Saudi Arabia Food Services Market to grow at a CAGR of over 7% till 2026

by Mack Nene SEO | Digital Marketing

Saudi Arabia Food Services market is anticipated to reach USD26.54 billion by 2026, growing at a CAGR of 7.68% during the forecast period. Growth in the market can be attributed to increasing disposable income, growing tourism industry, increasing urbanization, and rapid expansion of food delivery services in Saudi Arabia. Large base of young adults & working population coupled with social and cultural changes are the major drivers for the Saudi Arabia Food Services Market. Moreover, the online food services industry has been growing at an exponential rate, with technological advancements facilitating the development of online platform and allowing for a better user experience and convenience.

Restaurants were forced to close their dine-in services during the lockdown in 2020 due to government restrictions, leaving them with no choice but to rely on online delivery services. This increased the overall demand for online food ordering and delivery in Saudi Arabia. Recognizing a massive opportunity for online food delivery services, market players adopted the World Health Organization (WHO) guidelines and began to adhere to no contact delivery, which helped them regain customer trust and, as a result, helped the market recover. Furthermore, the pandemic has broadened the customer base of online food delivery market, pushing it beyond typical younger consumer segment.

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The Saudi Labor Law requires employers to fill the majority of positions with Saudi nationals, with the remainder filled by expats. Many positions are still unfilled because restaurant owners are not allowed to hire foreigners, thereby, negatively impacting the food service market in the country.

Saudi Arabia Food Service market is categorized by type, by region and by food chain. In terms of by type, the Saudi Arabia food services market is segmented into QSR (Quick Service Restaurants), Dinning Services, Café & Others (Canteens, Lounges, etc.). Amongst, Quick Service Restaurants segment leads all the types of restaurant segments in the Saudi Arabia food services market and this segment is expected to continue its dominance over the forecast period on account of changing tastes and preferences of people. Factors such as increased price consciousness and value-seeking consumer behavior, among others, have contributed to an increase in demand for quick service restaurants. Another reason for this segment's rapid growth is the widespread use of the internet and social media, which divulging large number of Saudis to Western food and culture. Cafés are increasing in number in Saudi Arabia, with international brands, like Applebee’s, Outback Steak House, Chili’s, and TGI Fridays, marking their presence.

In terms of region, the Saudi Arabia Food Service market is categorized into Western, Central, Eastern, Southern and Northern region, respectively. In 2020, the Western Region was the highest revenue-generating region in the Saudi Arabia food services market. Furthermore, due to factors such as increased internet connectivity, modern and changing lifestyles and preferences, and so on, the region is expected to remain the most dominant region during the forecast period as well. Some of the major players operating in the Saudi Arabia Food Services market are McDonald’s, Herfy, AL BAIK, KUDU, KFC, etc.

The COVID-19 outbreak has had a significant impact on the Saudi Arabia food services market, which saw a decline in fine dining services in 2020 as a result of the countrywide lockdown imposed to stop the spread of the disease. The fine dining sector has yet to fully recover, whereas quick service restaurants have recovered partially as a result of increased demand for home delivery services. Even after being vaccinated against COVID-19, consumers may continue to prefer eating at home and avoid fine dining services until 2021. Moreover, the COVID-19 pandemic has altered the country's food consumption pattern. People prefer eating healthy home cooked food over restaurant food in order to maintain strong immunity and avoid becoming infected with the coronavirus. Such a shift in people's food consumption habits is expected to stifle the growth of the Saudi Arabia food services market to some extent.

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Food Service market in Saudi Arabia is categorized into by type, by region and by company. In terms of by Type, the Saudi Arabia food services market is segmented into QSR (Quick Service Restaurants), Dinning Services, Café & Others (Canteens, Lounges, etc.). Among which QSR (Quick Service Restaurants) market has accounted for the majority share in Saudi Arabia Food Service Market in 2020 followed by Cafés. With the growing popularity of fast foods and casual dining, chained consumer food services are growing at a fast pace. Cafés are increasing in number in Saudi Arabia, with international brands, like Applebee’s, Outback Steak House, Chilis, etc. marking their presence. Moreover, the global chains have followed the strategy of customization and localization through intelligent modifications in their menus.

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