By Armina Ligaya www.thenational.ae
Emaar, the Dubai property developer, is planning to expand its restaurant division outside the UAE and expects to launch two new brands before the end of the year.
The company already manages more than 50 restaurants inside its hotels, including The Address and Armani hotel, but has branched out into independent restaurants to tap into what it believes is a growing market, said Marc Dardenne, the chief executive of Emaar Hospitality Group.
“The idea is to eventually franchise the concept,” he said. “It just made sense because we had the expertise in-house and we realised there is the potential in the restaurant business. It just made sense for us to branch out.”
In the third quarter of this year the group will open Madeline, a French restaurant, and Saha Cafe, an Arabic restaurant, in the Dubai Mall and Boulevard near The Old Town, both of which are Emaar properties. Its first restaurant brand, Downtown Deli, opened at the end of last year. If these are successful, the group plans to open more restaurants across the UAE and franchise the brand outside the Emirates, he said.
The expansion comes after a difficult period for retailers and property developers. While there are no official figures, retail sales across the UAE are estimated to have fallen by as much as 40 per cent in sectors such as jewellery and cars although budget-friendly restaurants and other categories were more resilient. After the contraction of the property market with falling rental and purchase prices and rising vacancy rates, developers have been forced to reassess their strategies and explore different revenue models such as moving into retail.
The market for full-service restaurants in the UAE last year was worth about US$1.15 billion (Dh4.22bn), data from the research group Euromonitor shows. This is expected to increase by 5 per cent to $1.21bn this year and by 23 per cent to $1.42bn in 2013, the consultancy forecasts.
Imran Hashim, the consultant at Euromonitor for the MENA region, said food retail had experienced steady growth despite the economic downturn.
“People are still going to go out and eat or get takeaways,” he said. “People can cut down on say, spending on hotels and changing from five star to four star. But eating is something we need to do.”
Taking a home-grown brand global, however, is a departure from the typical retail model where local groups adopt brands from Europe or North America and open franchises in the UAE. But recently, as the UAE retail market matures, more Dubai-based concepts are expanding abroad. Japengo Cafe, a restaurant brand developed by BinHendi Enterprises, is franchising the concept across the GCC. Jumeirah Group has also taken its Noodle House concept on the world stage, with outlets in the Gulf and as far afield as Melbourne, Australia. The founders of the high-end Japanese restaurant Okku in the Monarch Hotel also plan to open an outlet in London this year.
Mr Dardenne said their global push hinged on the success of concepts in the UAE. But early indications at its Downtown Deli in Dubai Mall are positive, he said.
“Because we were very satisfied with the first opening, with the Downtown Deli, that was encouraging us to continue and pursue further. We just think there is room for growth.”
Emaar developed its restaurants brands in conjunction with its food and beverage specialists, which are already employed within the group, Mr Dardenne said. The brands would be more budget-friendly than its hotel-based restaurants, he added.
“We looked at what is on the market, what is popular, did some market research and found those three concepts would potentially work very well,” he said.
Mr Dardenne declined to give the amount of investment Emaar was funnelling into its independent restaurant ventures.
Mr Hashim said Emaar’s strategy was “pretty good” and could bear fruit. “That’s one area that they can look into expanding,” he said. “Because the region we live in, people are passionate about eating.”