Opening a restaurant in Saudi Arabia and the UAE presents exciting opportunities, but it also involves navigating distinct regulatory environments, market conditions, and consumer preferences. Since the launch of Saudi Vision 2030, the Kingdom has seen rapid growth in its food and beverage (F&B) sector, attracting both local and foreign businesses eager to capitalize on this momentum. Entrepreneurs based in the UAE have also been eyeing Saudi Arabia’s dynamic market, while the sector’s growth has led to an increased demand for foreign workers to meet the expanding workforce needs.
In this article, three industry experts share their insights on the key differences between launching a restaurant in Saudi Arabia and the UAE:
- Jil Assaf, head of strategy and development at Shawarmer
- Eddy Massaad, founder of Swiss Butter
- Ricardo Riera, director of operations at Takara Hospitality Group (THG)
Their experiences shed light on the regulatory requirements, market conditions, and consumer preferences in both countries, offering a deeper understanding for prospective restaurateurs.
Regulatory Landscape and Compliance
Opening a restaurant in either Saudi Arabia or the UAE means dealing with stringent regulatory frameworks. Both countries prioritize public health, food safety, and halal certification, but the specific regulations differ in significant ways.
Jil Assaf emphasizes that Saudi Arabia has some of the strictest health and safety regulations in the region. “The government has deployed extensive resources to ensure that businesses comply with these regulations, with government-affiliated organizations like QOOT playing a crucial role in liaising with officials,” he shares. While these efforts ensure high standards, they can also create challenges for restaurant owners, particularly with regard to compliance.
One notable regulatory difference is Saudi Arabia’s employment laws. The Kingdom follows a sponsorship work permit model, requiring restaurants to employ full staffing levels on yearly contracts with fixed wages, regardless of business fluctuations. Assaf explains that this arrangement forces restaurants to shoulder financial burdens during slow periods.
In contrast, the UAE’s regulations are more flexible but still come with their own challenges. Eddy Massaad explains that while Saudi Arabia mandates “Saudisation,” which requires businesses to hire a percentage of Saudi nationals, the UAE’s “Emiratisation” policy is more lenient. Emiratisation only applies to companies with more than 50 employees and requires just one percent of the workforce to be Emirati nationals.
Massaad’s experience in launching Swiss Butter in both countries highlights how these regulatory frameworks affect day-to-day operations. The Saudi Vision 2030 reforms have made it easier for foreign businesses to enter the Saudi market, but understanding local regulations is critical. Working with a local representative has allowed Swiss Butter to expand while meeting Saudisation policies.
Market Sensitivity and Pricing Differences
Another key distinction is the approach to pricing regulations. According to Ricardo Riera, Saudi Arabia enforces strict price monitoring through its Ministry of Commerce. “The government actively monitors prices to prevent overcharging, especially for basic items like bottled water,” he explains. This contrasts with the UAE, where market forces largely dictate prices. While this system allows for more flexibility in the UAE, it can lead to higher prices, especially in luxury areas.
Riera also points out that licensing and permit requirements vary by location within both countries. “Setting up a restaurant in Dubai’s DIFC is different from doing so in Abu Dhabi’s Yas Island, just as Riyadh’s requirements differ from those in Khobar,” he says. Despite these differences, both countries generally require a Commercial Registration (CR), VAT certificate, health and safety certifications, and compliance with Saudisation or Emiratisation policies.
Market Opportunities and Emerging Trends in Saudi Arabia
The Saudi Arabian market is expanding rapidly, presenting unique opportunities for restaurateurs. With a youthful population increasingly interested in diverse dining experiences, Saudi Arabia offers vast potential, especially beyond its major cities like Riyadh, Jeddah, and Dammam.
Eddy Massaad notes that Saudi Arabia’s focus on economic diversification under Vision 2030 has created a favorable environment for international brands. The Kingdom is investing heavily in tourism and entertainment, which is driving demand for new dining options. “Unlike the UAE, where the market is more saturated, Saudi Arabia’s dining landscape is largely untapped,” says Massaad.
Riera agrees, adding that the reopening of Saudi Arabia’s tourism sector in 2021 has further fueled growth in the F&B industry. Major events like the 2027 Asian Cup and the 2030 Expo are expected to attract both international visitors and domestic audiences, creating a growing demand for diverse dining experiences.
This market growth also reflects changing consumer preferences. “The Saudi market is relatively young and discerning, with a significant portion of the population under 30 years old,” says Riera. Casual dining and fast-casual formats are gaining popularity, while fine dining remains more niche.
The Rising Importance of Health and Sustainability
Consumer awareness of health and environmental issues is also on the rise, leading to increased demand for healthier, more sustainable dining options. According to Massaad, restaurants offering organic, locally sourced ingredients are becoming more popular. “In Saudi Arabia, sustainability is increasingly important, and consumers are looking for restaurants that reflect these values,” he explains.
This trend aligns with a broader shift towards casual dining experiences, particularly among younger Saudis. “With over 18.8 million Saudis, 63 percent of whom are under 30, there’s a growing preference for informal, social dining environments,” says Riera.
Challenges: Location, Costs, and Recruitment
Both Saudi Arabia and the UAE present unique challenges when setting up a restaurant, particularly when it comes to location, costs, and recruitment.
In the UAE, high rental costs in prime locations can significantly impact profitability. As Riera explains, “Your brand needs to be where your target audience is, but securing a location in high-footfall areas like DIFC or Yas Island comes at a steep price.” Meanwhile, in Saudi Arabia, the vast size of the country and its relatively underdeveloped infrastructure outside major cities can pose logistical challenges.
Recruitment is another significant hurdle. “Attracting skilled talent is difficult in Saudi Arabia,” says Assaf. While the Kingdom’s hospitality sector is growing rapidly, many professionals prefer to work in the UAE, where the industry is more established.
Navigating Cultural Differences
Cultural differences also play a role in business operations. According to Riera, consumer preferences in Saudi Arabia are more focused on taste and local dishes, whereas in the UAE, visual presentation and brand appeal often drive dining choices.
Networking practices vary as well. In the UAE, relationships are often built around mutual financial interests, while in Saudi Arabia, personal connections and hospitality play a more prominent role. “Saudis are extremely hospitable, and they value personal character in business dealings,” shares Riera.
Support and Resources for the F&B Industry
Vision 2030 has created a wealth of support for the F&B industry in Saudi Arabia, with initiatives aimed at strengthening local supply chains and enhancing food security. Massaad highlights the government’s efforts to provide financial support and training through programs like Monsha’at, which encourages innovative dining concepts and supports SMEs.
Moreover, the development of new entertainment hubs like NEOM and Qiddiya is driving demand for diverse dining options. As the Kingdom continues to invest in tourism and infrastructure, opportunities for restaurateurs are expected to grow.
Opening a restaurant in Saudi Arabia or the UAE presents distinct opportunities and challenges. Saudi Arabia offers vast market potential and government support under Vision 2030, while the UAE’s well-established F&B industry provides access to a diverse and affluent customer base. Navigating the regulatory landscapes, understanding market preferences, and adapting to cultural differences are key to success in both countries. Entrepreneurs willing to invest in understanding these nuances will find rewarding opportunities in the thriving F&B sectors of both nations.
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