anything in Dubai and the Kingdom of Saudi Arabia has embarked on the world’s largest private investment project – King Abdullah City (it will be three times the size of Manhattan once complete).
The Middle Restaurant Industry
The restaurant industry in the Middle East is growing at a pace that is exceeding its infrastructure. With hundreds of billions being pumped in to mind-boggling developments throughout the region, there is an appetite for new restaurants that exceeds any other region in the world. Despite the economy in the West, the Middle East can’t seem to open restaurants fast enough to keep up with the demand and dramatic shifts in consumer spending.
Spending in Saudi Arabia
In Saudi Arabia alone, for instance, the increase in consumer spending increased 47% from 2005 to 2009. It is projected that the restaurant industry will grow by over 500% in less than a decade. The supply chain and restaurant industry infrastructure cannot keep pace with the growth of the industry and it has become a necessity of the industry and market there to solicit expertise from the world’s largest restaurant market – the United States.
There are a number of harsh monopoly suppliers with their foot on the throat of growing restaurant enterprises. Many restaurateurs have only one source for food supplies and foodservice equipment. As a result, it is common for the monopoly supplier to increase prices by as much as 250% on primary ingredients at a whim. Many restaurants in the region are suffering food costs as high as 47% – 86% on signature food items.
Growth Around the World
The entire Middle East is emerging in much the way that China and India have. China is regarded as the world leader in manufacturing growth. India is the undisputed global leader in information technology and outsourcing. Even a cursory review of the current market conditions and growth projections in the Middle East will take its place as the international leader in hospitality and tourism growth.
The opportunities in the Middle East are far too rich and plentiful to even begin to list. One way to help put it in perspective though is to consider just Dubai alone and what has happened there in just 10 years. In less than a decade, they have turned the bare desert landscape in to a collection of the most magnificent engineering feats in man’s history. There were no architects there and no construction companies capable of building what is there today. It all sprung from the desert in less than a decade and required the very best architects, designers, engineers, contractors, artists and financiers. They were imported from all over the world. Now that hundreds of mind-blowing developments have been born though, the food industry infrastructure to support these new luxurious cities is needed desperately.
On a small scale, we are seeking help for a client there that is under the foot of a supplier. The three items they purchase most for their restaurant chain can be bought from only this one supplier. We feel compelled to rescue this restaurant chain and help them find a new supplier for chicken, rice and lamb. It is an acute pain.
Beyond solving this immediate issue for our client, we have also been asked to identify new foodservice industry partners on their behalf. They are embarking on a mission to become the largest Arabic foodservice company in the world and are seeking partners in all spectrums of the industry. This includes a search for restaurant franchise rights that can be acquired in the region, offering their services to foreign foodservice companies that would like to grow in the Middle East, finding management talent to add to their fast-growing management ranks, and even finding foodservice partners for brokerage, distribution and supply chain solutions in the region.
We are therefore seeking to discuss strategic alliances with well -funded and established American and European foodservice companies that are seeking to expand in to the Middle East.
And, if you are or can recommend a foodservice supplier who can help us source a more reliable supplier with a better price for chicken, rice and lamb to the Eastern Province of the Kingdom of Saudi Arabia – please contact us as soon as possible.
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