Food consumption will grow by 7.3% in 2016

Being the largest economy in the Middle East, Saudi Arabia has a rapid growth of food consumption. The Kingdom offers abundant growth opportunities to food and beverage companies, across all its sub-sectors and categories, due to a particular lifestyle, age group and most of all, potential.

According to industry research, the total GCC food services market, which includes, full-service chain restaurants, quick service restaurants, Café & Bakery segment, recently stood at SAR 70.5 billion and is estimated to grow to a collective value of SAR 91.9 billion by 2018; whilst Saudi Arabia’s recent total food service sales was estimated at SAR 33.3 billion, accounting for nearly half of the GCC market.

Characterized by a relaxed and casual ambiance, offering a full table service, the casual dining segment has emerged as the second fastest growing within the food sector market with potential for growth. 

Reality of Saudi Food Consumption 

Recent industry reports have underlined that food consumption in Saudi Arabia will grow by 7.3% in 2016, outperforming other regional markets. Population is forecasted to grow to 40 million by 2050, of which 70% will be aged 30 or under – Saudi Arabia will be a prime audience for restaurants and chain operators. 

Most of the major branded restaurants with multiple branches are concentrated in primary and secondary cities. Urbanised population, globally-exposed younger generation who are inspired by food, shopping festivals, exhibitions and events become stimulus to food industry. In combination with high disposable incomes and significant investments in new malls, restaurants and hotels, Saudi Arabia is particularly ripe for global investments in the food service sector notably in casual dining segment to cater to young population.

Sector will stay robust, despite economic lull

Industry experts predict significant growth in both revenues and number of outlets in the sector. The current count of full-service chain restaurants, which includes casual dining and fine dining outlets, in the Kingdom stands at almost 1,200, and account for a greater part of revenues in the sector 

Across Saudi Arabia, a slowdown in several industries seems imminent and inevitable this year, observes Anees Moumina, CEO of SEDCO Holding Group. But he is equitably confident that this will not affect the food services industry. “Despite the slowdown in economy, Saudi Arabia’s food consumption is forecast to grow by 7.3% in 2016, to SAR224.5 billion and projected to reach SAR259.4 billion in 2018. In sum, capital spending in the food sector will expand further, while the value of the casual dining sector will increase at a growth rate of 3% per annum”.

Associated with the opening of every restaurant in the Kingdom, is a promise potential of job opportunities. As an illustrative example - and much in line with the government’s policy of Saudization - TARFEEH employs 1,000 staff across its restaurant outlets. Anees Moumina says “Despite potential for the development of the real estate market, construction is lagging behind, and pressure is being felt on the availability of outlets, and rents thereof. Fortunately, SEDCO Group, we benefit from the synergy and breadth of our operating companies as we build our strategies working alongside specific committees, and by investing heavily in research and development.  

Saudi Arabia’s Casual Dining in numbers

With total food service sales recently recorded at SAR33.3 billion, Saudi Arabia has by far, the lion’s share of the region. Under this umbrella, it is the ‘fast food and quick service’ category that is the largest, and notably, it is ‘casual dining’ which is growing the second fastest at a growth rate of 3% per annum.

Casual dining is a concept that has been rapidly gaining popularity. These restaurants offer the quality of fine dining combined with the speed of fast food, at affordable prices. 

In the last 15 or so years, Saudi Arabia’s casual dining sector has witnessed very healthy growth rate, and major brands penetrating the market – several new entries have been made every year - have driven a 10% increase in the number of chain restaurants, and 5% increase in independent casual dining restaurants.

TARFEEH, a SEDCO Holding Company that runs Applebee’s, Macaroni Grill, and Ocean Basket, already enjoys the status of being Saudi Arabia’s largest company in the casual dining franchisee sector. Ahmed Marashde, CEO of TARFEEH, points out: “Whilst the Gulf region as a whole has immense potential, Saudi Arabia outperforms all other regional markets and it is the remote areas within Saudi Arabia that singularly stand out as investment hubs.” 

He adds: “To leverage geographical opportunities, we will be embarking on ambitious missions and an aggressive expansion plan to open many more outlets across the entire Kingdom. With support extended by our sister companies within the SEDCO Group’s portfolio, in terms of facility management and services, labor and maintenance needs, real estate and property development and management, we will ensure that TARFEEH makes progress with our plans for the near future - to acquire more master franchises and open several new outlets across the Kingdom.”

Marashde concludes: “In line with today’s industry trends, we are always on the lookout for offering new services to our customers; we are currently looking into developing our home delivery and online food service which is yet another potential revenue and employment channel”.