The largest Food and Beverage (F&B) industry in the Middle East is in Saudi Arabia, valued at USD 45 billion. In fact, Saudi Arabia is rapidly emerging as one of the top food destinations in the world. According to the Ministry of Investment of Saudi Arabia (MISA), the spending on foodservice in the country is expected to grow at a CAGR of 6% for the next five years. Attributing to this, it can be really lucrative to start a restaurant in Saudi Arabia.
MISA is planning to invest USD 27 billion to boost Saudi Arabia’s tourism, which is one of the major drivers for the F&B industry in the country. As per a survey conducted in Jeddah and Riyadh by JLL, Refuel & Relax units have become the second most common form of F&B outlet in the country and currently dominate the ‘social’ commercial spaces in Saudi Arabia.
This format accounts for ~26% of all F&B units in both cities. So, the concept of a rooftop restaurant can leverage the apparent trend and ride the market expansion. However, starting a restaurant in the Kingdom Of Saudi Arabia (KSA) is quite a task. This blog post will provide a step-by-step guide on how to start a restaurant in Saudi Arabia.
Factors Worth Remembering To Start A Rooftop Restaurant In Saudi Arabia
Like any other country, KSA also has specific business conditions that need to be fulfilled before starting an F&B unit. The factors below will help you start a rooftop restaurant in Saudi Arabia:
1. Decide Ownership
Although anybody can start a restaurant in the KSA, the laws are slightly different for the locals and the non-KSA nationals. A local needs the necessary licenses, ideal location, business plan, and adequate capital to open an F&B outlet.
On the other hand, foreigners can either start a business in partnership with a local or own 100% of the business. However, the 100% ownership will be subject to certain conditions, some of them being not-exhaustive:
- Must have minimum cash capital of SAR 30 million
- Must have an operational presence in at least three global markets
- Committed to investing minimum capital of SAR 300 million over five years
2. Develop The Concept
Nowadays, F&B joints serve more than recreation. Hence, a food joint must have a theme that cajoles their target market’s imagination. It is essential to analyze the target market, assess potential clients and evaluate market competition before preparing the draft plan and eventually finalizing the concept. A well-researched concept is more practical and easier to implement.
3. Site Selection
Location is a critical factor in the hospitality business. Poor site selection is considered one of the leading reasons for business failure. Hence, aspiring restaurateurs must be careful when selecting the location for starting their business. The criteria for site selection include parking space, visibility, accessibility, and base population. Some of the most prominent locations in the country are Riyadh, Jeddah, and Makkah.
4. Conduct A Feasibility Study
Although accumulating resources, developing a concept, and securing a shop in a prime location is key to successful hospitality business in any country, it is necessary to conduct a feasibility study to confirm the validity of the idea. A feasibility study can be broken down into six categories – business, market, technical, location/site, social, and economic strategy.
This will help in assessing whether your available resources meet the technical requirements of the business. It also involves cost-benefit analysis, determining the cost and benefits associated with the business and its viability.
5. Obtain Business And Food License
Now, let us look into the different licenses required to start a restaurant in KSA.
Service License
In Saudi Arabia, the new food establishment owners need to secure permission from the Ministry of Commerce for a business trade license. The government might demand approval of appropriate additional licenses depending on the other associated offerings of the F&B outlet.
- Payment of license fee of SAR 2,000 annually for five years (maximum)
- Payment of SAR 10,000 for the 1st year to obtain services from MISA investors’ relations centers. This fee is applied as a subscription fee in the following years (SAR 60,000)
Food License
Besides the service license, the food establishment also needs to get a food license from the Saudi Food & Drug Authority (SFDA). This license guarantees that your foodservice business meets the stringent municipal regulations pertaining to venue safety, food hygiene, and business licensing. This also helps in maintaining a database for all F&B outlets in KSA.
6. Promote Before Opening
It is essential to promote your rooftop restaurant before opening the doors to your first customer. It can be successfully done by:
- Using Instagram, Facebook, and Twitter to spread the brand identity among the young generation
- Building an easy-to-navigate website that showcases the brand and offers the basic information
- Creating ads or getting featured in the local dailies
7. Invest In Technology
Investing in an efficient POS system allows food establishment owners to concentrate on their core business while the POS system takes care of the operation management.
Cloud-based restaurant management software helps automate day-to-day operations. You can leverage this technology to monitor daily operations without much involvement efficiently. Some ways in which it can assist your business are:
- Manage billing on a daily basis, which is one of the most critical activities in an F&B outlet
- Better management of inventory levels resulting in optimum capital utilization and lower probability of losses
- Generates real-time and accurate reports that facilitate close analysis of operations
- Helps in sending out customized emails, and SMS, and market loyalty programs to customers
Starting a rooftop restaurant in Saudi Arabia is quite a task, but it can be an enriching experience if done correctly. KSA provides the perfect platform for aspiring restaurateurs and offers excellent growth opportunities.
