A recent study by the strategic consulting and market research firm; BlueWeave Consulting revealed that the Saudi Arabia Cafés Market was worth USD 6,271.0 million in 2021 and is further projected to reach USD 16,299.2 million by the year 2028, exhibiting a CAGR of 13.1% over the analysis period of 2022-2028. The Saudi Arabia cafés market is booming because of the growing urban population base, massive product awareness, and changing societal norms that are creating opportunities for restaurant and café owners across the country by meeting the demand for high-quality food as well as changing tastes and preferences due to western influence.
In addition, the tourism industry in Saudi Arabia is undergoing a drastic change owing to the efforts of the private and public sectors to develop their tourist base and the purpose of visiting Saudi Arabia. Therefore, the number of tourists visiting the country is increasing, which is boosting domestic tourism. Hence, impacting the demand of cafés in the country leading to the growth of the Saudi Arabia Cafés market during the forecast period.
Drivers
Increasing Internet Penetration Boosting the Demand
Major technological advancements in the Saudi Arabia café market have facilitated the development of online platforms. This has resulted in the expansion of the online café services industry. This is because internet accessibility, feasibility, user-friendliness, wide restaurant selection, and convenience of the online café services is providing a better customer experience. During the Covid-19, the strict lockdown restrictions compelled restaurants to completely shift to home delivery services. Various food delivery applications operate in Saudi Arabia, such as MRSOOL, UberEats, Lugmety, HungerStation, Talabat, Toters, etc. As most people have become acclimatized and addicted to online platforms, the demand for online food delivery will reach 15.9 million users by 2026 in Saudi Arabia. This is because contactless delivery and cashless transactions are gaining momentum among the youth population.
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Challenge
Increasing health consciousness and the growing rate of obesity
One of the primary issues Saudi Arabian cafes face is the rise in health consciousness and the country’s rising obesity rate as individuals avoid fried and unhealthy foods and favor more home-cooked meals.
In Saudi Arabia, obesity and overweight are particularly concerning trends. In Saudi Arabia, one out of every five adults is overweight, and more than half is obese. According to information provided by the World Bank Group in 2022, Saudi Arabia is aiming for a 3 percent reduction in obesity and a 10 percent decrease in the prevalence of diabetes by 2030 as part of Vision 2030, its strategic plan to lessen its reliance on oil, diversify its economy, and develop public service sectors like health and education.
Additionally, rising raw material costs push up costs and lower profit margins for manufacturers. Additionally, despite rising raw material costs, the vendors are operating on poor profit margins as a result of the increased market competition between them.
The Beverages Segment Comprising Coffee Accounts for The Largest Market Share in the Saudi Arabia Cafés Market
The beverages segment comprising coffee accounts for the largest market share due to its increasing popularity and demand over recent years as well as Asia and North America are the largest exporters of coffee across Saudi Arabia. Next shakes in the Beverages segment are also of high demand among the consumers of the country but due to the lockdown, their sales dropped as the companies were unaware of the online platform and could not cater to it online. But due to rising disposable incomes as well as changing tastes and preferences of consumers demand shakes is likely to bounce back and impact the growth of the Saudi Arabia Cafés Market during the forecast period.
Western Region Segment Accounts to Hold the Largest Share in the Market
The western cafés market is growing due to rising disposable income, increased internet connectivity, and changing lifestyles and preferences. The region is expected to remain the most dominant region during the forecast period as well. Today, coffee has replaced traditional beverages as a staple of the contemporary lifestyle in every region of Saudi Arabia. The hospitality industry’s fastest-growing sector globally is the cafe industry. Five years ago, one can easily count the number of cafes in Jeddah area but there are a lot more now. Mohammed bin Abdul Hakim Al-Saadi, a Saudi businessman and investor in restaurants and cafes, said that the sector has fully recovered from the coronavirus (COVID-19) pandemic, thanks to various support packages provided by the government, which mounted 150 initiatives for the private sector and its workers.
Impact Of COVID-19 On the Saudi Arabia Cafés Market
The pandemic had a major effect on Saudi Arabia’s tourism sector which is directly linked to the cafe market as well. A large number of pilgrims travel to well-known holy places including the Kaaba, the Great Mosque of Mecca, the Prophet’s Mosque, and others every year. Beginning in March 2020, the government would no longer let tourists and abroad pilgrims from at least 25 nations due to the coronavirus. The Saudi Arabia café market was impacted by the suspension of domestic and international travel later in the month since people were forced to stay at home.
The pandemic has significantly impacted Saudi Arabia’s café industry, causing changes in dietary preferences, a decline in tourism, and a rise in online services. Due to the government’s stringent guidelines during the pandemic, all cafés had to close, forcing them to switch to delivery services at home. Due to the fact that since most people preferred the flavor of a specific café, this further boosted the demand for online food orders. The worst-hit industry is in-cafe dining due to regulations requiring social distance, travel restrictions, and a general reluctance for people to enter larger gatherings. As a result, more cafes started closing across the region, which lowers their profits. For instance, HerfyFood Services Company in Saudi Arabia reported a 16.40% decrease in revenue from 2019-20 as just a result of COVID-19’s effects on the nation.
Competitive Landscape
Key players operating in Saudi Arabia Cafés market are Sulalat Coffee, Applebee’s, Bateel, Starbucks, Elixir Bunn Coffee Roasters, T.G.I. Friday’s, Brew92, Chili’s, Bafarat Café, Java Time, Sizzler House, dr.CAFE COFFEE, Café Magad, Fuddruckers, Boho Café, Outback Steakhouse, Derby Coffee International, and other prominent players.
There are strategies used, such as strategic alliances, contracts, mergers, and partnerships. As the café market depends on word-of-mouth and client retention, industry participants are concentrating on it. Additionally, cafes in Saudi Arabia are investing in Wi-Fi-enabled coffee makers that can brew coffee to suit each user’s distinct preferences. For instance, in 2019 Starbucks started utilizing reinforcement learning technology to give customers who use the Starbucks mobile app a more customized experience.
- May 2022: In order to elevate dinner and a movie, Applebee’s is soaring into summer and collaborating with the highly anticipated Paramount Pictures blockbuster, Top Gun: Maverick, which opens in theatres on May 27. Customers who dine in, order to go, or order delivery from their local Applebee’s using the Applebee’s website or mobile app and spend $25 or more in qualifying purchases in a single transaction are eligible to get one free* Fandango movie ticket.
- February 2022: TGI Fridays, the newest and hippest place for casual dining, has reopened in the Ibn Battuta Mall. As the first restaurant in Dubai, United Arab Emirates, to reopen with a 360-degree makeover that emphasizes its modern and contemporary decor, the well-known eatery makes a statement about the city’s food scene
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