How to Start a Food Delivery Service Business in the UAE?

by Zaara 06, Jan 2022

How to Start a Food Delivery Service Business in the UAE?

It is a widely known fact that the UAE's Food and Beverage industry is enormous - and is only expected to get bigger. According to the estimates, the size of the F&B market is approximately AED 142 billion with projections for growth up to AED 145 billion by the year 2021.

More and more individuals/families are currently drawn towards meal delivery subscriptions, mainly for its convenience. Additionally, food delivery businesses offer home-cooked meals, healthier options than what their fast food and restaurant delivery counterparts provide.

According to the recent survey, 60% of the UAE consumers use an app to order food - that's compared to just 18% in the US. The market's strength is highlighted by the recent news that Zomato has sold its UAE food delivery arm for USD 172m. Meanwhile, UAE startup success story Careem has also recently announced plans to raise USD 150m to start a food delivery arm to break into this lucrative market.

Looking at the number and overall future trends, the food delivery business presents a massive opportunity for entrepreneurs with the skills and the knowhow to see success in F&B. If that sounds like you, there's more good news – with the right support, applying for a food delivery license in Dubai can be incredibly simple and straightforward.

Guidelines for Opening a Food Delivery Service Business in the UAE

If a restaurant can generate 150 to 250 orders a day through the online platforms, then the following is likely to happen,

  • It can negotiate a commission rate of 15-18 per cent of the transaction value;
  • The online platform also has an incentive to promote the outlet actively on its site;
  • It may again run above-the-line campaigns featuring the F&B brand;
  • The platform monitors the restaurant's performance with weekly MIS (Management Information System) reports and performance metrics to enhance the customer experience;
  • It could provide free delivery and free commission weeks to promote the restaurant further.

But if the restaurant's order volumes are low, then the operator will need to pay 25-30% as commission to the online service provider.

Procedure for Incorporating a Food Delivery Service in the UAE

With ongoing concerns around the effects of COVID-19 on the food and beverage industry, the delivery has never been more critical. Here are the steps to open a food delivery service -

  1. Decide on the business activity. The essential thing here is that your chosen activities align with those on the Department of Economic Development (DED) list.
  2. Now, its time to choose a trade name. Be aware that you must abide by a strict set of naming conventions here in the UAE. In short, you should avoid any offensive or profane language. Avoid names of well-known organisations and avoid abbreviations if naming your company after yourself. You must also check that your chosen name is available to register.
  3. You can apply for your business license. You'll be required to provide a few information and some essential documentation, including:
    1. Completed application form
    2. Passport copy of the proposed owner or owners
    3. Two colour passport size photos
  4. Finally, unless you already have a valid UAE residency visa, you'll need to apply for one. Just like applying for your business license, the visa application process can be incredibly straightforward with the right guidance.

Building a Food Delivery App

The most crucial part of opening a delivery service has a workable application. Accepting orders just by phone or website will put you outside of a large market, so building a mobile app is a must. True, building an app requires additional costs, but it is money well spent due to the extra level of comfort it offers to your consumers.

So first you should have a good idea about the UAE and the customer trends. Researching this is a jumping-off point.

Then, unless you possess app-building skills, the best strategy here is to work with an established company that specialises in mobile app design. Costs can vary enormously, so it depends on the level of functionality and design that you need. The key is to work with developers who are in it to help you achieve success.

EndNote

There you have it. Working with a business formation specialist means your food delivery service can be up and running in no time. With more and more people wanting to avoid restaurants, your app could help bring a variety of Dubai cuisine into people's homes.

We can help you with obtaining a license for your food delivery service business in the UAE. Get in touch with us today for more information.

 

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