Skip to content Skip to Search
Skip navigation

UAE restaurants call for rent cap as inflation bites

Supplied
Bombay Brasserie in Dubai
  •  Caps help protect both restaurants and consumers from rising prices
  • For well-run restaurants, rent accounts for up to 12% of total costs

UAE restaurant operators have called on the government to introduce a cap on how much landlords can increase rents.

A survey carried out last month by the UAE Restaurant Group (URG), a trade body which represents around 15,000 outlets, found that 63 percent of respondents said rent renegotiations was their biggest focus for 2022, followed by staff welfare (58 percent), and price increases (56 percent).

Rental contracts can vary, from an agreed base rate to a percentage of revenue, or a combination of both.

Naim Maadad, chief executive and founder of Gates Hospitality and a board member of URG told AGBI that rising rents “continue to be a massive burden on businesses” and “stricter caps in place would definitely help protect both restaurants and consumers from rising prices”.

Rayyan Rizvi, managing partner at Yoko Sizzlers, commented that, while some landlords were flexible during the pandemic, rising rents is the main reason “for many promising businesses going bust”.

“Because there is demand, therefore landlords don’t mind evicting their tenants as they already have new tenants lined up even before the previous one is evicted. But if rents are controlled by the authorities, it will be beneficial for businesses and it is long due,” he added.

Nadine Benchaffai, a partner at Ella’s Eatery on Palm Jumeirah, said she has had experiences where rents have doubled overnight. In addition to rental controls, she also called for more flexible terms and conditions in leases.

“Ultimately it would be better to work well with landlords and have a long-term approach. I’d rather sign much longer leases to give us protection with a reasonable break clause such as three months’ notice and three months penalty. That would help protect the capital we invest at sites and at the same time give us a way out should things not work out,” she said.

Maadad said, for mature well-run restaurants, rent accounts for up to 12 percent of total costs. However, not all restaurants are facing big rent hikes.

“For us, the rents haven’t increased,” Deepak Bhatia, CEO of Snowbell Restaurant Management, which operates brands such as Sugar Factory, Ming’s Chamber and Peppermill, said.

“On the contrary, we are negotiating for a reduction in rents. We have multiple brands, and a group [such as a shopping mall operator] with such a capacity arguably has the bandwidth to do the same.”

Despite the issue of rising rents, the URG survey found that 69 percent of its respondents said they were in a stronger financial position than pre-pandemic times in 2019 – more than double the 29 percent who reported the same sentiment in 2021.

Latest articles

Turkey foreign property sales

Foreigners turning back on Turkish real estate

Foreign buyers are increasingly shunning the Turkish property market, wary of high prices, the expensive cost of living and a less welcoming environment for overseas real estate investors. There were only 2,064 residential units sold to foreign buyers in May, 35 percent down on the same month last year, data issued by the state statistics […]

2KEY8G1 Emirates Airline Airbus A380 aircraft landing. Aerial view of Emirates Airlines A380-800 airplane. An Emirates plane coming in to land at LAX; a spokesperson for Emirates said the contraventions were for safety reasons

US fines Emirates for operating in prohibited airspace

Emirates has been fined $1.5 million by the US Transportation Department for operating flights carrying JetBlue Airways’ JBLU.O designator code in prohibited airspace. The transportation department said that between December 2021 and August 2022, Emirates operated a significant number of flights carrying the JetBlue Airways code between the United Arab Emirates and the United States […]

Egypt will use the US funding across a range of sectors including agriculture

US allocates $130m development funding to Egypt

The US has allocated funding of $130 million for a range of developmental projects in Egypt, it was announced on Thursday. In a press release published by the US Embassy in Cairo, ambassador Herro Mustafa Garg said that the money would go towards “advancing Egyptian efforts to achieve a brighter, healthier, and more prosperous future […]

Hollywood actor Leonardo DiCaprio. A US VC fund backed by him plans to invest $50m in Mena climate tech startups

US firm to invest $50m in Mena climate tech

A US venture capital firm backed by Hollywood actor Leonardo DiCaprio plans to invest $50 million in Mena climate tech startups over the next five years. Princeville Capital is targeting mature startups with strong growth potential, facilitating quick exits and a clear path to profitability, its co-founder Joaquin Rodriguez Torres told AGBI. The firm has […]