Restaurants with strong concepts and efficient business models need not be concerned with high rents from landlords in Dubai, according to the CEO of Dubai Retail, the retail management arm of Dubai Holding.
“Look at Dubai. It’s a very tough, competitive environment, but the concepts, whether international or homegrown, that are performing well have good operating models,” Nabil Ramadhan said in an interview with Arabian Business. “They are not complaining.”
Dubai Retail’s restaurant management company, Sarood Hospitality – formerly known as JRG Dubai – has a portfolio of 25 F&B brands, including 11 homegrown concepts. Its restaurants include The Noodle House, Al Nafoodah, Pierchiec, Khaymat Al Bahar, Trattoria Toscana and Flow.
While Ramadhan declined to comment specifically on other landlords in Dubai, he said “it’s all about supply and demand. If you, as an operator, run your business efficiently and effectively….it all comes to sales,” he added. Ramadhan acknowledged, however, that high rents in some cases led to slower growth, but said that restaurants with efficient business models will still grow.
“The growth percentage probably drops, but not to negative,” he said. “If they were at 7 or 8 percent, they are at 3 to 5 percent. At the same time, you have certain landlords who have adjusted to the market,” Ramadhan added. “We need to be fair to the landlord. Additionally, Ramadhan said restaurants that find themselves with rent to sales ratios of 50 percent, the “model is wrong”.
“That’s the challenge. It’s not the landlords’ fault if the rent to sales ratio is too high,” he added. “There is something wrong with your concept or the way you promote it, or the original business model. It’s a two-way street.”
