.png)
Hi there! Welcome to all those who share a love for food and food places.
Today, I am excited to explain the process of determining the cost of setting up a restaurant in Dubai. A person who has been in the culinary business for years knows the net of opening a restaurant here and believes me – Dubai is a completely different world!
Licensing and Permits: The First Course
Let’s start with the paperwork because that is how it goes – not exactly the fun part, but necessary nevertheless – well, believe me, I have been there and learnt it the hard way!
Types of Licenses Required
Okay, okay, let us not beat about the bush. A few licensing will be required in order to place your restaurant at operational levels.
- Trade License
- Food License
- Alcohol License (yes, I mean if you want to serve some firewater)
Now, these are not just pretty pieces of paper. These are the legal papers that enable you to do business within the borders of Dubai. It’s around here somewhere, the Department of Economic Development (DED) and the Dubai Municipality.
Cost
Are you ready? I am sorry but you will have to cough out between AED 10,000 to AED 30,000. I know, I know it’s not what most of you would call cheap – in fact, that is quite a lot of money – but wait, it is still an investment, one in your ideals.
Here’s an insider tip. The costs and processes vary if you’re setting up in a free zone vs. mainland. I’ve seen friends go the free zone route and cut down some dirhams, but it all depends on how you want to go in the long run.
Application Process and Timeline
Let’s discuss the procedure now. Let’s just say, it’s not the easiest thing in the world, but it’s certainly not impossible either. You will be jumping through a few hoops:
- Filing the application
- Receiving approvals from various departments
- Pay certain amounts (there’s always payments that have to be made, right?)
- Collect your documents and licenses
Time-wise, you are looking at about 1-3 months. From my practice, it is better to expect a more pessimistic scenario. It’s always better to be pleasantly surprised than stressed!
Additional Licenses
Oh, and don’t forget about those extra licenses if you’re thinking of outdoor dining or delivery services. They are like the cherry on the cake – not such a big expense, but worth considering for the sake of your business.
Location and Rent: Finding Your Spot
We’ve reached the interesting part: picking the location where the gastronomic magic will happen!
Picking a Place
Let’s just say, there are some pretty good places for restaurants in Dubai. I mean:
- Dubai Marina (my pick, I love the place, it’s full of life)
- Downtown Dubai
- Business Bay
- Jumeirah
Every place has a different energy. I recall a time when I was helping my friend in determining the perfect spot for her café – we literally spent weeks just walking around various neighborhoods and observing.
Rental Costs
Okay, here we go. Renting in Dubai is, well, to put it one way, only for the brave. You are looking at:
- Small restaurants: AED 150,000 per year
- Medium to large spots: Up to AED 500,000 per year
And that’s only a general idea of what you’re likely to spend! It normally amounts to the locality, area, and how “happening” the place is!
Rent Escalation Clauses and RERA
Now, an equally crucial issue comes to the fore, which may not be very entertaining, and it’s in relation to smooth rental increase. The Real Estate Regulatory Agency (RERA) has some rules about this. My advice? Read your lease carefully and make it a point to consult a lawyer about it as well. Trust me, you will be thanking yourself elsewhere in the future.
Fit Out and Interior Design: Personalizing Your Space
This is where your restaurant begins to take shape, which is quite a relief to imagine if not every entrepreneur’s dream. It is work filled with high expectations however one must be frugal or else it can be a huge steal from the budget.
Fit Out Costs
Fitting out your space may cost anything between AED 1000 to AED 3000 a square meter. I know, it's a wide range, but it really depends on how fancy you want to go.
And let's not forget about those fit-out permits from the Dubai Municipality. With fancy suits on, people say they are construction officers and you cannot go in without one.
Interior Design Costs
This is where you can either unleash all your design ideas or go bankrupt attempting to do so. I have seen bare remains of what was supposed to be a restaurant as good looking as any social media page I’ve come across, but it doesn’t come easy.
Understand that very affluent interiors can be costly; on the other hand, if a more modest approach is taken, then a few dirhams can be saved. It always comes back to keeping it as appealing as you can while remaining within your budget.
Health and Safety Regulations
The Dubai Food Code is rather a serious matter as usually it is. You will need to put aside some money for proper designing of the kitchen, a ventilating system, and sanitary affairs. This might sound like an unnecessary hassle, but I assure you, it pays off. I have witnessed some restaurants where minimal effort was used in this area and they have been closed down. And it isn’t pretty.
Kitchen Equipment and Furnishing: The Heart of Your Restaurant
This is the section which is your inmost working area. This is where the fun is folks! This is because your kitchen is the engine room of the entire restaurant, hence you have to make sure that it’s done the right way.
Kitchen Setup
Kitchen equipment is also a considerable and prudent investment for any business. We’re talking about:
- Ovens
- Freezers
- Dishwashers
- And so much more!
You are looking at anywhere from AED 50,000 to AED 200,000 based on how high-end you wish to go. I remember when I was installing my very first kitchen – I assumed some of the appliances may not require spending that much. Big mistake! Investing in quality pays off ultimately.
Furniture Costs
Now let’s see about what will your guests sit on and eat from. The prices of furniture will obviously range depending on the concept to be adopted. What do you desire; sleek and contemporary, or charming and classic?
Now about lighting and those tiny little things for decor – all of them have a total!
Local Sourcing vs. Imported Equipment
Here’s a tip: Look into local suppliers before jumping to international imports. In this case, you may slowly guide yourself in the local market exporting because sometimes the suppliers abroad are definitely more expensive and the customers are not. Plus, it can be annoying to have to call overseas for support if something goes wrong.
Staffing and Labor Costs: Building Your Dream Team
The staff in a restaurant is equally or even more determining to the success of a restaurant business compared to its location. There is proof – I can’t say more!
Hiring Staff
First things first – visas and labor cards. Each employee will cost you AED 5,000 to AED 10,000. That’s no chicken feed, but competent staff pays the returns.
Salaries vary with experience and position:
- Chefs: AED 5000 – AED 20,000 and above per month
- Waiters: AED 2000 – AED 5000 monthly
- Managers: AED 10,000 – AED 25,000 and above monthly
Note these are average values only, as there are other than managerial staff. I had once a sous chef which even with his higher salary was worth every dirham pay for myself.
Training and Certifications
Training is key – do not hold back on this! Education on food handling and safe hygiene practices should be part of such training. Plan for these – it’s a cost to be included in the overall budgeting but for the benefit of the restaurant’s image.
The Issues of Labor Laws and Gratuities
The provisions related to the basic Labor Laws in Dubai are quite explicit. Stay in touch with matters like gratuity, sick leaves, and costs incurred during termination. I experienced this the hard way at the beginning of things - it is wise to be ready with all inconveniences.
Waitressing and Promotion: Spreading The News
You should be prepared to be more original than the rest! How many visitors do you receive at your establishment during peak dinner hours? In terms of other age groups, the figures would be at least 600 per month on average.
Marketing Costs
Online marketing is important. It is advisable to allocate a campaign’s cost of between AED 5,000 to 50,000. Well, all these contribute to any type of marketing campaign. How dependent are you on order flow?
I can recall when we and some others started our campaign. At first, it was as if one was throwing all the money down the trench but it was the creation of that hype that was worth every dirham spent!
Branding and Logo Design
The brand is the face of the restaurant. For branding, menu, and logo designing, engaging experts costs AED 10,000 to 30,000. Though it may look expensive, good branding can work wonders for any business.
Online Presence
Currently, these days, one understands how vital it is to course an effective website along with social media presence. Still, there is the aspect of Google My Business which is free of charge yet very useful from a local search perspective.
Utilities and Operational Costs: Keeping the Light Shines
This one relates to actual costs, that are rather minor in comparison to revenues, but nevertheless costs someone has to deal with in the restaurant business. By all means, these aspects of running a restaurant are not the prettiest but just as well the most unavoidable.
Monthly Utility Costs
Water, electricity, gas, this will cost you WORTH AED 10,000 to AED 50,000 per month. It’s a very huge gap I must say, but it really depends on your cost assessment.
Point of Sale (POS) System
Nothing makes a practical business without an ordering system. This will cost AED 5000 to AED 10000 for setup and/or, monthly charges. Trust me, this cuts down a lot of time!
Maintenance and Cleaning
You have agreed to regular cleaning and all maintenance of works? That shall be in the region of AED 3000 to AED 5000 monthly. While it may seem quite high, reality dictates that a successful restaurant will be a clean one.
Food Supplies and Inventory: The Provisions of Triumph
This is where your love for cooking and making money gets to expression hole!
Initial Inventory Costs
These initial inventory costs are likely to depend on your menu. Does it include really high-end and fancy ingredients, or just simple-kitchen-sweet-comfort-food? Anyway, reliable suppliers are very much necessary.
Portion Size and Menu Aesthetics Design
A smart menu design and portion control may help you save a lot on food costs. Now it is about balancing and maximizing the taste of the food served, and ensuring that profits do not go down.
Insurance and Legal Costs: It’s Better To Be Safe Than To Be Sorry
Insurance might not be the most fun subject, but it’s something you cannot do without. Trust me, thank yourself later!
Types of Insurance
You will provide property coverage, employee health insurance, and third-party coverage. Average budget figure is AED 5,000 to AED 20,000 per year. They look plenty, however, talking about the loss that could happen without insurance cover will make them miss small drops in the bucket.
Legal Consultation
Spend some extra money for legal assistance when it comes to contract negotiation and compliance. This is a short-time expense that helps you in averting possible larger legal costs later on.
VAT and Taxes: Government Too Wants Its Share
No one likes taxes and VAT including the SD people, but that’s life – not an alternative even in Dubai!
VAT Registration
Current VAT rate in UAE is 5%. Ensure to include this in your pricing and profit calculations.
Corporate Taxation
Watch out for new corporate tax regulations regarding the advance. It is better to be ready even if the worst is not expected!
Additional Considerations
Franchise vs Independent Restaurant Costs
There is nothing wrong with imagining a franchise if this is the ideal picture. You can expect from AED 500,000 to AED 1 million to be paid in franchise fee to as much as INR 5 lat. Yes, this in itself is a huge sum, but you have a brand to rely on and help.
Sustainability Initiatives
Green certifications and sustainable practices are nowadays almost a must for most companies. This fair amount of investment is expected to provide dividends after some time with more customers who have a sense of environmental protection.
Food Truck Costs
Yet if a fully equipped restaurant looms a bit larger than life, think about a food truck. Consider it as a very nice solution when you are still in the phase of testing your business. The investment in this includes all necessary permits and equipment which should be within AED 100,000 to AED 300,000.
Phew! That’s quite a bit to comprehend I would agree. More so, starting a restaurant in Dubai is certainly an experience; nevertheless, where proper planning and budgeting are upheld, it is an experience that can be very worthwhile. After all, every single dirham you use is an investment in achieving your dream.
I am looking forward to reading about your restaurant goals or adventures. Leave a comment below since I want to talk. And if you think this was useful, please, pass it along to your hungry friends who dream of starting a restaurant somewhere in Dubai.
Here’s to delectable cuisine, memorable times, and prosperous eating establishments! Bon appétit! And best wishes to you all.