Gourmet sandwiches that cost a steep Dh35-Dh40 and over don’t seem to taste as good in a less healthy retail environment. But you won’t have the head of McDonald’s UAE complaining too much about that.
“All these newcomers (high-end burger chains) in the last two to three years focused only on the niche customer ... and that was always going to be a very limited market,” said Rafic Fakih, Managing Director of Emirates Fast Food Co., which operates the McDonald’s network in the UAE. “It was fine as long as the market was growing at 5-10 per cent during that period.
“But, in 2016, you don’t have that growth any more, and the consumers’ capacity to buy has changed with that. I can see how every F&B business is suffering — but we are the ones less affected by it all. And that’s because what we offer on the menu works for everybody — the family, the young as well as the millennial.”
Fakih’s mention of the millennial is deliberate. It was felt that this buyer-demographic would easily gravitate towards the more sophisticated experience the new age burger joints can offer (at a price premium, of course). Industry estimates reckon that there are more than 40 brands competing in the burger space, with anywhere between 10 and 20 of these joining in over the last two years. With each new entrant touting the premium and healthy aspect of what they are flipping, it was felt the heat was being turned on McDonald’s growth.
But Fakih runs through the numbers to show that his network is not hurting. For McDonald’s UAE, its outlets at The Dubai Mall, the Mall of the Emirates and Deira City remain the most popular within its 140-plus network. An average month would see around 8 million orders. And there are plans in the works to capture more transactions where possible.
Within the wider retail space in the UAE, F&B — especially the quick service providers — is rated as the only category that has been able to withstand the worst of the dip in consumer spending. The impression has only consolidated further with the number of new F&B centred locations that have sprang up in Dubai and elsewhere. City Walk has been an obvious attraction and shortly there will be the F&B clusters at the Marasi Promenade in Business Bay and the one within Dubai Parks & Resorts in Jebel Ali. Later this year or early next, Palm Jumeirah will play host to the upscale Pointe right at the tip of the island.
Apart from new locations, McDonald’s is also aiming for a lot more besides within its stores. There could be an app upgrade, which would allow placement of orders. The pilot tests haven’t started as yet, but Fakih says a launch next year is an option. As and when this feature is added, it should come in handy with the delivery side of the business, which has turned in double-digit growth in the last two years.
Then there are the changes that will take place within the outlets. Some of the bigger ones have already transitioned to include a cafe element, and that has caught on quite a bit. “Worldwide, McDonald’s is one of the biggest sellers of coffee; in the UAE more and more of our outlets will make the switch to being open 24X7,” said Fakih. “The breakfast possibilities will be expanded further.”
And more in-store cashless options too will be on the menu. Currently, these transactions make up 10 per cent of the overall at its UAE network. (The cashier does not have to key in the total sale amount onto the pinpad, which shows the amount when the payment option is clicked. Also, the buyer does not have to enter a signature for transactions below Dh100.)
If a patron’s taste does go beyond a standard burger, McDonald’s UAE will have an answer for that as well. “New menu options on kiosks will be added to customise the order, if someone wants a more sophisticated sandwich. We do — and will — cater to all tastes.”