The burger-bar boom in the UAE is continuing unchecked – but some restaurateurs warn the industry has already grown too flabby.
Streets such as Jumeirah Beach Road in Dubai are lined with burger joints, including the fast-food giants McDonald’s, Burger King and Hardee’s and their pricier rivals Fuddruckers, Fatburger, BurgerFuel and Elevation Burger. The list goes on.
Yet as chains increasingly look to differentiate themselves – Fatburger’s beach road branch has a kids’ play area, for example – some expect a shake-out in burger-and-shake shacks.
Andy Wiederhorn, the global chief executive of Fatburger, says when the chain first arrived in the UAE in 2008, there were just four of what he called “better burger” chains.
“Today there are 41. And there are not 41 times more customers in the last five or six years,” he says.
“For sure not all 41 brands are going to survive and grow and make it work,” he adds. “We saw that in Istanbul recently, where they had an influx of better burger brands, and some brands were consolidated with other brands. And we’ll see that I’m sure here … There will be certainly be a fallout and a shake-out in the better burger space.”
This has not stopped Fatburger – which was founded in 1952 in Los Angeles – from pursuing an aggressive expansion of its franchised restaurants in the region.
Globally it and sister brand Buffalo’s have about 200 restaurants, almost all run under franchise, and Mr Wiederhorn says another 350 are in the pipeline.
In the UAE there are seven established Fatburger restaurants, with Mr Wiederhorn saying he would like to grow that by 10 in the next three years. New franchises are springing up in Kuwait, Qatar, Tunisia and Iraq.
Even more challenging markets are on the horizon. Mr Wiederhorn says the company is looking at opportunities in Cuba following the thawing of relations with his native United States. Similarly, he sees great opportunity in Iran should the economic sanctions imposed on the UAE’s northern neighbour be lifted.
“We’re looking forward to opening in Iran. It’s a vibrant economy. It’s now self-contained but when it’s open to trade with American companies we’d love to be able to offer American burgers, shakes and fries to the Iranian people,” he says.
“We’ve been approached a number of times by parties interested and we have to say ‘no’. But when it’s permissible we can’t wait.”
Yet amid such aggressive plans to expand the franchise, Mr Wiederhorn acknowledges the greater competition in the developed UAE market is being felt by the company.
The 49-year-old executive says that Fatburger restaurants in the country registered only “single-digit growth” in 2014 and so far this year. Before the influx of rival chains, revenues were rising in the double digits, Mr Wiederhorn says.
Research by Retail Access, which specialises in interior design concepts for shops and restaurants, says the Shake Shack and BurgerFuel chains rank as the favourite premium burger joints in the UAE – with Fatburger falling lower down in the rankings.
Its study of 30 burger restaurants in the UAE was based on “mystery shopping” visits and amalgamated reviews of 30 casual dining restaurants.
Hugo Van Der Schaegh, director for consultancy at Retail Access in Dubai, agrees that the burger market was crowded. But a lack of customer loyalty was also a problem, he says.
“It’s definitely true that there are more and more burger restaurants in the UAE,” he says. “There is a very young age group … they are not very loyal and this is not helping.”
Offering a unique selling point is key to survival, he adds. “Definitely those who are not offering something special will … not be able to sustain [their business].”
Mr Wiederhorn says Fatburger has introduced a few new innovations, including turkey burgers, a 300-calorie “skinny burger” and even an all-organic product created for the boxer Floyd Mayweather while training ahead of his bout with Manny Pacquiao.
Yet there is a limit to what the chain can do given that – at the end of the day – it is in the business of selling fast food.
“From an innovation standpoint, let’s be real: we’re selling burgers, shakes and fries. We’re not going to reinvent the wheel and bring pizza and tacos to Fatburger. But we’re going to make sure that we’re serving true halal meat, and that the quality of our product stands out. We’re not going to try to be something we’re not,” Mr Wiederhorn says.
“We don’t have to differentiate ourselves. We’ve been doing the same thing for 62 years – and everyone’s trying to come up with how they differentiate ourselves from us. We’ve been the standard.”
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