Dubai is without a doubt one of the most booming and largest encouraging economy in the world. It is home to some of the most flourishing businesses in the world and the reason why it’s economy has grown from strength to strength, year after year because of the fact that its appeal lies in welcoming foreign businesses without any discrimination and allows easy business set up rules all across UAE. Speaking of which, the food business in Dubai in particular has seen an extravagant growth in the past decade or so. Restaurant business is considered to be the most lucrative business in the Middle East region. Dubai is not only the trade hub of goods but people from all over world are fascinated by mouth-watering cuisines in the restaurants of Dubai. Dubai is at the forefront of tourism and one of the main reason why tourists from all over visit Dubai is to experience its authentic cultural and world’s finest cuisines. This will not only enrich their travelling experience but will also develop some amazing taste buds for new and innovative food in Dubai. According to multiple surveys, this year more than 19000 new food outlets will enter the food business in Dubai.
Since people are always open to try newer cuisines from all over the world, foreign investors are always looking to invest particularly in this area in Dubai. There has always been a huge scope in restaurants business in Dubai as travelers from foreign countries indulge themselves in local and international cuisines which make the food business a lucrative business to invest in.
Key Factors Involved In Opening A Food Stuff Business In Dubai:
Opening a business can sometimes be a bit difficult but, here are some of the factors involved in opening a business in Dubai.
- Choosing the right location can be tricky; you need to choose a place which has ample parking space, accessible to commercial and residential properties. It is a must to choose the location of your restaurant strategically.
- The rent is important and should not be more than 10% of your expected turnover.
- Identifying standard operating systems or SOP’s is important as it can result in negative service and review for the restaurant.
- Choosing the right menu and restaurant concept is always a must. The menu should not be made on personal liking and your own taste. It should keep in to consideration the items which will build the image of the restaurant in the customer view.
- In the restaurant and any food business industry the basic concept of its success lies on food and service. After food, staff represents your restaurant and training of staff is a must.
How to Open a Restaurant in Dubai Mainland:
The business plan of the food business will always ensure the success of the business. However, it all comes down to the right location of your business which will determine the success ratio of your venture. Here is a list of do’s and don’ts that must be considered before opening a business in Dubai.
Location for Opening a Restaurant in Dubai:
Dubai is an ideal city to open up a food business with more than 2000 nationalities residing in Dubai with diverse cultures. The location for setting up a food business depends on the target market you want to serve.
Dubai has variety of zones which directly or indirectly impact the target clientele. Business zones such as Media city, education city, business bay are location where foreign tourist visit places such as Jumeirah road and Marina Dubai have mix of Asian and European. The business bay, Marina and Jumeirah beach road is ideal location for opening a restaurant business. But It always comes down to the fact that what kind of food you serve and to which niche and what is the demand for that cuisine.
The Do’s and Don’ts of Opening a Restaurant in Dubai – The Do’s
- To start up, the basic step is preparation of business feasibility and plan to have clear understanding of market and forecast on return on investments.
- Establishing pricing policy with competitive analysis to verify expenses and costs.
- The Preparation of detail sales plan by using online platform which eventually results in more than average % of sales.
- With the help of professionals, prepare SWOT analysis about competitors and establish what strategies should be used.
- Lastly, take necessary approval and no objection certificates from related authorities.
Don’ts involved while opening a restaurant business in Dubai:
- If you don’t have prior experience in food industry it is not recommended to open a restaurant business in Dubai. It’s better to take advice from professional before getting into food business.
- Being realistic is a must and do not over charge on your menu.
- It is not recommended to create a menu that you personally prefer. Always remember that creating a menu for customer taste makes you profits.
How much does it cost to open food Business in Dubai:
It is difficult to devise how much money does it cost to open food business in Dubai, but depending on licensing authority and lease valuation, on an average the cost of setting up a good food restaurant ranges from $80,000 USD to around $3million USD and sometimes it varies from location to location. The basic minimum lease space requirement as per authority is around 750Sqm. All the legal procedure does not exceed a week to open a restaurant in Dubai.
How to open a food business in Dubai:
In order to launch your restaurant in Dubai, you need to go through the following steps:
- Food Code in Dubai:The Dubai Food Code contains certain set of rules and regulations which you have to comply with before commencing a restaurant business. This food code states conditions to be met in order to obtain a safe environment and health protection for restaurant goers in Dubai.
- Getting your food and trade license: There are two types of licenses required in order to commence food business in Dubai. Firstly, you have to acquire a license from food and safety Department in Dubai and secondly, a trade license from the Department of Economic Development & Department of Tourism and Commerce Marketing.
- Food safety requirements: In Dubai the Municipal authorities looks after food safety requirements. This is compulsory to ensure that customers are obtaining quality food products with right labels and expiry dates. It is a must to acquire this license from the Municipal authority.
- Location: It is imperative for food business to select appropriate location with ample space for equipment necessary for food establishment.
Steps how to setup food business in Dubai:
Dubai is the capital hub of Middle East and has always encouraged foreign investments for the past decade or so. Now the question is why business are targeting Dubai for investment? the reason are as follow:
- There are no restrictions on Foreign exchange
- No Income tax, withholding tax and corporate tax
- Dubai has the highest per capital income in the world
- Import duty exemptions are around 2%
- Dubai has the most modern infrastructure
- There are absolutely no trade, import and export restrictions.
So, if you intend on planning a trade investment in Dubai, then for foreign investors the government provides you with a number of business models, including direct sale, brand office, commercial agency arrangement, LLC or limited liability company and also offer specialized free zone investment.
There are three major factors that should be into consideration before planning to start a food business in Dubai and these are:
Market Research Analysis:
Planning is the basic the key process for any kind of business to be successful; you need ample amount of knowledge and expertise in the food sector. You must conduct extensive research in preferred food sector where you will operate. Make excellent business strategy plan containing detail research on market influence, competitor analysis and outcome calculation. It is always difficult to find investment unless you are a local, so it is best suggested to use your own resources or fund your food business through your own business. If lucky or you have a good plan you can even land local support and could attract Government attention.
It is a law in Dubai to organize your business in collaboration of local partner, who will control maximum share of business and has the power to seize the business activity as well if deemed necessary. The local partner owns 51% of share over business while 49% of the shares are owned by foreign partner. The local partner does not necessarily make a financial investment in the business or any investment for that matter.
Approval from the Ministry of Commerce:
After completing all the legal formalities and registration of the business, the next step is getting approval from Ministry of Commerce. You can get that by showing substantial proof of resources and by showing that you are capable of investing a fair amount of money into the business. You must also produce account summary which should show that you have funds ranging from $6500 to $10000 and from $33500 to $50000 and may vary in different states. The Ministry of Commerce considers this as guarantee against liabilities. Once the concerned Ministry conduct required checks and are satisfied they approve your request and you can take the money out after sometime.
Food Stuff Business In Freezone
If you intend on sole proprietorship of your company without local, you must consider conducting business in the Free Zone.
Benefits of Dubai Free Zone for food business:
- You can enjoy 100% Ownership
- Sole proprietorship of your company
- Easily open bank account
- 100% guaranteed Confidentiality
- No Tax for 10-15 years period.
- Minimum Renewal Charges
- Can cease business at anytime
- You are provided with International business opportunities
But before choosing to Freezone setup in Dubai you must consider a few factors, for example whether you need your business to be in close proximity to the city, as Free Zone is located towards the outer skirts. The rental costs in the Free Zone are higher compared to the prices in the city.
It is a must to have profound knowledge about the business processes whether you plan to open a retail outlet or an enterprise. The process is financially risky and complicated, so is advised to seek legal assistance for getting for setting the food business appropriately. It is compulsory to seek guidance from lawyers with great professional expertise related to business formation. t hey can guide you with the process of trademark registration and intellectual property rights.
You can also seek help from the Local Chambers of Commerce for providing the complete guidance for new start-ups.
Finally, when you have set up podium for business formation in Dubai, the foremost is to ensure that you meet the visa eligibility and other related requirements. These requirements are mandatory to live and work here. If you plan to employ other foreign resources for your food business, you can seek your local partner’s support and get approval from them on sponsoring the employment visas. It is imperative in Dubai that your local partner’s support matters all decision making from selling the business to quiting your business at some point of time.
The Corporate law in Dubai is same as the in the Western countries which states that businesses can be run as:
Limited Liability Company or Private Company or any other types of concern.
Generally, setting up a business or buying an existing is a difficult task and you are recommended to seek legal advice in Dubai to complete the registration formalities for opening food business in Dubai. Foreign residents can take guidance from the Western/ Arab joint venture law firms to help with their legal formalities. The Arab-British Chamber of Commerce, Middle East Association, the DTI and finally your Embassy’s commercial sections can guide you with the different processes related to setting up food business in Dubai.
So, that’s it, these were the guidelines which can guide you on various aspect on how to open a food business in Dubai and always remember to follow the above mentioned processes and tips necessary to start up and taking full advantage from the booming food industry in Dubai.