Dubai has become one of the most preferred tourist destinations for people around the world; in fact, it is one of the top 10 destinations for tourists. The government plays a vital role in the far-reaching success of Dubai, a city that is full of resorts, marvellous buildings, eye-catching sceneries and hospitality. These factors are the reason behind people migrating in search of jobs and businesses in Dubai.
The food & restaurant sector has witnessed a remarkable amount of growth in Dubai and Abu Dhabi. A market research by Euromonitor International states that there will be 19,000 outlets in addition to the restaurants in Dubai alone by 2019. Foodies from Asia, Europe, Australia, and America have contributed to the success of the restaurant business in Dubai.
But before one makes the decision of opening a restaurant in Dubai, he/she needs to follow a code of conduct and needs to acquire some information.
How to open a restaurant business in Dubai?
Opening a restaurant in Dubai might be a daunting task for a rookie. So you need to plan each and every step carefully because skipping one step might get you into trouble with the authorities. Let’s see the steps involved in opening up a restaurant in Dubai.
Step 1: Acquiring a Food & Trading licenses
The first step you need to take is to acquire your food and trading licenses from the authorities. For the food license, you need to approach the Department of Food and Safety, whereas the trade license can be obtained from the Department of Economic Development (DED), which might cost you approximately AED10,000 to AED12,000, and the Department of Tourism and Commerce Marketing (DTCM).
Step 2: Selecting a location
The next major step would be selecting the best location in Dubai. The first thing would be deciding whether to go to the mainland area or to operate within one of the free zones.
To open a restaurant in the mainland area (wherein business can be started with the support of a local sponsor), approval of the DED authorities is necessary. The mainland area might give you the option to trade, but the sponsor will hold 51% of your shares, and remaining 49% shall be with the owner.
But if you are planning to set up a restaurant in Dubai free zones, then consent of the corresponding free zone authority should be obtained. Free zone areas will allow you to hold 100% of your shares and might not require a local sponsor but might restrict your area for trade.
After choosing the right area, the next step is to choose the right locality. For example, if you have planned for an Indian or Pakistani cuisine then you need to target the right set of customers who prefer this type of cuisine. So in order to get the insight of some of the famous local areas, you need to have some expert advice or business consultation in Dubai.
Step 3: Drafting a business plan
A professional restaurant business plan will require all the necessary factors like SWOT analysis, target marketing, preparing a financial plan, preparing a contingency plan for uncertainties, market survey, research, your cash flow projections, break-even analysis, and others. Every single factor will contribute to the growth of your business.
Step 4: Estimating cost and expenditure
The last and most important thing to be considered before starting your restaurant is to have a proper financial plan ready to keep a track as to how much you need to spend. How much will this type of restaurant cost? What will be the cost of staffing and pieces of equipment? How much will the license acquire cost? Estimating all the investment and expenditure is a daunting task in a restaurant business.
Other than that, one needs to consider costs like:
- Local sponsor fee - approximately AED10,000/year
- Trade license fee for DED - approximately AED10,000 to AED 12,000
- Labor and immigration registration - up to AED8,000
- Rent of the restaurant premises - AED60,000 and above (varies by location)
Architectural Requirements for a New Restaurant Business in Dubai
- The kitchen must have an area of at least 300 to 380 square feet (if there is a tandoor in the kitchen), or 40% of the total area of the restaurant
- There should be a good ventilation facility, and the chimney should 2 metres higher than the nearest building
- Walls, floor, and roof should be washable, non-absorbent and fireproof
- There should a basin for washing the utensils, a separate basin for cleaning the vegetables, and a separate one for meat
- Storage facility for all types of food items is a must
- The drainage pipe should be at a distance of at least 2 inches from the wall
Documents Required for Starting a Restaurant in Dubai
Before you begin with your new restaurant or cafeteria business in Dubai, these are 3 main documents required to be submitted to the authorities:
- Trading license
- Food and safety license
- Non-Objection Certificate (NOC) from the local municipality of Dubai
Other than these, one can always opt for other permits like:
- Ramadan permit
- Liquor permit
- Pork permit
- Delivery permit
All the aforementioned documents are required for every old and new restaurant business in Dubai to run its activities without any interference or shutting of business by the authorities.
Even though setting up a new restaurant business might seem like a daunting feat, it is a revenue-generating mine if managed properly. The food industry is an industry which has never faced a downfall in its record. So if you are willing to set up a business in this industry, you should be able to make a fortune out of it.