Is the bubble about to burst on Dubai's booming restaurant scene?

Independent

19 hours ago

Dubai's culinary landscape is a testament to its unbridled ambition, boasting an astonishing 13,000 food and drink establishments that range from the opulent to the everyday. Yet, as the emirate continues to push the boundaries of gastronomic extravagance, questions are emerging about the sustainability of its "growth-at-all-costs" model.
From diners suspended high above the city to underwater lounges and dishes adorned with edible gold, the city-state's eateries employ every conceivable gimmick to lure customers in one of the world's most saturated dining markets. This diverse offering, catering to every taste and budget – from inexpensive biryani to lavish fine dining – is a key weapon in Dubai's fierce competition with neighbours like Saudi Arabia and Qatar for lucrative tourist dollars.
So far, Dubai is winning handily, with more restaurants per capita than any major global city save for Paris. However, this relentless expansion of its culinary empire is beginning to strain the very model that fuels it, prompting observers to ponder how long the emirate can continue to feed its insatiable appetite for growth.
The competition is cutthroat, so presentation is key.
'Gone are the days when it just tastes good,' said Kym Barter, the general manager of Atlantis The Palm, a resort perched on a manmade archipelago that boasts more Michelin stars than any other venue in the Middle East.
But dazzling Dubai's food bloggers — the most popular of whom have millions of social media followers — isn't enough. Staying afloat means battling high rents and winning over a diverse and demanding group of consumers.
Dubai has roughly nine expatriate residents for every Emirati citizen. Most of its private sector workers are migrants on temporary contracts, and only Vatican City has a higher share of foreign-born residents.
Tourists, in turn, outnumber locals about five to one by some estimates, and they spend lavishly. Visitors to Dubai drop an average of over five times more than those traveling to nearby Saudi Arabia or even the U.S., according to global restaurant consultant Aaron Allen.
Dubai is 'on the right path' to becoming the world's food capital, said Torsten Vildgaard, executive chef at FZN by Björn Frantzén. The restaurant, which runs at more than $540 a head, was one of two in Dubai to nab three Michelin stars in May.
'We're only seeing the tip of the iceberg of what's to come in terms of gastronomy here,' Vildgaard added.
With each new set of illuminated high-rises and hotels, another crop of eateries emerge, vying for patrons. The legions of construction workers powering Dubai's progress also need affordable options.
That growth, propped up in part by investor pressure on some of the world's biggest chains to expand in Dubai, has created what some analysts warn is a bubble.
'If you're a publicly traded company like Americana, what are you supposed to do — just stop opening restaurants?' restaurant consultant Allen said, referring to the Gulf-based operator of KFC, Pizza Hut and other big franchises.
The frenetic expansion of Dubai's restaurant industry is part of a regional shift that has seen Gulf Arab states pour hundreds of billions of dollars into building out tourist destinations as they move away from hydrocarbons to diversify their economies. Saudi Arabia has a high-stakes, $500 billion project: a straight-line futuristic city called Neom.
But, in a Muslim-majority region, the United Arab Emirates has gone to lengths that some consider too much of a compromise, including relaxing restrictions on alcohol that fuel its pubs and nightlife and other social reforms.
The rapid development comes at a price. Dubai's restaurants have a high failure rate, industry veterans say, though local authorities don't say what the rate of closures is. In the downtown district and other prime areas, annual rents for restaurants can top $100 per square foot. That's on a par with some of the world's most expensive cities.
Still, the emirate issued almost 1,200 new restaurant licenses last year, according to Dubai's Department of Economy and Tourism. The department declined to respond to questions.
Empty tables during peak hours are common, even in top locations. Part of the problem, managers say, is that traffic congestion is so severe that convincing diners to drive out can be a tall task.
'I sometimes go, 'Do I go into the restaurant right now, because I'm going to get into traffic?''' said Waseem Abdul Hameed, operations manager at Ravi, a Pakistani family-owned eatery famous for its official Adidas shoe line and a 2010 TV feature from Anthony Bourdain.
He knows restaurateurs who have had to shut up shop and others who are squeezed by slim margins and increasingly reliant on delivery apps, Hameed said.
The demand sends fleets of migrant workers racing through gridlock on motorbikes, with few protections and tight delivery windows. Emirati newspaper Khaleej Times reported the accidental deaths of 17 Dubai food couriers last year.
The math of Dubai's restaurant scene doesn't add up, delivery apps and wealthy tourists notwithstanding, restaurant consultant Allen said. He cited operating expenses that have more than doubled relative to sales since 2009, when a financial crisis almost hobbled the emirate.
Too many Dubai entrepreneurs, he put it simply, have 'too much money, and they don't know what to do besides open restaurants.'