Dubai: Hiring by UAE’s F&B businesses has slowed in the first two months of 2025, with restaurant operators pointing to rising rents and staff costs as the main reasons.

“The food price inflation has slowed down considerably, but rental increases are the biggest worry,” said a top official at the regional operations of a global restaurant franchise. “Some of our biggest locations are in the malls, and there are no regulatory limits on how much mall managements can raise rents.

“In January and February, we reduced our hiring, because there was no other way to manage the higher costs.”

Recruitment consultancies have the same thing to say - UAE's F&B businesses are having a re-think on what their workforces should be. And the possible impact on staff will not be easy.

The other cost element that F&B businesses – along with those in other sectors – must factor in would be how much they need to set aside as corporate tax.

“The mid-sized F&B operators need to be particularly diligent how they operate under the tax regime,” said an auditor. “That’s because many of these businesses must also factor in the seasonal element, for instance, the reduced visitor or orders during Ramadan and during summer breaks.”  

So, even as new restaurants, cafes and small eateries keep popping up wherever possible in the UAE, it has meant their owners are taking an extremely cautious approach to staff additions. Based on what industry sources say, even as new restaurants multiply, there continues to be a steady trickle of closures too, adding to job losses.

Now, the go-slow on hiring comes after two years of sustained salary increases in the F&B marketplace.

According to Shanavas Mohammed of Golden Fork Restaurant Group, “UAE F&B salaries increased by at least 20% over the past two years due to higher staff turnover costs and related expenses. There must have been at least a 30% increase in hiring during 2023 and 2024, driven by new international brand openings in Dubai.

“Generally, restaurants are still working to recover sales to pre-Covid levels.”

With many recent hiring by F&B operators, offered salary packages have been lower than what was available a year or two ago.

More restaurant businesses say if the slower revenue growth persists through this year, they will restart conversations about the rates order generating and delivery platforms charge them. Something that was avoided for the better part of the last 3-4 years because there was enough business happening to ensure everyone got a decent enough share.

"Rental costs are rising, making it difficult for restaurants reliant on delivery to sustain their operations while paying over 30% as commissions to aggregators," said Mohammed. "That's along with packaging and discounts we have to give for online orders.

"To adapt to the current rental landscape, restaurants must focus on increasing dine-in revenue."

F&B operators also point to the recent financials posted by Americana Restaurants, the Middle East's biggest name in this industry. The ADX and Tadawul listed company saw 2024 profit drop nearly 40% in what has been a fairly tough operating environment.

"Americana Restaurants mentioned in its outlook that profitability could be impacted by corporate tax in some markets," said the owner of four F&B outlets in Dubai. "If the biggest name in the business is cautious on 2025 outlook, others much smaller need to do the same.

"That means be careful when it comes to hiring."