Life as we know it has changed beyond our belief, and the rug has been pulled from under our feet as businesses in the UAE have to deal with new challenges to survive the COVID-19 pandemic every single day. The food and beverage industry is no exception. The second largest sector in the UAE, it has been hit drastically over the past few months, with many establishments having to close their doors and cease operation.
Before the pandemic really took hold in the Middle East, we were having a great year at RMAL Hospitality, especially for our Wagamama business. Sales were up and increasing, we were developing new menus, and we were also set to grow the business with the launch of new restaurants.
Set to be our best looking restaurant yet in the Middle East with new design elements and upgraded finishes, the new Motor City site for Wagamama was ready to open, but like with many other food and beverage companies in the region, we need rent relief support from the landlord in order to make this possible.
The rent was agreed long before the COVID-19 pandemic, but in this new world whereby restaurants can only operate with social distancing, coupled with zero tourism and no events allowed, the original deal that was signed is no longer feasible. There have been reports in the media about landlords reducing rent to support F&B businesses, in actual real life this isn’t the case.
Landlords that refuse to offer any rent relief in the form of a rent-free period, a TOR arrangement, or even consider these for a limited time, are adding to our pain. They cannot expect us to open regardless and be in a negative cashflow and NP situation. For us, without any relief our new unit will remain closed for the foreseeable, unless our partners decide to cooperate and offer some form of support.
I don’t expect a market recovery until Q4 of 2021 but not everything is doom and gloom. A challenging climate is a great opportunity for new players to enter into the F&B space. The barriers to entry will be much lower, talented workforce is up for grabs and there is plenty of time to develop a winning strategy before you get to the execution stage.
But first, this is a time where UAE businesses need to come together to support each other to secure longevity in all areas of business, especially the landlords. All we want is to see the UAE’s thriving food and beverage sector back on its feet, but that is going to take people looking at the bigger picture and offering support in this time of need.
About the author
Elias Madbak is the managing director of RMAL Hospitality – operators of wagamama, Trader Vic’s and Marco Pierre White Restaurants