Saudi Arabia Food Service Market Size, Share & COVID-19 Impact Analysis, By Type (Full Service Restaurants, Quick Service Restaurants, Institutes, Others), By Service Type (Commercial and Institutional), and Country Forecast, 2023-2030

The Saudi Arabia food service market size was valued at USD 14.16 billion in 2022 and is projected to grow from USD 16.02 billion in 2023 to USD 34.04 billion by 2030, exhibiting a CAGR of 11.37% during the forecast period.

The significant growth of the Saudi Arabia food service market is attributed to the increasing demand for home delivery services in the country and rising consumption of takeaway foods. Furthermore, the number of shopping & food malls has rapidly expanded in Saudi Arabia over the last few years. The trend of opening food outlets in shopping malls, earlier limited only to the country's major cities, has now spread to tier 2 and tier 3 cities in the last decade. Therefore, the increasing number of food outlets and the rising trend of eating outside will boost Saudi Arabia food service market growth.

COVID-19 IMPACT

Increased Away-From-Food Consumption Propelled Industry Growth Amid COVID-19

The COVID-19 pandemic had created unprecedented challenges in Saudi Arabia’s food sector. The outbreak impacted farm production, food processing, restaurants, transport & logistics, and consumer demand. Other limitations, such as labor shortages, hampered farm production. Some farm sectors rely on seasonal labor more than others - fruits and vegetables require a large labor force, but grains and oilseeds often require less. Therefore, supply chain issues and challenges in the restaurant industry increased food costs and shortages of main ingredients. Obstacles in the supply lines created a scarcity of different raw materials and increased the overall costs, which eventually passed on to consumers.

LATEST TRENDS

Rising Popularity of Veganism to Fuel Market Growth

Veganism is gaining traction globally as well as in Saudi Arabia. Vegans do not eat animal- and dairy-based products, while many do not eat honey, considering it an animal-derived ingredient. Even though this diet was earlier limited to the vegetarian population, it is now popular among all consumers.

Responding to consumer needs, market players are also competing with each other to attract customers that demand vegan food. Vegan cooking is challenging as the original recipes use different products, such as eggs, milk, and other animal-based ingredients. But several chefs and companies are working on vegan products. More and more substitute products are being studied; thus, the market is growing steadily.

Although the market in the Kingdom of Saudi Arabia (KSA) is significantly influenced by Western food culture, healthy food options, such as vegan/plant-based foods are becoming quite popular among consumers in Saudi Arabia. Market players are also working toward spreading awareness among consumers and trying to launch vegan products in KSA’s food service market.

Request a Free sample to learn more about this report.

DRIVING FACTORS

Expansion of International Brands in Saudi Arabia to Fuel Market Growth

In the last few years, many international restaurants and dining chains have entered the Saudi Arabia market including Cipriani, The Cheesecake Factory, and Hakkasan. Several widely popular fine dining hotels and restaurants have recently entered the KSA market by launching their branches in the country, mainly in Jeddah and Riyadh. Some of them are Scalini, Zuma, and Catch. A growing number of famous chefs in Saudi Arabia focusing on opening their own restaurants is an example of the ever-increasing penetration of local and international restaurants in Saudi Arabia.

Riyadh is home to more branded international food service outlets than Jeddah. This is because when global brands expand their business, Riyadh is said to be their first choice over Jeddah. With the Saudi government’s 2030 vision underway, more branded outlets are expected to open in both Riyadh and Jeddah during the forecast period. While coffee is the most popular beverage, Middle Eastern cuisine is also one of the popular cuisines in Saudi Arabia. Saudi Arabia’s neighboring countries’ cuisines, such as Indian and Pakistani, are also highly popular among consumers in the country. Hence, there are a significant number of restaurants that specialize in Indian and Pakistani cuisines in the KSA.

Increased Spending on Out-of-Home Foods to Drive Market Growth

Growth in household income owing to a rise in the number of dual-income households is a major factor boosting consumers’ spending on outdoor dining. With an increase in the number of working women, families are frequently visiting restaurants or ordering food from outside. This factor is increasing the customer footfall in dine-ins. The concept of away-from-home food consumption is gaining popularity across the Kingdom of Saudi Arabia, while franchising remains one of the most popular growth models for the country’s businesses. With a majority of the millennial population leaning toward fast food consumption, their spending on quick service restaurants is increasing over traditional family restaurants.

Opportunities for foreign food exporters to supply their products to the Hotel, Restaurants, and Institutes (HRI) sector are improving as the demand for ethnic foods is increasing. These are the major factors boosting the market growth, mainly in the largest cities of Saudi Arabia, such as Mecca, Riyadh, Medina, and Jeddah.

RESTRAINING FACTORS 

Rise of Online Food Orders Could Impact Market Dynamics

Online food ordering is the latest trend in the market, which has been adopted by a vast majority of consumers. One problem with food delivery is lower quality compared to a restaurant. Food is often transported over long distances, and its valuable nutrients can be lost over time.

Another drawback of meal delivery is the potential cost to consumers of employing these services. Even though most countries offer free meal delivery, if a customer's order falls below a specific threshold, they can still be required to pay for delivery, even if the food they ordered is extremely reasonably priced. These elements can limit the market's expansion in Saudi Arabia.

SEGMENTATION

By Type Analysis

Full Service Restaurant Segment Domiantes the Market owing to Variety in Menu

Based on type, the market is segmented into quick-service restaurants, full service restaurants, institutes, and others. The full service restaurant segment captured a dominant Saudi Arabia food service market share owing to the availability of a wide range of food items on the menu. Families, corporate meetings, and gatherings generally prefer full service restaurants as they have a variety of food items available for every individual. As family outings are becoming more frequent, the number of full service restaurants is also increasing. In addition to the food, full service restaurants that offer alcohol are also growing. Consumption of alcohol is rising each year and restaurants are expanding their network to cater to this need.

By Service Type Analysis

Commercial Segment to Dominate Owing to Their Growing Network

By service type, the market is segmented into commercial and institutional. The commercial segment is further divided into quick-service restaurants,  full service restaurants, and dining-out/takeaway food service establishments. In the food service sector, institutional meal service is a relatively recent idea.  Families with more disposable income are spending more at hotels, restaurants, cafes, and other establishments.

Major fast food chains like Domino's, Pizza Hut, KFC, Starbucks, Burger King, Taco Bell, Subway, McDonald's, Wendy's, Papa John's Pizza, and Chipotle Mexican Grill are taking advantage of this trend of millennial consumers choosing quick service restaurants to establish their presence in various international markets. During the forecast period, this tendency is anticipated to fuel market expansion.

To know how our report can help streamline your business, Speak to Analyst

COUNTRY INSIGHTS

Saudi Arabia’s food & beverage industry is one of the largest in the Middle East region. According to the data published by the Saudi Arabian General Authority for Investment (SAGIA) in 2021, Saudi Arabia’s consumer spending on food service will rise by 6% per annum over the next five years, which is greater than the population growth of 1.8%. Demographic and social changes in the Kingdom of Saudi Arabia will mainly drive this growth. 

Fast food consumption is steadily increasing in Saudi Arabia due to rising household incomes, the increasing percentage of working women, and the convenience provided by fast food businesses. Furthermore, the availability of affordable fast-food restaurants has increased the frequency of dining out, particularly among the working-class population. Apart from these factors, fast food restaurants that run on innovative themes are also gaining popularity across major and emerging cities in Saudi Arabia. Meanwhile, purchasing a franchise of leading fast food chains, such as Domino’s, McDonald’s, and KFC remains one of the most popular growth models. With the majority of the millennial population increasing their preference for fast food, their spending on quick-service restaurants is increasing. As Saudi Arabia’s tourism sector is growing at a notable pace, the country is moving toward becoming a global tourism hub backed by competitive advantages that attract international travelers looking for new experiences.

KEY INDUSTRY PLAYERS

Growing Tourism Industry in Middle East to Attract Companies to Expand Product Portfolios

As this industry was heavily hit by the COVID-19 outbreak in 2020, market players were not ready to risk their businesses by entering volatile markets and making losses. But since the markets recovered from the pandemic, key players in the market also started expanding their businesses, and the market also grew at a steady rate. For instance, In 2022, Nestle announced that it will invest USD 1.86 billion in Saudi Arabia over the next decade. Nestle’s initial investment of USD 100 million will begin with establishing a manufacturing plant set to open in 2025. This will be followed by a regional center with a research and development program and its first business incubator for small and medium-sized companies and start-ups.

LIST OF KEY COMPANIES PROFILED: 

• Yum! Brands, Inc. (U.S.)


• Starbucks Corporation (U.S.)


• McDonald’s Corporation (U.S.)


• Restaurant Brands International Inc. (Canada)


• Domino’s Pizza, Inc. (U.S.)


• Papa John's International, Inc. (U.S.)


• ALBAIK Food Systems Company Ltd. (Saudi Arabia)


• Herfy Food Services Co. JSC, KSA. (Saudi Arabia)


• KUDU Company for Food and Catering (Saudi Arabia)


• Hardee’s Restaurants LLC (U.S.)

KEY INDUSTRY DEVELOPMENTS: 

• February 2023: ‘Ramla Terraza’, an international food mall, opened its doors for visitors to try a variety of world-famous restaurants. The mall claims to provide an international flavor to food lovers through 4 distinctive international restaurants.


• December 2022: Russo’s New York Pizzeria & Italian Kitchen opened its new outlet in Saudi Arabia. The 2400 sq. ft. outlet is situated at Park Avenue Mall and offers an Italian menu that serves New York-style pizza and pasta. Its menu also included salad options, Italian soups, pasta, pizzas, calzones, and desserts. The company said that it will also serve Halal and gluten-free food.


• July 2022: Americana Restaurants, one of the leading restaurants and food companies operating in the Middle East, signed an agreement with Yum! Brands to establish and operate pizza hut brand restaurants in Saudi Arabia. As a part of this deal, the company planned to open 30 pizza hut restaurants by 2023 and 100 branches over the next three years.


• June 2022: Starbucks KSA introduced an all-female drive-thru store in the country. The new store was part of the company’s strategy to create gender balance in its employment and provide equal work opportunities to women.

REPORT COVERAGE

The research report provides qualitative and quantitative insights into the market along with a detailed analysis of the market share, size, segmentation, and growth rate for all possible segments in the market. The report also provides an elaborative analysis of the industry. It offers key insights, an overview of related markets, market dynamics, SWOT analysis, recent industry developments, such as mergers & acquisitions, regulatory scenario in key countries, leading market trends, and the competitive landscape of the market.

To gain extensive insights into the market, Request for Customization

Report Scope & Segmentation