The United Arab Emirates is one of the fastest-growing economies, offering numerous opportunities to start a business and scale it. Due to the rise of disposable income, Dubai’s food business and luxurious sectors are thriving.
The food industry in the UAE is expected to grow at a CAGR of 17.09% from 2024 to 2029. The compound annual growth rate has increased massively, as it was 6.8% in the past.
As the UAE’s food industry showcases demand from tourists, corporations, and locals, now is the best time to start a catering business in Dubai.
Is the Catering Business Profitable in Dubai?
As per the reports, UAE’s food service market size will grow from USD 19.98 billion in 2024 to USD 43.98 billion by 2029. As per the reports of Dubai Municipality, the total number of food service establishments in Dubai is 18,667.
There are –
- 9,705 restaurants,
- 4,310 coffee shops,
- 2,809 Cafeterias,
- 840 hotels,
- 728 catering,
- and 275 schools.
Profit margins in a catering business vary from 15-30% based on your niche and scaling requirements. Small caterers with specialised dishes or food items often experience higher returns, especially when they focus on weddings and corporate events.
With the right approach, strategy, location, and optimised menu, a new catering business in Dubai can achieve about 20% yearly margins.
Steps to Start a Catering Business in Dubai
Here are the exact steps to start a catering business in Dubai.
The first step is to conduct a thorough market research. According to a report by CB Insights, the second biggest reason for a startup’s failure is no market need. Hence, you must conduct market research to ensure your offering has some demand.
Start with researching the target location, ideal customer personas, and your potential competitors. This research offers you clarity on positioning, products, and marketing strategies.
Find out the demand for different cuisines based on regions and understand the pricing structure.
If everyone is your customer, then no one is your customer. Don’t try to attract everyone. It will not be sustainable in the long run.
Pinpoint your niche and try to target a particular target market. You can choose wedding ceremonies and galas or corporate events to start. Ensure that your menu and services sync with your ideal customers’ demands.
Establishing Your USP
Having a USP enables you to position yourself in a diluted market. You must determine what sets you apart. It could be a service, a cuisine, or an offer. However, it must be something that is different from what others are already doing.
For instance, you can focus on Michelin-starred gourmet collections for luxury weddings and corporate events.
Or you can offer sustainable, farm-to-table dishes using raw materials grown locally.
You must ensure that once you finalise your USP, your branding and marketing communications must align with it.
Finalise the Company Structure
You can choose between multiple company structures that the UAE offers. To avoid liabilities, it is recommended to opt for an LLC business model.
You can also choose between Mainland or Free Zones for catering business setup. Both have their own tax benefits, such as incentives and exemptions.
Before registration, finalise the internal hierarchy, shareholders, and profit-sharing terms.
Choose a Name & Location
Name registration is one of the most crucial steps in starting up a catering business in Dubai. You have ensured the name follows the UAE guidelines and is not similar to an already registered name.
To find the perfect spot for your business, you can shortlist a few places based on transport convenience, proximity to suppliers, and your target audience. For most caterers, kitchens in commercial buildings work best.
The main documents required are –
- Shareholders’ ID copies
- NOC letter
- and tenure agreements for rented space.
Obtain the Necessary Licence and Permit
You need to apply for a trade licence under the Restaurant/Catering category from the Department of Economic Development (DED). This licence is mandatory to operate as a catering establishment in the UAE.
In addition to that, you must obtain food safety training certificates for handling staff as required by the Dubai Municipality. Based on your catering operations, you may need approval for food transport vehicles, import clearances for ingredients, and health certificates for expatriate staff.
An expert consultant can offer appropriate guidance for seamless approvals of licences.
Open a Bank Account
This is a major step to keep your business and personal finances separate. Open a business account with a reputed bank after registration is complete.
This enables you to properly calculate sales and margins so you can set realistic goals for your business.
Rent a Kitchen Space and Purchase Utilities
You will need a kitchen space to prepare the cuisines. You can pick a rental space in a commercial building in Dubai Silicon Oasis, Dubai Investment Park, etc. You must pick a location under your budget but close to your target users.
You have to purchase and install all the cooking equipment, ovens, dishwashers, and refrigerators. If you are going to deliver food, you would also need to invest in a vehicle.
Hire Staff and Create a Menu
Without the right staff, you may not be able to serve the food that satisfies your customers. Hence, hire professionally trained and skilled staff, like chefs, servers, cleaning crew, and delivery drivers.
Hire people with specific experience in the field. They must be familiar with the cuisines you pick and can prepare the dishes properly as per the customer’s taste.
The final step is to craft a menu that is tailored to your target audience. The menu must demonstrate your USP and align with your sub-niche. The prices must balance affordability and profitability.
Pro Tip: Catering menus require various options that suit different dietary preferences, contain culturally appropriate ingredients, and offer pairing recommendations.
Catering Business Marketing Plan & Branding
You may have the best dish in the world, but it won’t sell itself if people do not know of its existence. Focus on creating a memorable and appealing brand identity.
Invest in logo, packaging, staff uniforms, and overall theme. Claim social media handles on different platforms with your business name, such as Instagram, Facebook, and YouTube. For a better reach, you can tie up with online food aggregators like Talabat and Deliveroo.
Create a proper catering business marketing plan with a specific budget to ensure consistent growth.
Catering Business Start-Up Costs
Starting a catering business in Dubai can cost from AED 70,000 to AED 200,000+ for registering, licencing and renting the premises, depending on your business operations and scaling requirements.
Interiors, kitchen equipment, and visa costs are additional to the above fees.
Remember that these costs are just estimates, and original numbers may vary based on multiple factors.
You must ensure a strong cash flow in the business’s early years to stay operational and grow.
How Avyanco Can Help You Start a Catering Business in UAE?
Avyanco Business Setup has experienced business consultants who provide end-to-end assistance with starting a catering company in Dubai. We offer your advice on choosing the right location, obtaining licences, and crafting a complete catering business plan.
Our expert consultants help you develop internal hierarchies and operational frameworks to operate faster with the least amount of risks. We also ensure that your business remains compliant with UAE’s laws and regulations.
If you want to start a profitable catering business, connect with us today.
You can contact us today by calling +971 50 398 9000 or via WhatsApp at +971 50 398 9000; we are also available by email at firstname.lastname@example.org. Let’s connect for end-to-end assistance with your new UAE venture.