With the scent of spices, the sizzle of grills, and happy customers, the restaurant market in Saudi Arabia is booming. The Young generation with spendable cash chooses to explore new dishes, making the state a promising location for restauranteurs to grow.
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According to Mordor Intelligence, the restaurant market in Saudi Arabia is worth 23.2 billion USD (as of 2023) and is projected to reach 3.3 billion USD by 2028 at a CAGR of 7.3%.
Entering this evolving market requires thorough research and planning. You will understand the important factors required to start a restaurant business in Saudi Arabia.
How to Start a Restaurant Business in Saudi Arabia?
The steps to start a restaurant in Saudi Arabia are mentioned below:
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Select a Business Structure
Before opening a restaurant in the country, it is necessary to select a business structure. The structures mentioned below come with their own set of advantages. Management needs to make wise decisions.
- Limited Liability Company (a popular choice)
- Joint Stock Company
- Sole Proprietorship
- Partnership
- Franchise
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Establish Your Business
Your restaurant must be registered with the Saudi Arabian Ministry of Commerce and Investment. The registration process requires the submission of documents to the authority either online or in person.
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Venue and Property
One of the essential factors for starting a restaurant business is its location. Get the necessary permits from the authorities once the location is decided. While selecting a property, consider factors such as -
- Accessibility,
- Foot Traffic
- Parking etc.
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Register the Restaurant’s Name
Select a brand-new name that suits the restaurant. Next, register the restaurant’s name with the Ministry of Commerce and Investment (MCI).
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Secure a Commercial Registration (CR)
Restaurants must secure commercial registration to operate legally in Saudi Arabia. Registration can be done at the MCI.
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Food Handling Permits
You must obtain a food handling permit from the Saudi Food and Drug Authority (SFDA). The permit contains certificates of the following -
- Cleanliness
- Food Safety Training
- Following Food Storage Guidelines
- Following Food Preparation Standards
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Approval from the Health Department
The Saudi Health Department will conduct an inspection of the eatery to ensure the health and safety rules are followed. After inspection, you will receive approval from the authority.
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Obtain Necessary Licenses
The applicant needs to obtain the necessary licenses and permits in order to start operating. Secure licenses such as -
- General Business License
- Permit for Outdoor seating,
- Permits for Live Music, etc.
Cost of Starting a Restaurant in Saudi Arabia
Company formation in Saudi Arabia requires investing money in its growth and operations. The cost factors for a restaurant business in Saudi Arabia vary. There are two types of costs that the business incurs - One-time Costs and Recurring Costs.
Let us get into the cost factors of a restaurant -
- Size of the Restaurant
- Restaurant Type
- Location
- Design
The One-time costs are -
- Permits
- Furniture
- Equipment
- Legal Fees
- Security Deposit
- Tech such as POS System
Recurring costs are -
- Rent
- Salary
- Grocery
- Insurance
- Advertisement
- Electricity and Water Bills
Benefits of Starting a Restaurant in Saudi Arabia
Setting up a Saudi restaurant business has many advantages. Read further to know more -
- Growing population with spendable income
- Crowds from all over the world
- Constantly expanding market
- Support from the government
- Tech Savvy population
- Strong Location
- Tax Benefits
Visit Saudi to experience the strong culture and diversity in businesses and food. Setting up a restaurant here can become a huge success due to the supportive government schemes. Still, it is important to speak with business consultants from Commitbiz to assist you in setting up your restaurant.
What are the cultural considerations to keep in mind when opening a restaurant in Saudi Arabia?
Saudi Arabia has a conservative culture with strong Islamic traditions. As such, it's essential to respect local customs and norms when starting a restaurant. This includes ensuring that your restaurant follows halal practices, which means serving food that complies with Islamic dietary laws. Understanding Islamic dietary laws, which prohibit the consumption of pork and alcohol, is crucial. Moreover, consider factors such as gender segregation, prayer times, and modest dress code for staff. Understanding and respecting these cultural nuances can contribute to the success and acceptance of your restaurant within the Saudi community.
How can I navigate the process of hiring and managing staff for my restaurant in Saudi Arabia?
Hiring and managing staff in Saudi Arabia requires attention to local labour laws and cultural sensitivities. Ensure that you understand the legal requirements related to employment contracts, wages, working hours, and holidays. It's also crucial to provide training on cultural awareness, customer service, and food hygiene to your staff. Additionally, consider employing locals who understand the language and customs to facilitate smooth operations and better connect with customers. Building a diverse and well-trained team can enhance the overall experience for both employees and customers alike.
How can I attract customers to my restaurant in Saudi Arabia?
Marketing your restaurant effectively is crucial. Utilize social media platforms like Instagram, Twitter, and Snapchat, which are popular among Saudis. Engage with influencers and consider offering promotions during key events like Ramadan or Eid. Providing high-quality service, maintaining cleanliness, and offering a diverse menu with authentic Saudi dishes alongside international cuisine can also help attract and retain customers.