Glee Hospitality executive reveals how UAE restaurants are coping with tough times

Aboudi Kader Saadi, the managing director of Glee Hospitality Solutions, says a slowing economy, more conservative customers and, fewer tourists and more competition are all challenges in Dubai’s food and beverage sector right now. Ravindranath K / The NationalShow less

Many restaurants in the UAE are struggling, even in glitzy new districts of Dubai.

Local residents have tightened their spending as they fear losing their jobs because of the oil slump. And tourists, although plentiful, are spending less when they dine out because the rise of the US dollar has made the dirham, which is pegged to the dollar, more expensive.

That is the picture that emerges in an interview with Abdul Khader Saadi, managing director for Glee Hospitality Solutions, which runs eight food and beverage brands with 300 staff and is on track to grow by 30-40 per cent before the end of the year.

Mr Saadi’s overview comes as the pace of growth in the F&B sector is slowing, according to Euromonitor International. By the end of 2016 the UAE had 16,720 outlets following a growth of 3 per cent compared to the previous year, which had grown at 4 per cent. At the current 3 per cent rate the UAE will have more than 19,000 outlets by 2020.

Mr Saadi spoke frankly with The National about the challenges facing the sector, and pointed to one change that could help the sector a great deal: more access to temporary or part-time staff.

What are the challenges and opportunities in F&B right now?

It’s challenging, I would say 40 per cent of our outlets right now are struggling. When I say struggling I mean 30 per cent are just paying rent, making no money, 10 per cent are in trouble. That 10 per cent will close unless the landlords do not see reason and understand the challenges we are all facing. Many of our investors are small investors, it is not a small investment, but they [are] not big corporates with deep pockets.

What are the challenges?

Many, many things, it’s not only the variety and number of outlets opening. It’s the spread of options available to the consumer. More brands are coming into the country, the economy is soft, people are losing jobs and leaving the country. Those that aren’t losing their jobs have stopped spending in case they lose their jobs. The number of tourists coming is growing somewhat, but I don’t think the tourists are spending what they used to spend. So yes, we are getting more tourists numbers but smaller revenues per head.

Are you closing restaurants?

Over the past six months one has closed in Box Park and another may close soon, also in Box Park. We have also relocated from City Walk 1. However, we have opened in Al Raha in Abu Dhabi, the capital is not as affected although they are not in seasonal locations. Abu Dhabi though is more price-sensitive than Dubai, Dubai has the exuberance of tourism and holiday traffic.

What other concepts that you oversee are struggling?

We are about to sell The Gramercy, in DIFC, which has been open seven years. We have struggled this year for a var­iety of reasons. We had a water leak and had to shut down over Christmas – we lost over Dh1 million that month – we opened again and had to shut down three weeks later as the leak was back. Seven to eight weeks of no trade killed us … we weren’t making money in 2016 but we were keeping afloat.

Was it easy to sell The Gramercy in this atmosphere?

It is being sold as a going concern but I’m not sure what its future is, that is up to the new shareholders. I wish we had sold it a year-and-a-half ago because we would have got four times the price, but my shareholders refused to sell it. We are still getting good money but not what we could have done.

The new districts in Dubai must be helping the F&B business.

New glitzy places don’t guarantee business. If you look at City Walk 2, you have 50 new concepts, 20 are packed and 30 are empty. That means that it is the supply that is skewed, also seasonality effects everything. It’s a harsh summer and it can hurt a business. I know people in JBR at The Beach and they are down by 30-40 per cent.

What would help the F&B sector right now?

Rents are not the only issue, we are at the mercy of macro conditions that cannot be changed. However, there are changes that could be made to allow temporary or part-time staff, that would help the industry 100 per cent. Every restaurant, although there are exceptions, are not packed seven days a week lunch and dinner. If we had part-timers that can apply weight when and where you need it, it would revolutionise the sector. That’s the benefit of the huge groups who can move staff. For the smaller guys who have staff on different visas and different trade licences that flexibility is not possible.

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