Dubai's F&B operators question the value of the 'discount culture'

Leading managers insist discounts are pushing prices up making emirate an expensive destination

The F&B sector has arguably been one of the worst hit by the Covid-19 pandemic, with restrictions seeing outlets initially closed for over two months and gradual opening limiting capacity due to social distancing requirements.

Leading F&B operators in the UAE have questioned the value of “discount culture” to the industry.

The F&B sector has arguably been one of the worst hit by the Covid-19 pandemic, with restrictions seeing outlets initially closed for over two months and gradual opening limiting capacity due to social distancing requirements.

Now as attempts are being made to revive the once-thriving industry, some have spoken about the impact of offering discounts to customers, and whether it offers real value all round.

Arthur Timlin, F&B manager at Conrad Hilton, told Arabian Business that the level of discounts being offered across restaurants, hotels and bars is actually pushing prices up and making the UAE, and Dubai in particular, too expensive for residents and tourists alike.

He said: “It’s a big problem all over and in Dubai in particular, but in the UAE there is a discount culture where people are looking for discounts and they’re going to live and die by discounts, but businesses ultimately end up pricing the discounts into the offering, so they don’t actually get any extra value at all, we just end up with inflated pricing in restaurants because of it.

“Tourists don’t realise that there’s all these discounts in place and they end up paying extra for it and viewing it as an expensive destination, which is hurting the place.”

Timlin used the traditional brunches as an example, where he said the two-for-one offers are priced into the cost of the brunch, “so whereas maybe the brunch should actually be priced at AED300, the hotel was pricing it as AED500 because they knew they were going to get two-for-one or buy-one-get-one-free and they’re actually only getting AED250”, he said.

Restrategise

Samer Hamadeh, founder of Aegis Hospitality, told Arabian Business, plans to resuscitate and rejuvenate the industry should not be done through discounts.

He said: “Truth be told though, no one is really getting a ‘great deal’ with a discount – operators would never sell food or drinks at a loss; so they take the original price, hike it up, then add a discount so it goes back to the original price; which might seem like a great deal on the surface but I guarantee you customers are not getting good quality ingredients when prices are that low.”

Timlin believed this was a perfect time to “restrategise” on pricing.

“We were definitely over-priced on food and beverage, pre-Covid, and now it’s going to be even more important moving forward, in terms of building back up the tourism,” he said.

“This is really key to everything. Everybody has been impacted, salary cuts, so spending power is down and the same that’s happening here is going to be happening globally so all of our markets are going to be very badly hit in terms of spending power.

“That we have a value offering, not necessarily a cheap offer, is hugely important, and we’re competitive.”

Invaluable insights

One of the most popular discount operators in the region is The Entertainer.

Founded in 2001 in Dubai by Donna Benton, the Entertainer sells buy one get one free offers for restaurants, leisure attractions, spas and hotel and accommodation in various parts of the Middle East, Africa and Europe.

According to statistics from The Entertainer, 52 percent of members dine out at least twice a week and 91 percent visit new outlets from The Entertainer, while 89 percent factor in The Entertainer offers when selecting a restaurant or bar.

Mike Rich, global marketing director, The Entertainer, told Arabian Business: “Our strategy is rooted in the intelligence found within our first-party data and technology upgrades that create unique experiences for our merchants. Because of this, we sell our product at a premium which in turn attracts a particular demographic. Once our demographic visits the outlet, they continue to order additional non-discounted products such as drinks and appetizers.

“The Entertainer also gives its merchants access to invaluable insights which help drive their business forward.”

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