Business

UAE restaurants in the digital age

UAE restaurants in the digital age

Since March, restaurants in the UAE have been closed following the outbreak of the Covid-19 pandemic. As outlets cautiously reopen — albeit at 30 per cent capacity and in accordance with physical distancing rules — many of our dining habits have evolved significantly over the past months.

Phrases such as contactless delivery have become commonplace as F&B outlets fight to secure revenue from a market in turmoil.

With customers increasingly reliant on technology to enjoy their favourite dishes, restaurants have been forced to adapt and evolve. One issue they face that has recently been making headlines is their reliance on the market-leading aggregators such as Deliveroo and Talabat.

“The mark-ups for delivery charges can range between 12 and 35 per cent,” says Adil Elmitari, Executive Producer F&B, Paramount Hotel Dubai. “It affects people’s margins. When you have a restaurant that offers discounts, they may not have a delivery service themselves and they might need to rely on one of the main aggregators.”

I think the market will be fragile for the next three months and that people will be increasingly looking for good value.

- Adil Elmitari, Executive Producer F&B, Paramount Hotel Dubai

While alternatives are gaining traction, such as Oogo, which is designed to offer restaurants a fixed monthly rate of Dh299 to handle deliveries, businesses remain reliant on popular platforms for delivery traffic. The issue is often related to F&B outlets’ ability to create and drive independent interest in their own platforms. “People in the F&B industry are definitely more aware about investing in a digital platform,” says Elmitari. “It’s not cheap or easy to create these though and a lot of outlets cannot afford their own delivery drivers.”

He says that F&B outlets’ ability to launch digital platforms is also reliant on the size of the organisation and often leaves them susceptible to being compelled to offer promotions. “It depends, from outlet to outlet. For local outlets, it’s much harder for them to expose themselves on the market, which is why they offer discounts on the main aggregators’ platforms.”

On May 18, the ride-hailing behemoth Uber announced that it was closing its food delivery service in the UAE, merging it with its high-profile regional acquisition, Careem. It’s indicative of a highly competitive market that has yet to prove its economic viability.

This month, The Guardian reported that industry giant Deliveroo, which is headquartered in London, loses money on every delivery it makes, despite its significant cuts from restaurant revenues.

It suggested that, like many start-ups, Deliveroo’s business model is to disrupt the traditional F&B model and gain a significant enough market share to reach profitability.

In March, one of Deliveroo’s largest competitors drew criticism from restauranteurs for taking advantage of the Covid-19 restrictions by charging outlets almost Dh1,000 for providing hygiene audits, leading to an apology from the company.

Here in the UAE, the F&B industry, like many sectors, faces an uncertain future. While Elmitari says the immediate future will be challenging, he also talks about how the Paramount Hotel Dubai’s outlets are adapting to face the crisis. He refers to new dining concepts and precautions such as disposable menus, used only once, to reassure cautious diners. He also believes that the post Covid-19 customer is likely to be increasingly price-conscious. “I think the market will be fragile for the next three months and people will be increasingly looking for good value.”

Elmitari also encourages people to try contacting their favourite local F&B outlets directly, rather than relying on only the main aggregators. “I appreciate that it’s easier to order on one platform but you don’t necessarily consider what the restaurants are paying for it. If restaurants have drivers, I would always recommend calling them directly and you might even get a better price.”