Despite The Negative Repercussions Of The COVID-19 Crisis, Entrepreneurs In The UAE's F&B Sector Are Stepping Up To Challenge The Status Quo Industry experts share their insights on what has changed through the COVID-19 crisis, and why being attuned to customer needs has never been more important.
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When exploring the impact of the COVID-19 pandemic on small businesses, the topics of advanced technologies and changing consumer preferences seem unavoidable.
Mohammed Bin Sulaiman, Senior Manager, Business Relations, Dubai Chamber of Commerce and Industry, confirms that the two features are common within the ongoing transformation of the UAE's food and beverage sector. "Smart solutions such as convenient delivery apps and contactless menus and payments are now becoming the new norm, complementing the traditional restaurant experience and creating value for industry players and customers alike," he adds. "Food businesses in the UAE are now rethinking their business models, and focusing their efforts on adapting to new market conditions and innovating, as they plan ahead for the post-COVID recovery. This is a positive development that will raise industry standards, create new business opportunities, and drive sustainable growth. The COVID-19 crisis pushed food businesses to explore non-traditional markets, and this has helped Dubai to strengthen its role and status as a major food distribution centre in the region, and a key player in addressing food security issues."
Mohammed Bin Sulaiman, Senior Manager, Business Relations, Dubai Chamber of Commerce and Industry. Source: Dubai Chamber of Commerce and Industry
Soniya Ashar can talk at great length on both of the aforementioned topics. Her startup NutriCal is a food data intelligence software that aims to equip food businesses with pertinent information they can use to attract and retain customers. She considers the F&B and food tech industry to be in a growing phase, despite it being quite large already- in the UAE alone, it stands at approximately US$30 billion. It is overcrowded, she says, with it including food aggregators, cloud kitchens, last mile, value added softwares, and the like, which is leading everyone to look for a piece of the pie. Therefore, she advises entrepreneurs to have a clear understanding of the market and the need that their product needs to fulfill to be successful and sustainable. "Even in the food tech industry, the eventual beneficiary is a regular consumer of food, like you and me, and the same needs to be kept in mind while creating a product or solution," she says.
Soniya Ashar, founder, NutriCal. Source: NutriCal
Being attuned to the customer needs has been even more important since the outbreak of the COVID-19 crisis, Ashar says. "As an early-stage startup, our purpose is to partner with as many clients as possible from the food industry, but we are completely mindful of the fact that restaurants, cafes, and the overall food and beverage industry has taken a huge hit," she explains. "Hence, one thing that we have done is to be aggressive and more flexible with pricing. Moreover, with improvements in technology and new features that have been developed at breakneck speed, such as smart contactless menu options, highlighting immunity boosting ingredients, and so on, our platform is designed to be an investment that a business does to increase revenue and brand equity, rather than be an added expense in their profit and loss statements."
A similar piece of advice -i.e. opting to rely on in-house rather than third party solutions- is what Mark Carroll and Andreas L. Borgmann, founders of Kcal, a Dubai-headquartered food company, would like their peers to take out of the economic crisis caused by the pandemic. "Be flexible to adapt to new changes when needed, and learn from the hard times to plan and be better for the future," Carroll says. "Thirdly, focus on building your own ordering platforms to avoid relying on third-party aggregators as the main revenue stream." And Samer Zayat, founder of Al Beiruti, a Lebanese restaurant and cafe concept operating in Dubai, echoes a similar sentiment by adding that everyone in the sector should use the COVID-19 crisis as a time for reflection, and go back to the basics by focusing on their brand proposition, rather than diluting their effort on secondary strategies. "First of all, everyone has to remember that the industry is suffering as whole, and no one has reached full recovery yet. That's why everyone must focus on their internal business model, and not get carried away with what others are doing," Zayat says. "Secondly, brand value comes first- don't throw away all the effort you have invested in creating your brand by adopting temporary strategies such as aggressive discounts that might impact your long-term position."
Zooming in on their respective ventures, Ashar starts by saying that the NutriCal team had already been working remotely out of Southeast Asia, and thus the COVID-19 pandemic came to reinforce their belief that work can be done from anywhere if the right team has been put in place. "The pandemic came as a reminder that employee wellbeing, physical as well as mental and emotional, lies at the core of the efficiency of any business," she says. "Working from the office, working from home, or a combination of the two are just details relating to the same. This flexibility empowers employees to make responsible choices. On the bright side of things, it was easier to get a hold of the right decision makers, such as restaurant owners, and operations managers, since everyone was confined to one place and relatively easy to get a hold of."
Mark Carroll and Andreas L Borgmann, founders, Kcal. Source: Kcal
As for Kcal, with its 300 employees spread across three restaurant locations in Dubai and two in Abu Dhabi, the company was quick to adapt its business operations to manage the impact of the pandemic. "We implemented reduced capacity working at our central kitchen from the start, so that we could ensure that our operations continued. Our restaurants have been following government guidelines to a tee," Borgmann says. "The safety of our employees and customers comes before everything. Efficiency levels have remained as high as ever, with employees now having the benefit of finding what works best for them, whether that be continuing to work from home where possible, or socially distanced on site." Not compromising on health and safety requirements was a must for Zayat too. "While the official lockdown was three weeks, we had opted to remain closed for almost three months, taking the time to understand the new normal, and ensuring that all measures are in place," he says. "My advice to all other restaurants would be to take firm measures in enhancing all core health and safety protocols. If we all work hand in hand in doing so, this would grant our industry a faster road to recovery by increasing customer confidence in dining out."
Zayat adds that the COVID-19 pandemic has brought fast-moving and unexpected variables to the sector, forcing his team to promptly adjust their overall business strategy. "We have adopted crisis management strategies across all areas, and focused on protecting our ventures by revisiting every single input of our business model," he says. "A weak point from our pre-COVID strategy was our high dependence on mall locations, which proved to be a disadvantage as customers dining preferences shifted to non-mall, brick-and-mortar, or outdoor locations." Kcal founders grasped similar lessons, mainly relating to the company structure and operations, which resulted in streamlining several procedures. "Like working a muscle, the stress on the business has helped us to continue to grow bigger and stronger," Carroll says. "We also found that because of the established name Kcal has in the market, and our record of excellent food hygiene, we're a trusted company. Consumers now think twice before choosing a food provider, and our excellent track record and quick reaction times throughout the pandemic has made them feel more comfortable with ordering from Kcal."
Samer Zayat, founder, Al Beiruti. Source: Al Beiruti
Going forward, Ashar opines that more and more restaurateurs and cloud kitchens will want to introduce healthier menus and products in order to attract consumers who will remain committed to building and maintaining their immunity to prevent contracting the COVID-19 virus. "Our solution is a cloud-based recipe management tool with food costing and calorie calculation. It serves a tool in the kitchen and in operations management, which allows reduction in headcount by leveraging technology. Additionally, our features that allow for safe and contactless dining, such as QR Code Menu, are beneficial on the front-end to attract consumers." Borgmann says that Kcal will be focused on daily adjustments to their business and individual clients' changing lifestyles. "A prime example is our recent partnership with a local payment provider, Post-Pay, which allows our meal plan clients to have the option of spreading payments over the term of their meal plan to avoid the upfront payment that most companies demand," he says. "Our clients have appreciated this flexibility in the current circumstances."
In conclusion, Ashar explains that the overall sentiment in the sector is mixed. "There is hope for change in the future, but it is combined with slight caution," he says, pointing toward reactions from investors in the sector, "Given that the food and beverage sector has been particularly hit hard, food tech startups that allow restaurants to become more efficient, lower operating costs, and create an industry need and niche will be of interest to the investor," she adds. "Although, given these unpredictable and unprecedented times, investors have become more conscious with their investments." For Carroll, the need for tech in the food industry has become more important than ever. "The fact that luxury restaurants have now had to shift to deliveries to be able to continue the business proves just that," he concludes. "The businesses that were tech ready, pre-pandemic have not been impacted quite as much, so I would expect a higher interest purely based on the fact that they have proven to be the most robust during difficult times."