The cosmopolitan culture and influx of expat population in the UAE have contributed to the accelerated growth of the restaurant industry. As per a CAGR report, the restaurant sector is expected to grow at a rate of 5.22%. While the consumers do not have to face any shortage of choice given the number of restaurants operating in the UAE, the restaurant operators may find it difficult to stay afloat. 

This article looks at the key challenges faced by the restaurant industry and the steps you can take to overcome them. 

High rate of labor attrition

On account of the stiff competition in the UAE market, the attrition rate is extremely high. Employees are always on the lookout for better opportunities, resulting in frequent entries and exits from the organization. Moreover, several employees also feel that they get paid paltry salaries and do not receive adequate benefits from the job, leading to more attrition. 

According to a report, as many as 83 percent of workers in the  UAE can consider resigning for better opportunities. Attrition rates also adversely impact the morale of the other employees in the restaurants and affect the cashflows of the restaurant. 

If this is what you are facing, consider working with business growth consultants to chalk out a solid retention strategy that motivates your employees to stay on. To recognize their efforts, offer your employees periodic rewards in the form of vouchers or discount codes. It will also help to foster employee loyalty and reduce attrition to a great extent.

Sky-high real estate costs 

Rental costs are incredibly high in the UAE. As per publicly available data,  a 500 sq m to 1200 sqm restaurant would set you back by AED 500,000 to AED 1.25 million in 2016. While the F&B industry usually runs on a low-profit margin, the rent and other associated costs can add up to 78 percent of total cash outflow. 

To save on paying astronomical sums for rental, be careful about the location you choose for your restaurant. Carry a thorough analysis of the type of cuisine you will offer, demographics of the target audience, expected footfall from the neighboring areas, accessibility of the location by public transport. It will also help you to come up with a better pricing strategy for your restaurant so you can still keep ringing up a sale on the cash register.

The exorbitant cost of ingredients 

Restaurants in the UAE rely on imported ingredients since there is very little that is grown within the UAE. Moreover, food inflation, which is expected to be around 2 percent in 2021, adds to the problem. The pandemic has also affected the food supply chains, and the food prices globally have reached the highest levels in January 2021 in the last six years. As a result, the cost of ingredients is going to be on the higher side. 

To overcome this issue, you can implement specific measures at your restaurant to control the costs. For example, you can revise the menu’s pricing based on the current costs of the raw materials. You can implement strict policies to curb the wastage of food while preparing any dish. You can also brainstorm with a business mentor who specializes in the F&B sector to put in place an inventory management system to control wastage at your restaurant. 

Attracting the right customers and retaining them

Outranking your competition is always a challenge, especially in the F&B industry, where the market is saturated. Moreover, as the F&B industry in the UAE was one of the worst affected sectors during the pandemic, it is truly an uphill battle to get the old customers back in the restaurants and acquire new customers. 

To enhance your service, ensure the optimum quality and consistency of food at all times. Given the increased emphasis on sanitation and hygiene, always opt for the highest quality raw ingredients and resist the temptation of taking any shortcuts. For the health-conscious customers, create a separate healthy menu featuring items that are nutritious as well as delicious. Create an ambiance in sync with the menu to improve the overall customer experience. 

Are you looking for business mentoring to navigate the challenges in your restaurant business?

Regardless of your experience in the industry, surviving challenges in the F&B business sector are unavoidable. But overcoming them on your own can be nerve-wracking. Learning from a mentor who has experience in this field can help you carve a roadmap tide over these obstacles and succeed as a restauranter. 

If you are on the lookout for business mentoring to start or scale your restaurant business,  it is time to check out Jupiter Business Mentors. We provide business mentoring services and connect the start-up community and small & medium businesses to experienced mentors. These mentors can offer you critical insights and make you a better entrepreneur. 

We also have dedicated mentors for various industry verticals who can provide appropriate resources, expertise, and advice to emerging entrepreneurs and handhold you through the entrepreneurial journey. And that’s not all — as business consultants, we also provide advisory and consulting for marketing your business and reaching out to more customers. Our expert mentors can guide you on brand identity and brand management, so your restaurant stands out in the crowd. 

If you are keen to discover more, don’t forget to subscribe right now to avail of 90 minutes of free sessions with any six mentors on our platform! We also have you covered in case you need multiple sessions. Besides, you can also enjoy discounted rates when you opt for more than five sessions.