The foodservice industry in Saudi Arabia is poised for significant growth, with the Saudi Arabian General Authority for Investment (SAGIA) forecasting an annual spending increase of 6% over the next five years. As of 2018, the food and beverage (F&B) sector contributed 10% to the Kingdom’s gross domestic product (GDP), highlighting its crucial role in the overall economy. JLL’s most recent report delves into the key trends set to shape the future of foodservice in Saudi Arabia, amidst a backdrop of evolving demographics and economic diversification efforts under Saudi Vision 2030.
The Growing Importance of Culinary Tourism
Culinary tourism is gaining traction globally, with travellers increasingly seeking unique and authentic food experiences. However, Saudi cuisine remains relatively unknown outside the region. The Culinary Arts Commission is actively working to change this by promoting the rich and diverse culinary heritage of the Kingdom. With initiatives like joining the Delice Network and hosting international culinary events, Saudi Arabia aims to place its cuisine on the global map.
Key Drivers of Growth
Several factors are driving the anticipated growth in the Saudi foodservice industry:
- Demographic Shifts: Saudi Arabia boasts a young population, with 53% of its citizens between the ages of 15 and 44. This demographic is more likely to spend on dining out and is open to new culinary trends, making it a key target for the foodservice sector.
- Tourism and Entertainment Expansion: The government’s efforts to diversify tourism beyond business and religious purposes are reshaping the retail and F&B landscape. Planned investments in entertainment, such as the development of cinemas and the hosting of major sporting events, are expected to boost demand for diverse and high-quality foodservice options.
- Economic Diversification: Vision 2030 outlines significant investments in various sectors, including F&B, to reduce the Kingdom’s reliance on oil. This includes enhancing local food production, fostering innovation in foodservice, and attracting international culinary brands.
Emerging Trends in Saudi Foodservice
The report identifies several trends that will shape the future of foodservice in Saudi Arabia:
- Shift from Fast Food to Fast Casual: There is a noticeable move towards healthier, more experiential dining options. Fast casual dining, which offers higher quality food and a better dining experience than traditional fast food, is expected to grow significantly.
- Rise of Home-Grown Brands: The market is seeing an increase in local brands that offer unique culinary experiences. These home-grown concepts are expected to compete effectively with international chains, particularly those that focus on health and sustainability.
- Growth of Delivery Options and Dark Kitchens: The demand for food delivery is on the rise, driven by convenience and changing lifestyles. Dark kitchens, which focus solely on food preparation for delivery, are becoming increasingly popular in major cities like Riyadh and Jeddah.
- Healthy and Sustainable Eating: As health consciousness grows, consumers are seeking healthier menu options. This trend is leading to the emergence of brands dedicated to health and wellness, such as Sinless and Yogi, which offer nutritious, locally-sourced dishes.
- Emphasis on the Dining Experience: There is a global shift towards valuing dining experiences over mere convenience. This trend is reflected in the rise of food halls and dining concepts that provide unique, immersive experiences.
Regional Insights
The report provides detailed insights into the restaurant markets in Riyadh and Jeddah:
- Riyadh: The capital city has a high concentration of fast food outlets but is seeing growth in fast casual and casual dining establishments. There is also an increasing supply of high-quality restaurants in the northern parts of the city.
- Jeddah: Known for its vibrant domestic tourist market, Jeddah has a higher ratio of restaurants per capita compared to Riyadh. The city is witnessing a rise in fine dining and fast casual outlets, along with a growing presence of international culinary brands.
Conclusion
Saudi Arabia’s foodservice industry is on the cusp of transformation, driven by demographic changes, economic diversification, and evolving consumer preferences. As the Kingdom opens up to international tourism and invests in its entertainment sector, the opportunities for growth in the F&B sector are immense. Embracing these trends and leveraging the rich culinary heritage of Saudi Arabia will be key to capturing the hearts and palates of both local and international consumers.
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Photo top of page – courtesy of STA
