GCC Food Service Market Size, Share, Growth & COVID-19 Impact Analysis, By Type (Full Service Restaurants, Quick Service Restaurants, and Others) and Regional Forecast, 2023-2030

The GCC food service market size was valued at USD 31.80 billion in 2022 and is projected to grow from USD 34.33 billion in 2023 to USD 62.25 billion by 2030, exhibiting a CAGR of 8.87% during the forecast period.

Sports tourism plays a pivotal role in any country's growth and is a significant driver of economic development. It has a crucial significance on tourism, lifestyle, and, ultimately, a city's reputation. In the last few years, Gulf countries, such as the UAE, Saudi Arabia, and Qatar, have firmly placed themselves as a global destination hub for sports events and have worked strategically for several years to invest in their resources and capabilities to develop and enhance the sports industry.

COVID-19 IMPACT

Industry Experienced Negative Growth due to Travel Restrictions and Insufficient Supply of Food Commodities

The COVID-19 pandemic had a profound impact on the Gulf Cooperation Council (GCC) countries. The region was hit with the dual health crisis and recorded low oil prices, severely impacting the economy. In addition to imposing lockdowns and restrictions on travel to lower the contamination rate, GCC governments took several fiscal and economic measures that included stimulus packages to aid healthcare spending, social assistance, and support for small businesses affected by the outbreak. Although the governments have taken various measures, key economic activities across the foodservice sector have been negatively impacted. According to the International Labor Organization (ILO), working hours in GCC countries decreased in the 1^st quarter of 2020 by 1.8% when compared with the pre-crisis levels. In addition, in the second quarter of 2020, GCC countries witnessed an even sharper decline, with a loss of 10.3% of working hours compared to the last pre-crisis quarter, which is equivalent to 6 million full-time jobs.

Moreover, the COVID-19 pandemic posed a significant threat to food security in GCC countries. The region relies heavily on imports from other countries as they have limited home-grown resources. Therefore, the dependence on imports is expected to continue owing to production constraints and growth in food consumption, primarily supported by favorable demographics.

LATEST TRENDS

Rising Concept of Cloud Kitchen in GCC Countries Influences the Market’s Momentum

As an emerging and lucrative business concept, ‘cloud kitchen’ has been the buzzword in the food service industry lately. Alternatively recognized as “ghost kitchens”, “dark kitchens”, “home delivery”, and takeaway-only restaurants”, these kitchens have caused a massive uproar in the market and opened several new gateways for strong revenue.

A popular concept, takeaway services, is already flourishing in Asian countries such as India and Singapore. However, for a few years, this concept's enormous growth has caught the attention of international restaurateurs in GCC countries such as the UAE, Saudi Arabia, and Kuwait. Factors such as the rising number of expatriates, growing usage of online food delivery platforms, and frequent changes in consumer tastes and preferences are expected to stimulate the GCC food service market growth.

In February 2023, Foodlink Global Restaurants & Catering LLC announced the launch of a new gourmet cloud kitchen brand, Art of Dum in Dubai. This is the 5th branch of the kitchen in Dubai, which focuses on a 100% sustainable delivery concept.

In addition, in January 2022, Dubai’s one of the leading cloud kitchen companies, Kitopi, introduced its two latest market launches in Bahrain and Qatar. With the newly launched kitchens, Kitopi now serves around five regional markets. Such scenarios thus further provide prominent growth opportunities for this market.

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DRIVING FACTORS

Increased Spending On Out of Home Food Consumption to Drive Market Growth

Considering the popularity of fast food among the young population, many International quick service brands and restaurants are expanding their presence in the Gulf countries. Foreign investments, rising incomes, high aspiration levels, growing young population, rising tourism, and changing food consumption patterns also benefit the growth of the restaurant industry in the GCC region. Opportunities for foreign food exporters to supply into the Hotel, Restaurants, and Institutes (HRI) sector are improving as demand for many regional ethnic foods is also increasing. Such factors are boosting the market growth of food service.

The tourism industry has traditionally been ranked after manufacturing or agriculture, as it is not seen as a significant or niche source of growth. However, over the last few years, the tourism industry has been seen as a potential means of generating revenue, creating jobs for youth and women, promoting economic diversification, and a follow-up economy. The tourism industry is more service-oriented, contributing to revitalizing declining urban areas and cultural activities and opening up remote rural areas. These factors are also gearing up to invite tourists, which will support the market growth of food service in the coming years.

Increasing Number of International Sport Events Boosts the Market Growth in GCC Countries

For a few years, Gulf countries have actively taken part in professional sports, which has led to added investment in the sports industry, including infrastructure, cafeterias, and restaurants to cater to the customers visiting the sports events.

According to the "Arabian Business," 2022, a weekly magazine, online food delivery players in Qatar along with the larger GCC region, added valuable economic support to the food & beverage sector during the FIFA World Cup.

The growing number of sports events, such as the FIFA World Cup, Saudi International Championship for Parachuting, and others, is expected to fuel the restaurant business as a large number of sports followers will step out to watch the sporting events in groups. As a result, it will increase food expenditures, which will boost the food service industry growth.

To cater to consumers' growing demand for various food items, many fast food chains expanded their restaurant chains in new areas, helping them increase their overall profit margin. For instance, in November 2022, Saudi Al Baik, an Arabian food chain, entered the Qatar market with four food trucks. This restaurant chain expanded in the Qatar market amid the festive atmosphere of the FIFA World Cup, which, in turn, fueled their revenue. Another prominent player, Rebel Foods, along with their cloud kitchen team, also designed special promotional campaigns on each of their brands, such as Behrouz Biryani and Oven Story Pizzas, to provide "customers the best excuse to watch the games with friends in the comfort of their homes while watching the FIFA World Cup.

With an increasing number of sports events in the region, the market is expected to flourish over the forecast period.

RESTRAINING FACTORS

Greater Reliance on Food Imports and Limited Availability of Natural Resources Inhibit the Market Growth  

Since the last few years, the dependence of GCC countries on food imports has been significantly increasing due to limited resource availability and fluctuating climatic conditions. Amongst the GCC countries, Saudi Arabia is one of the largest importers of cereals, along with milk and meat. Due to the growing regional food consumption and strong requirement of essential food commodities, such as cereals and others, to prepare various food dishes, manufacturers opt for import activities more often.

Thus, the governments of GCC countries have been highly responsive and are trying to step up their food security measures by investing in international farmlands such as Ethiopia, Serbia, Sudan, and others, thereby establishing strong trade relations and boosting domestic produce.

Water scarcity is one of the crucial problems for GCC countries as these areas have been facing a deficit of water availability for decades. The hot and arid climate and strong heat waves are among the primary factors leading to water scarcity in the region. Thus, improper agricultural land availability along with the shortage of water further increased the dependency on import activities, posing significant challenges for the GCC market growth.

SEGMENTATION

By Type Analysis 

Quick Service Restaurants Segment Holds the Largest Share Owing to Growing Popularity of Fast Food in the Region 

On the basis of type, the market is divided into full service restaurants, Quick Service Restaurants (QSR), and others. The Quick Service Restaurants (QSR) segment holds the largest market share in the market. The QSR segment comprises fast food chains and independent stores. QSR has a limited menu, specializing in selective main entrees such as burgers, pizza, and chicken. This segment leads due to the availability of a variety of food and beverages at competitive prices. Furthermore, the popularity of new forms of restaurants, such as virtual kitchens and ghost kitchens specializing in delivering food to consumers, has witnessed significant growth in recent years.

Full service restaurants include sit-down establishments that serve customers with table service in brick-and-mortar and have a full meal menu. They offer menus in multiple selection types, including breakfast, lunch, and dinner. Fine dining and casual dining restaurants are the major contributors to this segment. In full service restaurants, a shift of human functions to machines is the need of the decade for the restaurant industry operators to compete in the ever-expanding restaurant industry. There are a few innovative applications in the industry already, such as front-of-the-house kiosks, food deliverable robots, and the ability for users to place orders and pay via mobile devices. This innovation helps to increase the full service restaurants segmental growth.

The others segment includes food truck services, individual shop owners, and cloud kitchen services. Food trucks and cloud kitchens are the latest attraction among young consumers; hence, they tend to try food prepared by these operators, supporting the segment’s growth.

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REGIONAL INSIGHTS

Saudi Arabia holds the largest GCC food service market share. The market statistics show that the country is expected to dominate the market over the forecast period owing to the increasing number of tourist footfalls. Over the last few years, the number of shopping and food malls has rapidly expanded in Saudi Arabia. The trend of opening food outlets in shopping malls, which was earlier concentrated only in the country's capital cities, has spread to smaller cities in the last decade. With the popular trend of consumer behavior concentrating on shopping mall culture, this factor is expected to drive market growth further during the forecast period.

The UAE is the second largest country in terms of market share. The UAE food service market growth is mainly attributed to the growing tourism industry in Dubai, Abu Dhabi, and Sharjah.  

KEY INDUSTRY PLAYERS

Focus on Expanding Production Capacity Helps the Companies to Serve Effectively

The GCC market is moderately fragmented and competitive. The international restaurant industry players and small local players are competing against each other to strengthen their market position. Some of the major players, such as Starbucks, McDonald’s, and Yum Brands, are reframing their strategies to increase their footprint in the market and achieve competitive advantages. The companies emphasize on expanding their production capacity to serve a larger customer base. It is significantly impacting the market expansion. For instance, in 2022, Americana Restaurants, one of the leading restaurants and food companies operating in the Middle East, signed an agreement with Yum! Brands to establish and operate Pizza Hut restaurants in Saudi Arabia. As a part of this deal, the company planned to open 30 Pizza Hut restaurants by 2023 and launch 100 branches over three years.

LIST OF KEY COMPANIES PROFILED:

• Starbucks Corporation (U.S.)


• Yum! Brands, Inc. (U.S.)


• McDonald’s Corporation (U.S.)


• Restaurant Brands International Inc. (Canada)


• Domino’s Pizza, Inc. (U.S.)


• Papa John's International, Inc. (U.S.)


• ALBAIK Food Systems Company Ltd. (Saudi Arabia)


• Herfy Food Services Co. JSC, KSA. (Saudi Arabia)


• Kitopi (United Arab Emirates)


• Aura Group (Qatar)

KEY INDUSTRY DEVELOPMENTS:

• May 2022: The parent company of Hardee’s restaurant CKE Restaurants Holdings, Inc., partnered strategically with Universal Pictures to promote the movie “Jurassic World Dominion.” As a part of this strategy, the company introduced new movie-themed burger products in the market


• January 2022: Halwani Bros. Co. invested around USD 53 million in a non-binding agreement with Aquat Food Industries Co. Through this agreement, the company aims to supply locally-produced food products required to operate Albaik restaurants in Egypt.


• December 2021: Riyadh International Catering Corporation, the Saudi Arabia franchisor of McDonald's restaurants, opened the 200th branch of the company on Riyadh Boulevard. This expansion will help to increase the revenue of the company.


• July 2021: Yum! Brands acquired Dragontail Systems Limited, a technology solutions provider for the food industry. The company is focused on accelerating its global digital and technology initiatives that enhance the customer and employee experience, strengthen restaurant unit economics, and provide a competitive advantage.


• June 2021: Saudi Arabia’s popular restaurant chain ALBAIK opened its first branch in the UAE. The Saudi brand entered the UAE market in partnership with ServQuest, an entity established by National Holding, Abu Dhabi. ServQuest is dedicated to operating and expanding ALBAIK across several nationwide restaurant brands.

REPORT COVERAGE

An Infographic Representation of GCC Food Service Market

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