The UAE Restaurant Market: Recovery, Resilience and the Continued UK Interest
Last month saw the Global Restaurant Investment Forum (GRIF) take place in Dubai, one of the GCC's leading hospitality investment conferences. Unsurprisingly, the UAE market's recovery was a major topic of discussion, but what was also interesting was the noticeable UK contingent of attendees, with businesses continuing to look towards the region for greener pastures, away from what some have called the UK's 'tax tsunami' and increasingly tough trading conditions. Indeed, before the recent disruption, this was something I had observed among my own clients, with EBITDA margins in the UAE sometimes running at two to three times those achieved by the very same business in London.
Before the crisis, there was a seemingly endless stream of UK restaurant brands looking towards the UAE for expansion, with the likes of Berenjak, Knoops, Barrafina and Bread Ahead establishing a presence in the market, and others including Scott's announcing plans to follow. Unsurprisingly, the conflict brought many of these conversations to a halt, or at least put them on hold. Yet despite the more challenging trading environment, new names continue to emerge. Gymkhana opened in September, Kricket has confirmed plans for its first international opening at Emirates Hills, while Fallow has announced that it is looking to establish a Gulf outpost in the next year or so, and Café François has also announced plans to open in Dubai.
At the GRIF conference itself, London's Michelin-starred HIDE announced a development agreement with The FAB Group, with four locations already secured across the UAE and Saudi Arabia. Of course, many of these conversations will have been underway long before the crisis. Indeed, the HIDE partnership originated from introductions at GRIF a year earlier and Café François revealed its partnership had followed three years of planning, illustrating the considerable lead times involved in bringing international restaurant brands to market. With that in mind, it makes sense that UK operators are continuing to explore the market now, with a view that, by the time an opening would come to fruition, trading dynamics may be far improved.
Many of these restaurant brands are ultimately banking on a recovery in the UAE, which was, of course, one of the big topics of discussion at GRIF and a topic explored in the recently published the second wave of our UAE Hospitality Barometer, in collaboration with GRIF. In our study, we surveyed 30 foodservice operators, including many multi-brand franchisees and dining groups, who collectively represent around 150 brands and more than 350 sites across the UAE, so a broad cross-section of the market. Admittedly, there is some sample bias here, in that our network comprises relatively well-backed, international businesses that are better able to weather the current storm, but nonetheless the findings are very revealing.
From an average like-for-like sales decline of 27% back in April, around the beginning of the crisis, operators’ top-line sales had almost fully recovered by the summer, at just 1% below the previous year. That is despite tourism remaining severely depleted, and represents a significantly better recovery than many of us expected to see by now.
Scratching beneath the surface, however, reveals that things are not quite as rosy as that headline stat suggests. First of all, there is no reliable UAE-wide restaurant price inflation figure, but Emirates NBD published restaurant and hotel price inflation of 4.5% in Dubai in July. If the other emirates are similar, that would leave us with an inflation-adjusted sales figure of about 5.5% below last year. More importantly, much of this recovery is not passing through to profits. Ingredient costs are up around 12% on last year, and many businesses have prioritised protecting jobs, effectively leaving them overstaffed relative to current demand as they wait for trade to return. Some have implemented voluntary pay reductions to avoid job losses, while very few have found landlords willing to offer any form of rent relief. So, while headline sales may look encouraging, 50% of operators still cite cash flow as a key challenge. Some are losing money, while others are merely treading water, waiting for things to improve.
It has also been interesting to see who the UAE's restaurant customers really are, and the extent to which the market is domestically driven, versus tourism driven. There has been a huge discrepancy in how businesses have fared depending on where their sites are located. Those with more tourist-heavy estates have been hardest hit, whereas businesses with a greater concentration of residential locations have done much better, and some have even seen their like-for-like sales increase. Across our sample, individual operators reported everything from a 35% decline to 35% growth. Businesses were initially affected by working-from-home policies and residents travelling outside the country, but much of that domestic demand has now recovered. Tourism, on the other hand, remains significantly below previous levels.
Operator sentiment and responses to the current climate have shifted dramatically since April. Initially, much of the focus was on defensive cost-cutting action in response to the initial shock of the crisis. Now, the emphasis is on targeting residents and investing in marketing to rebuild demand. There is also something of a dogfight for volume, as you might expect. Despite rising costs, twice as many operators are cutting prices as are increasing them, adding further pressure to already squeezed margins.
So, what about the longer-term future? Overall, operators are relatively optimistic, and indeed the UAE still has a great deal going for it, particularly in terms of tourism investment with developments ranging from the Wynn casino resort in Ras Al Khaimah to the museums and cultural attractions on Saadiyat Island opening over the next few years. Personally, I remain optimistic about the UAE's longer-term prospects, although I suspect it could take a couple of years for the market to return to its previous trajectory, and much will depend on how the situation with Iran evolves. It is a competitive market, but with the right partners, market entry diligence and local adaptation, the best UK businesses are well positioned to succeed. After all, they have already proved themselves in one of the world's most competitive markets, under exceptionally tough conditions. Ultimately, international expansion is a long game. By the time the partnerships being negotiated today translate into restaurant openings, the UAE market could look rather different.
Sources and further reading
Juniper Strategy x GRIF: UAE Hospitality Barometer, Wave 2 (Summer 2026) (access here)
