Saudi Arabia has been facing difficult times in recent years due to the drop in oil prices, which meant the Saudi Arabian government needed to develop solutions to help the economic situation recover. The Saudi Arabian government made announcements in 2018 that had a significant impact on the market, primarily including increasing levels of Saudization and the implementation of VAT, which was introduced at the start of January 2018.
Restaurants in all foodservice channels began changing their business strategies to compensate for the losses incurred by the difficult economic situation. Players looked to boost their value sales by using food aggregators, which were gaining enormous popularity in 2018 and changing the online ordering environment.
Local chains have been developing strongly in the foodservice market in Saudi Arabia in 2018. This is thanks to the Saudi Arabian government, which is continually increasing the desired levels of Saudization, which, in turn, encourages Saudi Arabian investors to open new businesses and create job opportunities for local people.
Independent foodservice outlets continued to gain popularity and increasing their value sales in 2018. Saudization has been encouraging a lot of local investors to open foodservices establishments, which can be clearly seen in a number of foodservices channels, such as Middle Eastern full-service and limited-service restaurants.
Despite the tough economic situation in Saudi Arabia, the foodservice market is expected to continue growing over the forecast period with new investments of some SAR80 billion due to take place in the country in 2019 expected to have a positive impact on the Saudi Arabian economy. Foodservice is impacted by a lot of the main factors affecting the economy, such as austerity among consumers, the increasing number of expatriates leaving the country and the price increases resulting from the VAT implementation in January 2018, but the food industry is the one of the biggest and fastest-growing industries in Saudi Arabia, which can be attributed to the Saudi Arabian love of eating.
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This industry report originates from Passport, our Consumer Foodservice market research database.