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Cloud Kitchens are the future of Restaurant Industry – PRIME report reveals

Thu 15 Apr 2021    
| 4 min read
  • Appetite for Food Delivery Grows in UAE; 70 Percent of Restaurants Eye Cloud Kitchens to Expand Their Business
  • POSist Restaurant Industry & Market Evolution Report (PRIME) reveals trends shaping the future of the restaurant industry in the UAE.

As the restaurant industry resumes operations after months of restrictions due to the ongoing pandemic, the need to adapt and implement innovative business strategies is crucial. The industry is at a point where new menu concepts, improved dining experiences, and the need for delivery and take-out services have become necessary to serve the customers’ changing behaviors.

To uncover the emerging trends and the growth drivers of the UAE restaurant industry, POSist, a leading cloud-based restaurant technology platform in collaboration with Dubai Restaurants Group (DRG), a not-for-profit organization – under the direct patronage of the Dubai Chamber of Commerce, today released the PRIME (POSist Restaurant Industry & Market Evolution) Report UAE Edition.

This study is based on a survey of restaurant operators conducted in March 2021 and interviews with executives from quick-service restaurants (QSR), fine dining, casual dining, and cloud kitchen brands. It examines the restaurant industry’s long-term sentiment amid the pandemic and how the sector is adapting to the new normal and preparing for growth.

Cloud Kitchen-Food-Restaurant

Key findings of Report:

  • A sentiment of revival is emerging in the UAE; 75% of restaurant operators expect higher revenue in 2021 than pre-COVID time.
  • Business is returning in the region; one in three restaurant operators in the UAE are now running at 60%+ revenue than the pre-COVID level.
  • Customer engagement is one of restaurant operators’ top priorities; 60% of restaurants shared that they have introduced loyalty programs.
  • 70% of dine-in players explore investing in cloud kitchens.

A Sentiment of Revival

  • 75% of restaurant operators expect higher revenue in 2021 as compared to the pre-COVID time.
  • Top executives of restaurants in the UAE indicated a sentiment of revival. After a challenging year for restaurants, both local and international chains feel optimistic about the growing revenues. Nearly 75% of restaurant operators expect the revenue to increase compared to pre-COVID times.
  • One in three restaurant operators in the UAE are now running at 60% + revenue than the pre-COVID level.
  • Restaurant sales continue to improve as diners become more comfortable with contactless dining and ordering food online. One-third of restaurant operators surveyed mentioned that they are now operating at 60% of their pre-COVID-19 revenue levels (as of March 2021).

The Rise of Online Ordering

  • 66 percent of diners prefer ordering food online
  • Before the pandemic, a significant share of restaurant businesses came from dine-in customers, and deliveries complemented the orders. However, according to the survey, the situation has changed post-COVID-19; restaurant operators shared that as high as 66 percent of diners now prefer ordering online over dining out.
  • Restaurant chains ramp up loyalty programs to woo diners.
  • When diners are already taking precautions to step out, it is even more important for restaurants to take charge of the relationship between their brand and the customers. We asked respondents what steps they took to ensure orders keep coming in. 60% of restaurants shared that they have introduced loyalty programs and special offers for their regular customers to keep them hooked.
  • One-third of restaurants expect 60%+ revenue from food deliveries in 2021.
  • Nearly 36% of respondents said that they expect more than 60% of their revenue in 2021 to come from food deliveries compared to a small group of 10% of restaurateurs who registered similar delivery returns in the previous year.

Restaurants Find the Silver Lining in Cloud Kitchen

  • 70% of otherwise dine-in players explore investing in cloud kitchens.
  • We asked restaurants if they had additional funds to invest back into the business and what areas they would immediately pick. 70% of the respondents placed their bet on setting up a Cloud Kitchen or a delivery-only outlet for their brand.
  • Seven in ten Restaurants are willing to invest up to 8 percent of their revenue in technology.
  • It is interesting to note that nearly half of the restaurant operators agree that investing in technology is essential in these times. This sentiment can be corroborated basis the response of 70 percent of restaurant operators who expressed willingness to invest up to 8 percent of their revenue in technology.

“The pandemic has been a learning experience for the industry. It has opened up opportunities for the industry to innovate and be future-proof. One of the key takeaways from the survey is that restaurants are becoming technology-driven in every aspect of their business, from managing front of the house to the back of the house operations. The PRIME report outlines the huge opportunity in cloud kitchens, and it’s not surprising that 70 percent of restaurateurs are willing to invest in setting up a virtual kitchen in the UAE. By exploring investments in cloud kitchens and building an efficient delivery setup, F&B outlets will potentially increase unit growth, add more touchpoints to connect with diners, and above all, build a sustainable model in the longer run.” Ashish Tulsian, Co-Founder & CEO of POSist.

“Absolutely a pleasure to be associated with this trendsetting survey which would go a long way in strategizing the future path that the culinary industry is earmarked to tread in future. Inviting all stakeholders and those who wish well for the sector to partake wholeheartedly and make the initiative a resounding success.”  Naim Maadad, Founding Board Member, Dubai Restaurants Group.

Research Methodology

  • The survey consisted of 12 multiple-choice questions, which records responses from senior executives of restaurants across the UAE. The survey was conducted between March 1 – 20, 2021.  Information was collected via online surveys in collaboration with the Dubai Restaurants Group (DRG).
  • The respondents were across the seven Emirates of the UAE, including Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah, and Ras Al Khaimah.
  • The respondents were key decision-makers at restaurants, including the Owners, Co-founder, CEOs, Operations heads, IT heads, and Managers.
  • 60% of respondents owned one to five locations; 15% owned 6-15 sites; 25% owned 15 and more locations.
  • 30% were casual dining restaurants; 25% were fine-dining establishments; 15% cloud kitchen or delivery outlets only; 10% were quick-service/fast-casual restaurants; 8% were cafes/ bakery; 3% were food court chains and remaining 9% were from other formats.

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