Sales of fast food in the UAE breached the Dh10 billion mark for the first time last year as the sector continues to grow swiftly, with chains opening more and more outlets.
Fast food bill soars past Dh10bn as chains grow
Sales of fast food in the UAE breached the Dh10 billion (US$2.72bn) mark for the first time last year as the sector continues to grow swiftly, with chains opening more and more outlets.
The total market for fast food grew 7 per cent to Dh10.2bn last year compared with the previous year and should swell a further 5 per cent this year, according to the research and information company Euromonitor.
McDonald's remained the country's biggest hamburger chain, with Burger King and Wendy's both in hot pursuit as they open more outlets.
"Restaurant spending per capita is higher in the UAE than in many countries because [input] prices are relatively high and consumers tend to eat out more than once a week," said Karima Berkani, a senior research analyst at Euromonitor.
The Dh10bn spent last year on fast food is equivalent to nearly 1 billion Big Macs, McDonald's signature burger. It is also 10 times more than the level of e-commerce spending expected online this year in the UAE.
"Urbanisation, higher disposable incomes and the country's relatively young population are major factors in why consumers eat out so frequently," said Ms Berkani.
But as the fast-food industry grows, so too do concerns about obesity in the country.
About 30 per cent of men in the UAE are classified as obese and 43 per cent of women, the most recent statistics from the World Health Organization show.
More than half of Emirati schoolchildren are overweight, but only about a third are worried about that fact, found a recent study funded by the Sheikh Saud bin Saqr Al Qasimi Foundation for Policy Research.
Of the burger chains, McDonald's has 95 restaurants in the UAE, followed by Burger King with 61 and Hardee's with 32. McDonald's hopes to break the 100 figure this year.
Mr Berkani added that the high numbers of tourists visiting the Emirates in the past 12 months also contributed to the industry's growth.
The number of hotel guests in Dubai increased 10 per cent to 9.3 million last year compared with 2010, and Abu Dhabi had a record year, with 2.1 million hotel guests, up from 1.8 million in 2010.
Restaurants and hotels accounted for 11.7 per cent of the GDP of the UAE in 2010, according to government figures.
KFC is the second-biggest fast-food chain, behind McDonald's, according to Euromonitor, and is the biggest fast-food company by sales.
"Because it has been operating in the UAE for 20 years and because chicken sells better than beef, KFC has performed very well here," said Ms Berkani.
"While KFC has fewer outlets than McDonald's, their delivery sales increase their transactions per outlet. KFC and McDonald's are very close in terms of their market share," she said.
McDonald's stores in the UAE outstripped the average sales growth of stores globally last year, with sales increasing 8 per cent, according to Rafic Fakih, the managing director for Emirates Fast Food, which owns and runs McDonald's outlets in the UAE.
He said the brand does not worry about competition, despite talks in the past couple of years by Wendy's to expand aggressively in the UAE.
"I do not think we have to worry," he said. "We have affordable prices, we give back to the community, people feel we are fair."
Globally, McDonald's made operating profit margins of 30 per cent in 2010.
In June 2009, the Wendy's Group announced a 10-year development deal with Al Jammaz Group, a Saudi conglomerate, to build about 80 dual-branded Wendy's and Arby's restaurants in the UAE. The company could not be reached for comment.
Wendy's, which Euromonitor says is the fifth-largest fast-food chain in the country, has overtook Burger King in the United States as the second-largest hamburger chain.
A report by the food industry research company Technomic showed that Wendy's had US sales of $8.5bn last year, compared with $8.4bn for Burger King, with both some way behind McDonald's at $34.2bn.
The market for premium burgers is also growing across the Emirates as brands such as Burger Fuel, Gourmet Burger Kitchen and Fat burger extend stores.
"Premiumisation is a trend seen across many retailing categories in the UAE, as consumers' demand for value for money drive growth," said Ms Berkani. "The volume of such retailers is very small in comparison to that of larger chains."