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Restaurant business being ‘over-done’ in Kuwait
December 29, 2018, 3:12 pm
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Intense competition from the growing number of restaurants and falling revenues have led to the sector experiencing stagnation, according to business insiders. The sources added that as a result around 30 to 40 percent of existing restaurants could face closure within the next two years.

Statistics from the Ministry of Commerce and Industry show that more restaurants opened in Kuwait during the past five years than in the entire period from independence until 2013. Figures reveal that a total of 4,237 commercial licenses for restaurants were issued in Kuwait between 2014 and early December 2018. In 2018 alone, there was an increase of 16 percent in the number of commercial licenses issued relative to a year earlier.

Restaurants under the food and catering sector accounted for 70.6 percent of all restaurants in the country, followed by the light-foods (snacks) sector at 24 percent, and the dual-activity sector (restaurant and coffee shop), which accounted for 5.6 percent.

It is estimated that just to run a small or medium-sized restaurant in Kuwait it would require between KD20,000 and KD120,000 depending on the type, quality, size and location of the restaurant. The revenue that can be expected from such a business could vary from KD600 to KD1,200 per day with net profits being anywhere from 10 to 50 percent, again based on location, turnout, reputation and other factors.

One reason for the emergence of such a large number of restaurants is the entry by non-professionals into the business. These novice restauranteurs enter the market without any knowledge of the business and do not conduct proper diligence or feasibility studies. Unaware of the responsibilities that a restaurant business entails, and the challenges posed, including the need to have the right location, talented chefs and other staff, these new restauranteurs stumble and then, invariably call on the government to bail them out.

 

 

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