Model 1: the FSR (full-service restaurant)
This is the most popular type of F&B business, modeled on the full experience of dining, service and delivery. It requires the most resources to open and operate. The average rents for a prime location from Downtown Dubai to Jumeirah range between USD 70 to USD 275 per square foot. With an average lease space of 1,500 to 5,000 square feet needed to execute the full dining and delivery experience, annual leases could be anywhere between USD 70,000 to more than USD 1,000,000.
Design and build averages between USD 150 to USD 600 per square foot. Even if bigger units require higher operation costs, they can turn over more seats. F&B is all about the average spend of a person versus how many people are served daily. Building a strong concept, great product, maintaining industry standards in operational control are all important to see profitable returns. However, FSRs are ultimately less scalable, with branches based on prime locations in different target market locations.
The average capital expenditure (capex) is USD 500,000 upward for a prime location, Instagram-friendly interiors, great product and overall an excellent brand with marketing and staff budgets included.
Model 2: the dark kitchen and delivery unit
This is currently the fastest growing sector in F&B, with many dark kitchens offering affordable rental prices. The average size of a dark kitchen is around 19-21 square meters.
To rent a space with no equipment can cost USD 2,000 to 2,200 per month, while spaces with kitchen equipment start at USD 4,700. In order to ensure profitability, the location would need to fall within a strong delivery radius that’s highly populated.
If an outlet needs to purchase kitchen equipment, the costs can range from USD 30,000 to USD 100,000 depending on what is required. Two of the benefits of creating a dark kitchen model is that you can run multiple brands out of one kitchen, and no service staff are required.
The most affordable capex for a dark kitchen starts at USD 100,000.
Model 3: the hole-in-the-wall concept
With an average size of 1,000 square feet, the hole-in-the-wall restaurant model has become very popular since the pandemic began. These types of venues thrive on word of mouth. A small and focused menu is required, and any cuisine can be used with correct price and portion planning.
Rents can be as low as USD 30 per square foot depending on location, and costs for staffing and interior design will be minimum due to limited space.
In order to be successful, the hole-in-the-wall venue needs a viable residential and commercial mix along with an excellent delivery plan. This model is very scalable and can be considered for expansion as well as franchising.
An average capex of USD 250,000 is required for a smart location, great product and packaging, online presence as well as excellent marketing and HR budgets.