Food delivery boom: 70% of UAE restaurants eye cloud kitchens to expand their business 

As the restaurant industry resumes operations after months of restrictions due to the ongoing pandemic, the need to adapt and implement innovative business strategies is crucial. The industry is at a point where new menu concepts, improved dining experiences, and the need for delivery and take-out services have become necessary to serve the customers’ changing behaviors.

To uncover the emerging trends and the growth drivers of the UAE restaurant industry, POSist, a leading cloud-based restaurant technology platform in collaboration with Dubai Restaurants Group (DRG), a not-for-profit organization – under the direct patronage of the Dubai Chamber of Commerce, this week released the PRIME (POSist Restaurant Industry & Market Evolution) Report UAE Edition.

This study is based on a survey of restaurant operators conducted in March 2021 and interviews with executives from quick-service restaurants (QSR), fine dining, casual dining, and cloud kitchen brands. It examines the restaurant industry’s long-term sentiment amid the pandemic and how the sector is adapting to the new normal and preparing for growth. 

A Sentiment of Revival

• 75% of restaurant operators expect higher revenue in 2021 as compared to the pre-COVID time.
  Top executives of restaurants in the UAE indicated a sentiment of revival. After a challenging year for restaurants, both local and international chains feel optimistic about the growing revenues. Nearly 75% of restaurant operators expect the revenue to increase compared to pre-COVID times.
• One in three restaurant operators in the UAE are now running at 60% + revenue than the pre-COVID level.
  Restaurant sales continue to improve as diners become more comfortable with contactless dining and ordering food online. One-third of restaurant operators surveyed mentioned that they are now operating at 60% of their pre-COVID-19 revenue levels (as of March 2021).

The Rise of Online Ordering

• 66% of diners prefer ordering food online
  Before the pandemic, a significant share of restaurant businesses came from dine-in customers, and deliveries complemented the orders. However, according to the survey, the situation has changed post-COVID-19; restaurant operators shared that as high as 66% of diners now prefer ordering online over dining out.       
• Restaurant chains ramp up loyalty programs to woo diners.
  When diners are already taking precautions to step out, it is even more important for restaurants to take charge of the relationship between their brand and the customers. We asked respondents what steps they took to ensure orders keep coming in. 60% of restaurants shared that they have introduced loyalty programs and special offers for their regular customers to keep them hooked.
• One-third of restaurants expect 60%+ revenue from food deliveries in 2021.
  Nearly 36% of respondents said that they expect more than 60% of their revenue in 2021 to come from food deliveries compared to a small group of 10% of restaurateurs who registered similar delivery returns in the previous year.

Restaurants Find the Silver Lining in Cloud Kitchen

• 70% of otherwise dine-in players explore investing in cloud kitchens.
  We asked restaurants if they had additional funds to invest back into the business and what areas they would immediately pick. 70% of the respondents placed their bet on setting up a Cloud Kitchen or a delivery-only outlet for their brand.
• Seven in ten Restaurants are willing to invest up to 8% of their revenue in technology.
  It is interesting to note that nearly half of the restaurant operators agree that investing in technology is essential in these times. This sentiment can be corroborated basis the response of 70%t of restaurant operators who expressed willingness to invest up to 8% of their revenue in technology.

“The pandemic has been a learning experience for the industry. It has opened up opportunities for the industry to innovate and be future-proof. One of the key takeaways from the survey is that restaurants are becoming technology-driven in every aspect of their business, from managing front of the house to the back of the house operations. The PRIME report outlines the huge opportunity in cloud kitchens, and it’s not surprising that 70% of restaurateurs are willing to invest in setting up a virtual kitchen in the UAE. By exploring investments in cloud kitchens and building an efficient delivery setup, F&B outlets will potentially increase unit growth, add more touchpoints to connect with diners, and above all, build a sustainable model in the longer run.” Ashish Tulsian, Co-Founder & CEO of POSist.

“Absolutely a pleasure to be associated with this trendsetting survey which would go a long way in strategizing the future path that the culinary industry is earmarked to tread in future. Inviting all stakeholders and those who wish well for the sector to partake wholeheartedly and make the initiative a resounding success.”  Naim Maadad, Founding Board Member, Dubai Restaurants Group.

To download the report, please visit https://pages.posist.com/prime-report-uae