Restaurant costs in Dubai: what to budget

An owner who has run restaurants elsewhere builds a budget for a first venue in Dubai. The rent, the food cost and the wages look familiar. Then the surprises arrive: rent paid in advance in a few large cheques, visas and medical insurance for every member of staff, accommodation and transport for some of the team, a cooling bill separate from the electricity, licences renewed every year and a summer when trade falls just as costs stay the same. None of these is unusual in Dubai, but each one is easy to miss in a budget built from experience somewhere else.

Restaurant costs in Dubai follow the same shape as anywhere, rent, people, food and drink, utilities and overheads, with a few lines that are particular to the market and a cash pattern shaped by how rent and licences are paid. A budget that includes all of them, and tests each against realistic sales, is far more likely to survive the first year.

This guide sets out the parts of a restaurant budget in Dubai, the costs that are particular to the market and how to get real figures for each before committing. It gives no market price ranges, because they move quickly and vary by location: get quotes for every line. Every venue and figure in it is an example.

Restaurant costs fall into opening costs, paid before the doors open, and running costs, paid every month. In Dubai, the opening costs include licences and approvals, the lease deposit and advance rent, design, fit-out, equipment, furniture, systems, initial stock, visas, recruitment, training and launch marketing.

The running costs include rent, wages and staff benefits, accommodation and transport where provided, food and drink, utilities and cooling, maintenance, insurance, licence renewals, software, delivery commission and marketing. Both sets need a line in the budget.

The only reliable figures for a Dubai budget are quotes and offers for your own site and concept: the landlord's terms, the fit-out contractor's quote, the equipment supplier's prices, the recruitment and visa costs from your adviser, the utilities estimates for the premises and the licence fees from the authorities.

Ask for quotes in writing, and get more than one for the large items. Figures from articles, including this one, are no substitute for the numbers your venue will actually pay.

Rent is usually the largest fixed cost and the one most worth testing before signing. Restaurant rent in Dubai varies enormously with the location, the footfall, the building and the terms, from a quiet neighbourhood unit to a mall or a waterfront destination.

Test the rent against the sales the site can realistically produce. A useful check is rent as a share of expected sales: if the rent takes too large a share, the venue struggles however busy it is. Our guide to why restaurants fail, in the numbers covers the share rent can safely take.

In Dubai, rent is often paid in advance, by a small number of cheques covering the year, rather than monthly. That shapes cash flow: a large rent payment may fall due before the venue has earned the money to cover it.

Plan the rent payments in the cash flow month by month, and negotiate the number of cheques if you can. A venue that can pay rent in more instalments has a much easier first year.

Premises in malls, developments and some buildings carry service charges for shared areas, security, cleaning and maintenance, and sometimes a share of marketing. These can be significant and are often billed separately from the rent.

Ask for the service charges in writing before signing, and how they have changed over recent years. A low rent with high service charges may cost more than a higher rent with none.

Fit-out costs vary widely with the concept, the condition of the site and the standard of finish. A unit that was previously a restaurant may need less work; a shell unit needs everything, from the kitchen extraction to the floors.

Get a detailed quote, include the kitchen equipment, the fire safety systems and the approvals, and add a contingency for the surprises every fit-out brings. Fit-outs that overrun eat the cash meant for the first months of trading.

Kitchen equipment is a large opening cost: cooking equipment, refrigeration, extraction, dishwashing and storage. It can be bought new, bought used or leased, each with different costs and risks.

Choose equipment that suits the menu and the volume, and check that it meets the approval requirements. Refrigeration deserves particular care in Dubai's heat: undersized fridges struggle in summer.

Before the doors open, the venue pays for things that bring in no sales: staff hired and trained before opening, rent during the fit-out and licensing, utilities connected early, marketing for the launch and trial services for friends and family.

Budget these months honestly. A venue whose team is hired a month before opening pays a month of wages, accommodation and transport before its first sale, and the rent has usually been running for longer.

Plates, glasses, cutlery, pans, utensils, uniforms, cleaning supplies and the first stock of food and drink are all part of the opening costs, and they add up to more than many owners expect.

List them in detail and get prices, rather than allowing a round figure. Breakages and replacements continue after opening, so give them a monthly line too.

Wages are the largest running cost after food and drink in most restaurants. In Dubai, the cost of a member of staff is more than their salary: it includes visas and work permits, medical insurance, accommodation and transport where provided, annual leave and the end-of-service gratuity built up over time.

Budget the full cost of each role, not just the salary. A budget that counts only salaries understates the cost of the team, often by a large margin.

Employing staff from abroad means work permits, residence visas, medical tests and the related fees, paid when each person joins and again at renewal. Recruitment costs, such as agency fees and flights, may add more.

Ask your adviser for the full cost of bringing one member of staff into the business, from job offer to first shift, and multiply by the team you need. It is one of the costs most often underestimated.

Employers in Dubai must provide health insurance for their employees. The cost depends on the cover and the provider, and it applies to every member of staff.

Get quotes for the team you plan to hire, and include insurance for the dependants you are required to cover, if any. It is a recurring cost, renewed every year.

Many restaurants in Dubai provide accommodation and transport for some of their staff, especially kitchen teams and staff recruited from abroad. These can be significant costs, paid every month, whether through company housing, a rented apartment or an allowance.

Decide early which roles include accommodation and transport, and budget for them. They are part of the cost of the team and of keeping staff.

Under UAE labour law, employees build up an end-of-service gratuity, paid when they leave, based on their length of service and salary. It is a cost that grows quietly every month.

Set money aside for it each month, rather than meeting it from cash when someone leaves. A long-serving team builds up a substantial gratuity liability.

Food and drink costs depend on the menu, the suppliers and the volume. Imported ingredients, which many Dubai menus rely on, can cost more and change price with exchange rates and shipping.

Cost the menu from real supplier prices before opening, and build the budget from the recipes and expected covers. Our guide to restaurant operating costs, listed and ranked covers how food cost sits among the other costs.

Utilities include electricity and water, usually billed by the Dubai Electricity and Water Authority, and gas for the kitchen. Many buildings also bill air conditioning separately, through a district cooling provider, and in the hottest months cooling can be a large cost.

Ask the landlord or the previous tenant for past utility and cooling bills for the premises. A restaurant with a large glass frontage facing the afternoon sun will cost more to cool than one that does not.

Licences and permits carry fees when issued and when renewed, usually every year: the trade licence, food establishment approvals, and any separate permits for alcohol, outdoor seating, signage or other activities.

List every licence and permit with its renewal fee and date, and put them in the budget in the month they fall due. Our guide to restaurant licence Dubai: what you apply for maps the permissions a venue holds.

Restaurants charge VAT on their sales, at the standard UAE rate of five per cent, and pay it to the Federal Tax Authority. Menu prices shown to guests must include VAT, so the VAT is part of the price, not added to it.

Businesses are also subject to UAE corporate tax, at nine per cent on taxable income above AED 375,000. Our guide to VAT on restaurant sales in the UAE covers how VAT sits on a menu price.

Delivery is a large part of trade for many Dubai restaurants, and the platforms charge commission on each order, sometimes with extra fees for marketing and promotions. For a venue with significant delivery sales, commission can be one of the largest costs.

Budget delivery sales and commission separately from dine-in. Our guide to delivery in Dubai: the channels and the margins covers the sums.

Card payment fees take a share of every card payment, and most guests in Dubai pay by card. Terminal rental, bank charges and the cost of handling cash add to it.

Compare the fees offered by different providers, at your expected volume, and include them in the budget as a share of sales. Small differences in the fee on each payment add up over a year.

Many ingredients on Dubai menus are imported, and their prices can change with exchange rates, shipping costs and supply. A menu costed in one month may cost more a few months later without anything changing in the kitchen.

Watch the prices of your main imported ingredients, and review the menu's costs regularly. Where a key ingredient is imported from one source, know an alternative.

Marketing in Dubai often includes launch events, social media, influencer visits, listings and promotions on delivery platforms. Launch marketing can be a large one-off cost; ongoing marketing a steady monthly one.

Set a marketing budget as a share of expected sales, with a separate line for the launch. Measure what each channel brings, so the budget can move to the ones that work.

Insurance for the premises, the contents, liability and business interruption is a recurring cost, often required by the lease. Maintenance of the kitchen equipment, extraction, refrigeration and air conditioning is another, and in Dubai's climate, cooling and refrigeration maintenance deserve a generous line.

Plan regular maintenance rather than waiting for breakdowns. A fridge that fails in August costs far more than its annual service.

Systems include the till, bookings, kitchen screens, accounting, payroll and any inventory or delivery tools. Each has a subscription or a fee, and some charge per transaction or per cover.

Count the full cost of each system over a year, at your expected volumes. Our guide to software subscriptions: the audit worth doing covers how to keep this line in check.

Dubai's summer brings a quieter period for many venues, as temperatures rise and many residents travel. Sales fall while rent, salaries, accommodation and many other costs stay the same.

Build the summer into the budget: lower sales for those months, and enough cash to carry the venue through them. Our guide to Dubai summer trade: surviving the quiet months covers how to plan for it.

Ramadan changes the pattern of trade for a month, with fewer daytime sales in many venues and busy evenings around iftar and later. Staffing patterns change too, and working hours in the private sector are reduced during the month.

Budget Ramadan as its own period, with its own sales pattern and staffing. Our guide to Ramadan restaurant hours and the service that fits covers how trade shifts.

Equipment wears out faster in a hot climate and a busy kitchen. Refrigeration, air conditioning, extraction and dishwashers all need repairs and, eventually, replacement. A budget with no line for them meets the cost as a surprise.

Set aside a monthly sum for repairs and a longer-term reserve for replacing major equipment. A fridge replaced on a planned date costs less than one replaced in an emergency in August.

A budget is a plan, and the year rarely follows it exactly. Review it each quarter against the actual figures, update the forecast for the rest of the year and look closely at any cost that has grown faster than sales.

The quarterly review is also when to renegotiate: supplier prices, service contracts and, at renewal, the rent. A cost that is never questioned rarely falls.

Build the restaurant budget month by month: covers by service, spend per head, sales, food and drink costs, the full cost of the team, rent and service charges, utilities and cooling, licences, marketing, delivery commission and everything else. Include the summer, Ramadan and the months when rent and licence payments fall.

Our guide to a restaurant budget for the year ahead covers the method; in Dubai, the cash timing of rent and licences deserves extra attention.

Test the budget with a cautious version: fewer covers, a lower spend per head and a slower start than you hope for. If the cautious version still survives, with cash to spare, the plan is sound. If it does not, change the plan before signing the lease.

Ask an accountant who works with restaurants in Dubai to review it. They will know which costs are commonly missed.

Most new restaurants take longer than planned to reach their expected sales. Keep a contingency for the opening costs that overrun and a cash reserve for the months before the venue is profitable, including at least one summer.

A business that runs out of cash in its first months often had a good concept and a weak cash plan. Our guide to cash flow: profitable and still short in January covers why.

An invented bistro's owner, opening in Dubai after years in Europe, builds a first budget that counts salaries, rent and food. An adviser reviews it and adds the costs it missed: visas and medical insurance for every member of staff, accommodation and transport for the kitchen team, the end-of-service gratuity, separate cooling charges, the mall's service charges, annual licence renewals and a summer with sales well below the spring.

The revised budget shows the venue needs more cash in reserve and a lower rent to survive its first summer. The owner negotiates more rent cheques, chooses a unit with lower service charges and opens in the autumn, with a reserve to carry the venue through the following summer.

servearound does not hold costs: there is no rent, payroll, stock or supplier data in it, so the budget and the costs side stay in your own sheet and accounts. What it holds is the sales side to test them against, on the venue's own clock.

Payment analytics show what was collected by day and by hour and how it was tendered, reservation analytics show covers by day and hour and by shift and the dashboard shows revenue, covers and spend per cover against the previous period, so each month's actual sales can be set beside the budget. Bills for any dates download as a spreadsheet for the accounts. See Analytics.

Rent and service charges, the full cost of staff, food and drink, utilities and cooling, licences, delivery commission, marketing and overheads.

Because visas, medical insurance, accommodation, transport, leave and the end-of-service gratuity add to each salary.

Often in advance, by a small number of cheques, which affects cash flow.

Five per cent, included in the menu price.

Yes, at nine per cent on taxable income above AED 375,000.

Because sales fall in many venues while most costs stay the same.

From quotes and offers for your own site and concept, not from articles.

Yes, ideally an accountant who works with restaurants in Dubai.

Restaurant costs in Dubai follow the familiar shape of rent, people, food and drink, utilities and overheads, with lines that are particular to the market: rent paid in advance, service charges, visas, medical insurance, accommodation and transport, the end-of-service gratuity, separate cooling, annual licences, VAT at five per cent and a quiet summer. Restaurant operating costs that ignore any of them understate the real cost of the venue.

Build the restaurant budget month by month from real quotes, test the restaurant rent in Dubai against realistic sales, plan the cash timing of rent and licences, carry the venue through its first summer and test a cautious version before signing anything. Treat it as part of opening a restaurant in Dubai, not an afterthought.