Top tips from Dubai entrepreneurs to avoid restaurant business pitfalls

Chef working at Mitra Indian fusion bistro at Al Seef on Dubai Creek. (Supplied photo)
Updated 07 June 2019

Top tips from Dubai entrepreneurs to avoid restaurant business pitfalls

  • A big mistake is to underestimate cash requirements in the crucial first few months
  • Sometimes a contrarian approach can help brands stand out, says one entrepreneur

DUBAI: More than a thousand — 1,109 to be precise — new restaurants opened in Dubai last year, in one of the fastest-growing industries across the UAE.

That’s one restaurant for every 265 people in a city of 3.1 million, so it’s no wonder that so many new restaurants quickly go out of business. 

Beyond business plans and funding sources, Dubai industry insiders suggest a list of questions anyone looking to break into the food business in the Middle East & North Africa (MENA) region should ask themselves.

Have you budgeted enough cash until break even?

Underestimating cash requirements in the crucial first few months while letting costs balloon out of control is a big mistake that new restaurants make, said Mazen M. Omair, founder and president & CEO of Momair Trading.

“Create a cash-flow budget for the first three to six months using conservative revenue estimates and allowing for unexpected expenses. This will help you track cash on hand, business expenses and how much revenue you need to keep your business afloat until revenue starts growing.”




Mitra Indian fusion bistro at Al Seef on Dubai Creek. (Supplied photo)

Have you got a contingency fund?

For Shivam Goyal and Shipra Khurana, who opened Mitra Indian fusion bistro at Al Seef on Dubai Creek last year, unexpected expenses were a constant headache. 

“While signing the (rental) agreement, you (may) invariably ignore many mall charges that haunt you later, such as chiller charges, gas charges, mandatory annual maintenance contracts for different things,” Goyal said. “So don’t be in a haste to sign the lease agreement without thoroughly going through it even though it may run into hundreds of pages. Also get them ratified from a law firm to save hidden costs later.”

Does your restaurant reflect your brand?

The need to keep “sunk costs” low often has entrepreneurs settling for cookie-cutter interiors.  

“The number one design mistake entrepreneurs make is trusting that their passion will transfer to the interiors and branding organically,” said Jacqui Shaddock, partner at H2R Design, an interiors architecture and branding agency.

 “The most important thing, when a concept is strong, is that the story is told cohesively. There’s a strength in consistency.”

Do you know your message?

Consumers respond to clear messaging but sometimes a contrarian approach can help brands to stand out, said Bhavika Bhatia, a 24-year-old former graphic designer who relied on family catering expertise to launch Moreish Restaurant & Cafe last year.

“Vegetarian and vegan food has surged remarkably over the past two years, and it’s only going to grow exponentially,” she said. 

But in a city that loves meat, using those labels can work to a restaurant’s detriment.

“Not marketing our restaurant as vegetarian/vegan has helped us avoid filters and brought in customers who would otherwise think little of a meatless meal.”




Dessert cafe Pastryology. (Supplied)

Do you have enough practical, and local, knowledge?

Ahmed Abdulla Tahnoon, a 31-year-old Emirati, took the leap of faith without hospitality experience when he decided to bring Japanese street food to Dubai with Spheerz, a restaurant that grew out of a kiosk at Global Village.

“I had no business background or experience, but as an engineer — and problem-solver — I put a lot of effort into reading books and online publications until I felt ready,” he said.

Reading wasn’t enough, though.

“At the end I needed to learn from the field itself.”

Do you know when to bring in the specialists?

“As entrepreneurs we tend to be perfectionists, especially when it comes to our business and getting things done. We often find ourselves doing more than we can. This approach is inefficient and distracts us from making more important decisions in growing the business,” said Aisha Mohammed Sharaf, a 25-year-old Emirati who has been running the dessert cafe Pastryology with her husband Tariq Yousef Taher, 32, for more than a year now.

She said it was important to realize when to trust in outside knowledge.

Do you have staying power?

Starting your own business will test your patience, said Zubin Doshi, the 27-year-old founder of ice-cream Scoopi Cafe.

“No business takes off immediately,” he said. “Keep in mind that you’ll need a minimum period of three years before you start seeing actual results.”

• This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.

 


UAE to impose 50% tax on soft drinks in health drive

Updated 29 min 29 sec ago

UAE to impose 50% tax on soft drinks in health drive

  • The 50% tax on soft drinks and 100% on vaping products start Jan. 1, 2020
  • The government says the taxes are necessary to help persuade people to make healthier choices

DUBAI: The UAE government has announced new taxes of up to 100 percent aimed at vaping and soft drinks, in a bid to reduce the consumption of unhealthy products.

Starting Jan. 1, 2020, the new list of taxable products will include sugary and sweetened soft drinks, as well as powders that can be used to make drinks, and electronic smoking devices.

A statement on state-run news agency WAM said the step is aimed at reducing “consumption of unhealthy goods and modifying consumers’ behavior.”

The Cabinet decision, will add a 50 percent tax on soft drinks with added sugar, in form of a liquid, concentrate, powders, extracts or any product that may be converted into a drink.

Vaping devices and the associated products will be taxed at 100%. (File/Shutterstock)

“The decision also requires manufacturers to clearly identify the sugar content in order for consumers to make sensible healthy choices,” the statement read.

The cabinet also announced the introduction of a 100 percent tax on electronic smoking devices - irrespective of whether they contain nicotine or tobacco - and the liquids used in the devices.

The UAE government first introduced a tax on specific goods deemed harmful to human health in 2017.