| Kuwait | Feb 23, 2016
Kuwait’s restaurant and cafe segment has been growing exponentially over the past decade, with the market reaching a state now that many are dubbing saturated. As with retail, consumer behavior […]
Kuwait’s restaurant and cafe segment has been growing exponentially over the past decade, with the market reaching a state now that many are dubbing saturated. As with retail, consumer behavior is driving continued investment, innovation, and increasing competition in the restaurant and foodservices industry, with high spending power and consumer palettes generally familiar with different tastes and cuisines from around the world providing ample opportunities for food firms. There is a long-standing emphasis on food as a central part of most social gatherings in Kuwait, and this fact, coupled with a well-traveled population and growing expatriate community, have encouraged the development of a sophisticated, diverse, and adventurous consumer approach to gastronomy.
Kuwaitis crave new offerings, and are unafraid of blending flavors and trends from the international food scene with local traditions and lifestyles. Whether it is formal, casual, fast food, family, take away, drive-thru, or home delivery, it seems that there is always something new available, with room in the market not only for established franchises, but also original food concepts to gain their share of the pie.
Franchises and international brands have taken note of the market with chains such as McDonald’s, Domino’s, Cheesecake Factory, Pizza Hut, Costa Coffee, Red Lobster, Olive Garden, TGI Friday’s, and Texas Roadhouse, as well as several others dominating the fast food and casual dining segment. Kuwait is seen as a key market in most brands’ international expansion plans as evidenced by new entrants in the market each year. After exiting the Kuwait market in the 1990s, the American fast-food franchise Dairy Queen is back, entering the Kuwaiti market once again in 2015, along with its re-launch in the UAE.
Though franchising has been dominant, leading Kuwaiti restaurateur and entrepreneur Basil Al Salem, Managing Director & CEO of Gastronomica ME, explained that what he is seeing from consumers is actually a deviation from the cookie cutter franchise outlets, and a move towards one-off, original food concepts that emphasize quality, a trend he says is not just Kuwaiti or regional—but global. The owner of Kuwait’s top selling, premium burger outlet, Slider Station (a non-franchise, original concept), described the dynamics as follows: “Markets in the region are generally saturated; therefore, success will depend on how innovative our product is and how consistent it is in terms of quality. The model of low cost ingredients and low selling prices just doesn’t work anymore. Wherever you see a McDonald’s, there is always something better right next door to them. People are concerned about their health and what they eat. These concerns have an affect on long-term brands.“
Precise calculations of the value of this segment of the Kuwaiti economy are hard to come by, but estimates by Al Masah Capital Research in an April 2014 report indicate that annual revenues of consumer foodservice companies in Kuwait have hit $1.7 billion. The largest segment being fast food, followed by full-service restaurants, and the café, coffee/tea house, and bakery segment. Trends show that demand is increasing for quality food services, restaurants, and cafés—whether franchised international brands or original home grown concepts. With one of the highest per capita incomes in the GCC, Kuwait is expected to contribute $189 billion of the GCC’s $2.2 trillion economy by 2020 (Al Masah Capital Research). It is young, multinational, multicultural, globalizing, and expanding population will drive further consumption habits in this sector moving forward as food is and will remain a major part of Kuwaiti social life and its consumer culture.