the middle east: the land of restaurant opportunity

THE LAND OF RESTAURANT OPPORTUNITY

MIDDLE EAST: TH

E

The MIDDLE EAST: The Land of Restaurant Opportunity

TABLE OF CONTENTS

Middle East Overview 3

Bahrain 5

Egypt 7

Israel 9

Jordan 11

Kuwait 13

Lebanon 15

Oman 17

Qatar 19

Saudi Arabia 21

United Arab Emirates 23

About the Author 25

About AARON ALLEN & associates 26

2


With the discovery of oil in the Gulf Coast and surrounding areas, the Middle East has become a prosperous region. It boasts some of the highest concentrations of millionaires in the world. There is plenty of wealth to go around, and with that wealth, a penchant to indulge in luxurious hotels and restaurants.

3

MIDDLE EAST OVERVIEW •  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA

•  UNITED ARAB EMIRATES


RELIGION’S IMPACT ON BUSINESS The predominant religion of the Middle East is Islam. Restaurateurs interested in expanding into this region should note that many countries there adhere to Shari’a law – the law of Islam, which forbids men and women from interacting except in familial circumstances. Unmarried men and women cannot dine together, and women cannot work side-by-side with a man. Such laws and cultural norms make many restaurant and employment policies a challenge for restaurateurs with little experience in the region. Islam also demands a Halal diet, which restricts alcohol and meat consumption. Bacon and pork products are banned. There are stipulations regarding how an animal should be killed to be deemed suitable for consumption as well.

KEY FACTS & FIGURES •  Due to the restrictions in Shari’a Law, Middle Easterners dine out as a primary source of

entertainment – data shows they dine out three to four times a week in some countries. •  Western brands have seen abundant success in the Middle East, even when they are still

relatively unknown in their own countries – like Miami Subs. •  Cafés are popular among youths in the Middle East. Hot drinks are slated to grow124.9 percent

from 2009 to 2014 in Saudi Arabia alone.

MIDDLE EAST OVERVIEW

4

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA



BAHRAIN MARKET OVERVIEW GDP: $28.1 BILLION POPULATION: 1.2 MILLION GROWTH in 2012: 4.2 PERCENT MARKET SIZE (Number of Restaurants): NOT REPORTED RESTAURANTS PER 10,000 RESIDENTS: NOT REPORTED EASE OF DOING BUSINESS RANK*: 42 BIGGEST PLAYERS From 2005 to 2010, Bahrain saw a 75 percent increase in the chained consumer foodservice segment. Well-known brands were met with success, as was the case with restaurants like The Meat Co and Ken Lo’s Memories of China. Jumeirah’s Urbano is slated to open in 2014. The Four Seasons Hotel Bahrain Bay (271 rooms, 2014), Ibis Manama Seef (304 rooms, 2014), and Staybridge Suites Bahrain Al Seef (130 rooms, 2014) are set to join the Bahrain hospitality market where The Holiday Inn, Swiss-Belhotel, Kempinski, and Wyndham now sit. Mövenpick received the TripAdvisor Award for Excellence in 2013, recognizing outstanding hospitality practices.

KEY FACTS & FIGURES •  Bahrain has the best free market economy in the Middle East. •  The GDP is expected to grow 6.2 percent in 2013. •  Bahrain’s foodservice industry was valued at $267.7 million in 2010.

5

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA


*On a scale of 1 to 185, 1 as the easiest


EGYPT MARKET OVERVIEW GDP: $264.7 BILLION POPULATION: 84.2 MILLION GROWTH in 2012: 2 PERCENT MARKET SIZE (Number of Restaurants): 50,603 RESTAURANTS PER 10,000 RESIDENTS: 6.0 EASE OF DOING BUSINESS RANK*: 109 (subnational)��BIGGEST PLAYERS Wimpy was the first international burger brand in Egypt – and its reception sparked a craving for Western food. There are 123 KFCs, 63 Pizza Huts, and 43 McDonald’s branches across Egypt. St. Regis Cairo is set to make its Egyptian debut with 292 rooms in 2014 along with Crowne Plaza Sharm El Sheik Citystars (418 rooms, 2013), Holiday Inn Sharm El Sheik (432 rooms, 2014), and InterContinental Sharm El Sheik (256 rooms, 2015).

KEY FACTS & FIGURES •  Due to political unrest, Egypt saw 3.2 million fewer tourists in 2012. •  Hotel room rates began to rise in May 2013, but the overthrow of Mohammed Morsi sparked

protest, which has hurt hotel and restaurant growth. •  Egypt is home to the Oasis Heliopolis – the world’s largest food court, with 35 different cuisines

represented.

6

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




ISRAEL MARKET OVERVIEW GDP: $252.8 BILLION POPULATION: 4.3 MILLION GROWTH in 2012: 3.1 PERCENT MARKET SIZE (Number of Restaurants): 13,697 RESTAURANTS PER 10,000 RESIDENTS: 31.9 EASE OF DOING BUSINESS RANK*: 135 BIGGEST PLAYERS Tabasco Holdings Ltd, (who operates Pizza Hut and KFC in Israel) currently holds the largest share of Israel’s quick serve restaurant market – 2.2 percent in 2011. Other key franchise players include Yum! Brands Inc., Domino’s Pizza Inc., McDonald’s Corp., Burger King Holdings Inc., and Sbarro Inc. Scheduled to open in November of 2013 is the $150 million Waldorf Astoria (226 rooms). A Herods Hotel in Herzliya (250 rooms) is also coming soon, following the early 2013 opening of a Herods Dead Sea property. Kempinski is opening a 220 room hotel in Tel Aviv. KEY FACTS & FIGURES •  Israel’s tourism industry brings in $9.3 billion. •  The Israeli government is now offering grants to companies looking to build or expand their

hotels. For 2012, they spent $52.9 million on projects to build, expand, and improve 37 hotels. •  At the end of 2012, 340 hotels (47,900 rooms) were operational.

7

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




JORDAN MARKET OVERVIEW GDP: $34.1 BILLION POPULATION: 6.5 MILLION GROWTH in 2012: 3.3 PERCENT MARKET SIZE (Number of Restaurants): NOT REPORTED RESTAURANTS PER 10,000 RESIDENTS: NOT REPORTED EASE OF DOING BUSINESS RANK*: 106 BIGGEST PLAYERS Zuwwadeh, Osra, and Cantaloupe Gastro Pub are local favorites in Jordan’s restaurant industry. Western chains are not as drawn to the country due to unrest in neighboring countries. McDonald’s, for instance, has only 19 locations in all of Jordan. Starbucks has 9. Mövenpick, Four Seasons, Kempinski, and InterContinental all have impressive luxury properties in Jordan, but they have competition coming. By 2015, the Fairmont Amman (300 rooms), Aqaba (200 rooms), and W Amman Hotel (280 rooms) should be operational, among others. KEY FACTS & FIGURES •  In 2012, Jordan’s hotel occupancy rate was 70 percent. •  The Jordanian government is investing $20 million in the Aqaba Special Economic Zone – a

development area with low taxes and a duty-free market along the Red Sea. •  The trade and hospitality industry makes up 9 percent of Jordan’s GDP.

8

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




KUWAIT MARKET OVERVIEW GDP: $173.4 BILLION POPULATION: 3.9 MILLION GROWTH in 2012: 1.1 PERCENT MARKET SIZE (Number of Restaurants): 4,783 RESTAURANTS PER 10,000 RESIDENTS: 12.3 EASE OF DOING BUSINESS RANK*: 82 BIGGEST PLAYERS Smashburger, Fatburger, CaliBurger, Burger King – Kuwait is drawing in many Western brands and they’re finding success there. Who’s next? Kuwait will soon be getting its first Tim Horton’s and Sushi Shop – two Canadian brands with big hopes for the country. Radisson Blu Kuwait (191 rooms) has reopened after three years and a $52 million remodel as Jumeirah Messila Beach Hotel & Spa (409 rooms, 2013). InterContinental Kuwait-Downtown (220 rooms, 2015) and Staybridge Suites Kuwait Farwaniya (120 rooms, 2015) will open for the first time. KEY FACTS & FIGURES •  Trade, hotels, and restaurants make up 3.7 percent of Kuwait’s GDP. •  Kuwait is implementing a $110 billion development plan to diversify the oil-based economy and

modernize the country by building up new roads, bridges, hospitals, and power stations. •  $3.5 billion is spent annually at restaurants in Kuwait.

9

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




LEBANON MARKET OVERVIEW GDP: $43.8 BILLION POPULATION: 4.1 MILLION GROWTH in 2012: 2 PERCENT MARKET SIZE (Number of Restaurants): 8,000 RESTAURANTS PER 10,000 RESIDENTS: 19.5 EASE OF DOING BUSINESS RANK*: 115 BIGGEST PLAYERS Lebanon’s contracting hospitality industry has seen hotel and restaurant closures across the board, but some still see potential in this market. InterContinental opened its first Staybridge Suites (121 rooms, 2013) in Lebanon with Summerland Kempinski (151 rooms, 2013), Al Abadiyah Hills Hotel, and Residences Kempinski (78 rooms, 2014) in the works.

KEY FACTS & FIGURES •  Lebanon ranks 10th out of 15 Middle Eastern countries in economic freedom. •  The first six months of 2013 had a 6.5 percent decrease in tourism to Lebanon, while 2012 saw a

drop of 17.5 percent. •  Beirut’s famous Le Bristol hotel announced in June of 2013 that it plans to put $30 million into

renovations.

10

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




OMAN MARKET OVERVIEW GDP: $78.8 BILLION POPULATION: 3.2 MILLION GROWTH in 2012: 4.2 PERCENT MARKET SIZE (Number of Restaurants): NOT REPORTED RESTAURANTS PER 10,000 RESIDENTS: NOT REPORTED EASE OF DOING BUSINESS RANK*: 47 BIGGEST PLAYERS Western brands are thriving in Oman, with Coffee Bean & Tea Leaf winning the Oman Today Restaurant Award in February 2013. Yum! Brands Awarded its Oman operations the Yum Restaurants International People’s Award in 2012 for its stellar staff training across all 32 locations. The Crowne Plaza Duqum Resort (228 rooms, 2013), W Hotel Muscat (250 rooms, 2014), and Four Seasons Resort Oman (200 rooms, 75 residences, 2015) join such brands as Shangri-La, InterContinental, and Radisson in Oman. KEY FACTS & FIGURES •  Oman is set to accommodate 2,000 new hotel rooms by the end of 2013. •  Only 0.1 percent of Oman’s land is arable, meaning 80 percent of the country’s food is imported. •  Oman held its first ever Barista Championship in September of 2013.

11

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




QATAR MARKET OVERVIEW GDP: $188.8 BILLION POPULATION: 1.9 MILLION GROWTH in 2012: 5.2 PERCENT MARKET SIZE (Number of Restaurants): 1,946 RESTAURANTS PER 10,000 RESIDENTS: 10.2 EASE OF DOING BUSINESS RANK*: 109 BIGGEST PLAYERS The announcement that Qatar will hold the 2022 World Cup means that F&B is going to grow in this Middle Eastern nation – and fast. F&B concepts such as Megu, Tse Yang, Pampano, Mango Tree, Carluccio’s and Burj Al Hamam have seen success in Qatar and are set to open up with new concepts in the coming years. The Four Seasons Doha at the Pearl (300 rooms, 2014), M Gallery Doha Musheireb (215 rooms, 2015), and Pullman Doha West Bay (371 rooms, 97 apartments, 2015) are all slated to come to Qatar to join the Hilton, Crowne Plaza, and St. Regis hotels.

KEY FACTS & FIGURES •  Qatar’s government is set to invest $17 million in tourism. •  To host the 2022 World Cup, Qatar will have to add 46,593 rooms to its hospitality industry

(which currently has 5,544 rooms). •  Tourism increased 12 percent in 2012, with 84 percent of guests staying in four or five star hotels.

12

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




SAUDI ARABIA MARKET OVERVIEW GDP: $745.6 BILLION POPULATION: 29.6 MILLION GROWTH in 2012: 4.4 PERCENT MARKET SIZE (Number of Restaurants): 16,118 RESTAURANTS PER 10,000 RESIDENTS: 5.4 EASE OF DOING BUSINESS RANK*: 22 BIGGEST PLAYERS Of the top 20 restaurant chains in Saudi Arabia, more than half are Western brands. These include Baskin Robbins, KFC, McDonald’s, Seattle’s Best Coffee, Pizza Hut, Hardee’s, Mövenpick, Starbucks, Burger King, Domino’s, and Dunkin Donuts. InterContinental Hotels Group (IHG) is set to build the largest Holiday Inn in the world in Saudi Arabia. The hotel will have 1,238 rooms and is due to open in 2016. Also in the works? Crowne Plaza Riyadh Olaya (308 rooms, 2015), Radisson Blu Riyadh Ring Road (252 rooms, 2015), Four Points by Sheraton Dhahrain (236 rooms, 2014), and Aloft Riyadh (238 rooms, 2014). KEY FACTS & FIGURES •  Wholesale and retail trade, hotels, and restaurants make up 5 percent of Saudi Arabia’s GDP. •  Saudi Arabia allocated $218.7 billion to revamp public transportation, expand healthcare, and

increase education funds. •  Due to Muslim customs, women are not permitted to work alongside men.

13

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




UNITED ARAB EMIRATES MARKET OVERVIEW GDP: $396.4 BILLION POPULATION: 5.7 MILLION GROWTH in 2012: 3.1 PERCENT MARKET SIZE (Number of Restaurants): 11,000 RESTAURANTS PER 10,000 RESIDENTS: 19.2 EASE OF DOING BUSINESS RANK*: 26 BIGGEST PLAYERS The UAE is home to many award-winning restaurants and bars such as Okku, Hakkasan, and Reflets Par Pierre Gagnaire. As for fast food, there are 109 McDonald’s locations in the UAE, as well as 102 Starbucks, 98 KFC locations and 69 Pizza Huts. In fact, the UAE is Yum! Brands 23rd top market internationally. Starwood Hotels & Resorts is set to open 23 new hotels in the UAE by the end of 2014, along with the Four Seasons, Radisson, Crowne Plaza, and InterContinental. When talking about the biggest players in the UAE, it’s important to highlight the St. Regis Saadiyat Island Resort which allegedly has the largest hotel suite in the country. The 2100m² Royal Suite boasts four bedrooms, a 12-seater dining room, mini theatre, and game room – complete with billiard table. KEY FACTS & FIGURES •  In 2012, hotels in the UAE saw F&B revenues of $491 million USD. •  McDonald’s has secured 25 percent of the fast food industry in the UAE. •  The UAE’s GDP is expected to grow 2.2 percent in 2014. •  The UAE has cracked the Top 20 rankings for most productive economies in the world, making it

the frontrunner to host the 2020 World Expo.

14

•  BAHRAIN

•  EGYPT

•  ISRAEL

•  JORDAN

•  KUWAIT

•  LEBANON

•  OMAN

•  QATAR

•  SAUDI ARABIA




ABOUT THE AUTHOR

Third generation restaurateur Aaron Allen has held every industry position from line-level employee to unit manager. By age 19, he was running a $10 million food and beverage operation at a 625-room resort. By 20, he was overseeing a $4 million gulf-front Caribbean-themed restaurant that served more than 1,800 covers per day. Having cut his teeth in operations, Allen eventually transitioned to restaurant-focused marketing. In 2001, he founded his own consultancy. By 2008, he’d skyrocketed the company to become the world’s largest restaurant consulting firm. Major clients included esteemed brands such as Starwood Resorts and Hotels Worldwide, The Cheesecake Factory, TGI Fridays, FEMSA (Dos Equis), BJ’s Restaurants, Hofbrau, Land O’ Lakes, Marriott, SSP and dozens of other global restaurant chains, regional powerhouse brands, high-volume independents, food and beverage manufacturers, distributors, resorts, entertainment districts, hotel chains and more. Allen has become one of the most sought-after speakers and sources for restaurant industry media. He has been a go-to source for esteemed media outlets such as the Wall Street Journal, Entrepreneur, Smart Money, MSNBC, TIME, Forbes, USA Today, Nation’s Restaurant News, Chain Leader, Restaurants & Institutions, European Food Service News, Food Service Middle East, QSR Magazine, and hundreds more.

15

Aaron Allen


Aaron Allen & Associates provides strategic marketing, concept development, and executive-level advisory services to leading foodservice and hospitality companies worldwide. We identify and distill the latest restaurant and hospitality marketing trends. We prepare tailored presentations for executive management of growth-minded companies, and then support the development and implementation of innovative restaurant marketing initiatives within their system. Collectively our clients post more than $100 billion in global sales and span more than 100 countries across all six inhabited continents. We have worked with a wide range of clients including high-volume independent operators, multi-billion dollar restaurant chains, hotels, contract foodservice providers, manufacturers, distributors, and trade associations. We have direct consulting experience in nearly all cuisine types and operating models. Additionally, Aaron Allen & Associates has extensive experience in the Middle East's restaurant industry. Beyond our continued research, we travel there several times per year, and are familiar with the customs, traditions, and other cultural factors that are important in working successfully in the Middle East.

ABOUT AARON ALLEN & ASSOCIATES

16

www.aaronallen.com

www.aaronallen.com

United States 390 North Orange Ave Suite 2300 Orlando, Florida 32801 407-936-1010 (US) (866) 436-4002 (US fax)

Central Europe 1051 Budapest

Október 6. utca 17, Budapest, Hungary

+36-1-798-3578 (Europe)

[email protected]

the middle east: the land of restaurant opportunity

Business