30-40 pc restaurants face closure
KUWAIT CITY, Dec 27: Speaking of the restaurants sector, establishing new outlets has lost the momentum in the face of fierce competition as well as the purchasing power that many entrepreneurs feel have not reached the expected level, reports Al-Qabas daily quoting knowledgeable sources.
First of all “our expectations are that in 2019 and 2020 we may see the closure of 30% to 40% of the existing restaurants. The next two years will be very difficult for famous restaurants and the owners of these restaurants to adapt themselves to this reality to be able to withstand if they can.
The sources said the establishment boom that was witnessed in the last five years has witnessed the entry of ‘hooligans’ into this sector. It is enough to look at the names of some restaurants to know that the owner is not a professional and when they ‘stumble’ they scream for support from the government.
In this field there are those who enter this market without research and without feasibility studies. They do not know that a restaurant is a big responsibility for people’s lives and health.
They may not know that professional restaurants spend on their human resources, especially on ‘chefs’, a lot of money, especially in training courses outside the country. According to statistics released by the Ministry of Commerce and Industry, Kuwait witnessed the establishment of restaurants during the past five years, more than the number of restaurants established since the independence of Kuwait until 2013. Between 2014 and early December 2018, the Ministry of Commerce issued 4,237 commercial licenses for restaurants in Kuwait.
In 2018, commercial licenses for restaurants increased by 16% compared to 2017. The sources pointed out that the market activity for restaurants accounts for 70.6% that provide food and catering services, which reached the high number of licenses issued until the beginning of December to 6,000 compared to the other activities The figures show that 24% of the light food business, which witnessed its growth in 2018, reached 53% compared to 2017.
The lowest rank was in the dual activity sector (restaurant and coffee shop) at 5.2%. This activity, according to statistics, is shrinking.
The licenses for its establishment witnessed a significant decline of 76.7% in the current year compared to last year. The restaurant activity is different from the rest of the activities of the other commercial licenses, since the preparation of food is within the restaurant premises, an area of not less than 25 square meters, which is different from the activity of light snacks.
A number of restaurant owners estimated that the establishment of a small or medium-sized restaurant in Kuwait would require a capital of between KD 20,000 and 120,000 depending on the type, quality, size and location of the restaurant.
The average revenue of the restaurant in the above size is between 600 to 1,200 dinars per day, and the net profits achieved are from 10 to 50%, depending on location, turnout, excellence and other factors. Based on these ratios, the average consolidated sales of this business alone may reach to 1.22 billion dinars annually.