A major component of the monthly retails sales index of Singapore is the catering trade index. Results of the month of March 2008 showed increases in the overall retail trade index, both for month-on-month and year-on-year basis. However, index for catering trade fell. Although the month-on-month decline was being blamed on the lower turnover of restaurants following the strong growth from Lunar New Year celebrations in the previous month, even the year-on-year index registered a decline after removing the price effect.

Consumption of food away from home in urban areas of China is being looked at as the major explanation for the inconsistencies between meat supply generated from agricultural production and demand for meat generated from household expenditure survey. As practiced internationally, and due to the difficulty of detailing ingredients of cooked meals eaten out, expenditure surveys gather reports on food taken away from home at aggregated levels.

In the case of Dubai, eating out is a regular arrangement for many of its population, especially for the large groups of expatriate workers living in shared accommodations but making their own arrangements for food and other basic necessities. In the 1997/98 Household Income Expenditure Survey of Dubai, which still remains as the most recent statistics on consumption pattern of the emirate's population, about 20% of total expenditures of these group of population were on food eaten out. While consumption pattern may have changed over the years, the rapid modernization of Dubai and the flourishing of the hotels and restaurants sector may have even increased the share of eating out to the total expenditure of the population.

Fig. 1 shows the annual growth rate of GDP, Gross Fixed Capital Formation (GFCF), workers and compensation in the Hotels/Restaurants sector. Except for the surge in investments into the sector in 2003, the growth of the sector had been relatively steady. Annual GDP grew at an average annual rate of 14.3%, starting from a growth of 8.9% in 2002, rising to a peak growth of 20.5 in 2005, and slowing down slightly to 14.8% in 2006. Compensation grew at an annual average rate of 11.9%, while employment grew at only 8.1%, suggesting rising per capita compensation in the sector. Capital intensity of the sector was growing, with annual GFCF rising at an average annual growth of 19.6%.



Eating out in Dubai gets more expensive

In response to the need for more frequent indicators of price changes in Dubai, the Dubai ChamberDubai Chamber started a system for price monitoring of goods and services households consume starting the 3^rd quarter of 2005. From the database that has been established and continually updated, prices of food eaten outside the home have increased significantly during the last 2 years. The table below shows that annual inflation rate for food eaten in restaurants in 2006 was 5.4%, lower than the overall inflation rate of 9.3% estimated for the year by the UAE Ministry of Economy. In the following year, however, the group's inflation rate jumped to 15.1%, before slowing down to 7.3% based on the prices collected for the first quarter of the year. Prices of food in cafes, however, had moved slowly until 2008, when inflation rate went up to 8.6%



Prices of take-away beans and falafel, popular among the lower income groups, posted double-digit inflation rates of 11.9% and 11.0% in 2006 and 2007, respectively. However, slowing down in further rise of prices could be noted in 2008, with inflation rate based on 1^st quarter prices slowing down to 8.9%. Price pattern of take-away sandwiches and shawarma, however, caught up with rising prices later, with inflation rate rising from 3.9% in 2006 to 17.6% in 2008. Prices of other take-away foods have also been rising, though at relatively slower rate, with inflation rate of 8.9% in 2006, 6.4% in 2007 and 6.7% in 2008.

Prices of soft and fizzy drinks posted the highest rate of increase, with inflation rate reaching a high 39.5% in 2007. Estimates for 2008 based on 1^st quarter data showed inflation rate to still be very high at 20.6%.

Despite the increases in prices of food eaten out, sales are not expected to go down. In many cases, workers making arrangements for their own food can still find it cheaper and more convenient to eat out. On the other hand, with demand for skilled workers continue to rise in Dubai, and these workers are capable of bringing their families with them. More families moving into Dubai means more people going out on weekends.

© Dubai ChamberDubai Chamber of Commerce & Industry 2008

 

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