Do you want to join the booming Food and beverage industry in Saudi Arabia? Taking your share from the winning industry by opening a restaurant in Saudi Arabia is a very good choice. Yet a challenging one. Saudi Arabia’s food industry is estimated at 22.4bn worth, and an almost 9% CAGR from 2021 to 2026. The market is as varied of competitors as it’s worth. You need to take all the essential steps first in order to run your restaurant and get to scaling and growing faster than your competitors.

In this article, we’ll explore everything you need to know to get started with the 6 crucial things to consider before running a restaurant in Saudi Arabia.

#1 Budget your expenses

It’s almost impossible to know for sure how much it would cost you to open a restaurant in Saudi Arabia. But there are crucial elements you need to pay attention to and ask around in the location of your choice so you can set an estimated budget prior to opening your business.

The cost of opening a restaurant in Saudi Arabia can be divided into two sections:

• One-time costs
• Recurring costs

One-time costs

These can be summarized in the following points:

• Lease security deposit
• Business licenses/permits
• Legal/processing fees
• Space improvement, decoration
• Kitchen equipment for cooking
• Tables, furniture, and tableware
• Staff uniforms
• Operating technologies (POS systems and more)

Recurring costs

Recurring payments can be summarized in the following points:

• Space rent: The recommended space is 250 sq/m.
• Employee salaries
• Food and beverage costs
• Utilities: electricity, water, etc.
• Marketing and advertising
• Insurance and permits

#2 Prepare the required documents

The required documents for opening a restaurant in Saudi Arabia can be summarized in the following points:

• Proof of ID and address
• Passport copy
• Copy of trade name verification
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Bank reference letter

You need to get the required documents and licenses so you can run and operate your business in Saudi Arabia without the risk of having it shut down right after because of a missing document or so. Having to shut your restaurant over governmental disputes can hurt your reputation and give you hard time re-establishing your authority in the area.

You can hire an agency or consult a legal expert to help you prepare and get everything ready for operation.

#3  Use a restaurant management system

One of the major factors to be considered while planning a restaurant is integrating the restaurant management system and training your staff to use it effectively.

Without a restaurant management system, you and your staff are prone to err. So the best way to eliminate errors and kick-start your restaurant for success is to plan your operations and workflows ahead. One of the most important tools in a management system is the POS to seamlessly handle and sync all orders and payments.

Read the benefits of these systems in the below list:

1. Improve customer relationships
2. Track sales with analytics and automatic reports
3. Harmonizing your staff communications
4. Reduction of manual tasks and errors
5. Spot gaps and improve performance
6. Increase revenue and launch virtual brands
7. Manage your entire operations from one screen
8. Closely control your delivery performance

Use Grubtech’s restaurant management system and get a competitive edge over your competitors. Read more here.

#4 Create a thorough market research

We can’t stress this enough, the food service industry in SA is crowded with successful restaurant brands. These will be your competition. Plan your concept and view the market for competition and create a competitive analysis to know your competition and plan accordingly. Thorough market research will help you identify the strengths and weaknesses of your competitors, which will give you a competitive edge.

In your market analysis, make sure to tackle these points:

• Prices
• Concepts
• Target audience
• Marketing strategy
• Menu design
• Customer reviews and reputation
• Weakness points and strengths

#5 Design a profitable restaurant menu

Now we get to your menu design. In this regard, we went to the menu engineering expert, Gregg Rapp. As mentioned in our previous blogs on the matter, he gave us insightful advice on how certain techniques in a menu can double up any restaurant’s profit margins. Did you know customers spend an average of 109 seconds scanning a menu? Most of those seconds are spent on the first and last items.

Here are some critical things to consider when designing your menu:

• Highlight one item in each section because too many highlighted items will lose the purchase incentivizing effect of it.
• Use illustrations wisely and tone down the usage of photographs, as Rapp suggests, photographs of every meal are now associated with cheap restaurants.
• Don’t use dollar signs since dollar signs beside every item become the most thing that customers see, hence, they’ll care more about the price than the meal.
• Place prices at the end of meal descriptions, making it the least important thing to look at.
• Use descriptive meal names and mouthwatering descriptions.

Also, make sure to analyze whether or not your competitors are applying those techniques.

#6 Consider online ordering and delivery

Saudi Arabia is home to online food ordering and delivery services. You’ll notice this in your market research, but just in case you don’t, we’re here to prep you.

Saudi’s online food delivery market is estimated to reach $4.71bn in 2022 with an annual growth rate of 10.98% (CAGR) from 2022 to 2027. That said, it’s estimated that the market reaches $7.93bn by 2027.

Here’s a list of popular online food ordering platforms in Saudi Arabia:

• Hunger station
• Careem
• Jahez
• ToYou
• The Chefz
• Mrsool

And there’s more out there, make sure to get your restaurant featured on those platforms to leverage every chance of revenue increase and brand awareness.

Conclusion

Starting a restaurant in Saudi Arabia can be very challenging, but once you set your location, concept, and market analysis. There’s nothing stopping you but finding an effective restaurant management system that’d keep you ahead in every pitfall. Cloud-based management softwares have been reshaping the food industry for the past 10 years. It’s about time you get in touch to help us get your restaurant business up and running and harmonize your entire operations from one screen. Click here for a quick a demo

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