Market Trends of kuwait foodservice Industry
Kuwait's food service industry grew significantly in value terms from 2017 to 2022, driven by quick-service restaurants and cafes & bars
- The total number of foodservice establishments increased by 1,598 outlets from 2017 to 2022, with sales rising at a CAGR of 7.10% by value during the same period. Quick-service restaurants accounted for the major share in the number of food service outlets, amounting to 56.92% in 2022, with 4,940 outlets, in line with big chains expanding due to increasing demand and low set-up costs. In 2021, the number of Pizza Hut outlets reached 63, KFC was operating with 66 outlets, McDonald's with 77 outlets, and Burger King with 74 outlets, specifically in Kuwait.
- Cloud kitchens are projected to witness a high CAGR value of 4.65% during the forecast period (2023-2029). This is owing to the increasing number of online orders and the growing delivery app user penetration, which was around 23.5% in 2021. However, set-up costs are high for fine dining restaurants, which also drives the sales for ghost kitchens in the country. As most of the food is ordered online, the improving delivery techniques like acceptance of digital payments, fast deliveries, offers on orders, and heat bags used to deliver food are gaining customer attention. Some of Kuwait's top food delivery apps include Deliveroo, Talabat, Cravez, Carriage, and KFC Kuwait. Cafes & bars are also gaining popularity, and the segment is forecast to witness a CAGR of 2.42% from 2023 to 2029 due to increased foreign arrivals in the country, which has increased both alcoholic and non-alcoholic drinks sales annually. As of 2021, the number of international tourists arriving in Kuwait was around three million more than in 2020. The market is at a recovery stage after the pandemic, and the demand is increasing as foreign travel is increasing.
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Inflation, rising tourism, and increased consumption driving food prices in Kuwait
- FSRs accounted for a high average order value, which was around USD 20.61 in 2022. They provide dine-in facilities and entertainment like music and opera to attract customers' interest. Due to these higher service costs, the average order value price is higher for FSR since they require skilled chefs to prepare food. However, Kuwait imports around 95% of its food from abroad. Rising food prices are a downside to the outlook for consumer spending as it weighs on consumer purchasing power.
- The average order value for QSR increased by 10.89% from 2017 to 2022. Due to the increased fast food consumption, fast food like meat-based cuisines, pizza, burgers, and kebabs are more in demand. The number of orders per year reached over 60,000, witnessing a hike of 23% from 2017 to 2022, which fueled the market growth and increased the order costs.
- The inflation rate increased by 3.2%, with an average of 1.23% from 2019 to 2022, observing a hike of 1.32% from the 2020 rate. Food consumption is also high in the country, amounting to around 3 million metric tons of food in 2021. As international chains are entering the market with their high-cost menus, they provide unique dining experiences with premium ingredients that are mainly imported. The cost of staff and other facilities have also increased the menu cost. With rising tourism in the country, people are willing to pay high prices for premium drinks and food with a unique dining experience, which is resulting in a hike in sales. The prices are increasing due to rising imports and operational costs for foodservice outlets.
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