The lively atmosphere, the sizzle from the kitchen, and the contented faces of diners reflect the steady and impressive growth of Saudi Arabia’s restaurant sector.With a youthful population eager to try new cuisines and a strong spending capacity, the Kingdom has become an attractive destination for entrepreneurs looking to enter the food industry.
According to Mordor Intelligence, the restaurant sector in Saudi Arabia was valued at USD 23.2 billion in 2023 and is projected to reach USD 33.3 billion by 2028, growing at a compound annual growth rate (CAGR) of 7.3%.
However, stepping into this expanding market requires careful research and strategic planning. Below is a detailed guide explaining the essential steps to start a restaurant business in Saudi Arabia.
How to Start a Restaurant in Saudi Arabia
1. Choose a Business Structure
Before opening your restaurant, you must decide on the legal structure that best suits your business model. Each option has its own set of benefits and requirements, so it’s important to make a thoughtful decision.
Common business structures include:
- Limited Liability Company (LLC) – the most preferred option
- Joint Stock Company
- Sole Proprietorship
- Partnership
2. Register Your Business
All restaurants must be officially registered with the Saudi Ministry of Commerce and Investment (MCI). This registration can be completed either online or in person by submitting the necessary documents to the authorities.
3. Select the Venue and Property
Location plays a key role in a restaurant’s success. Once you’ve chosen a site, ensure you obtain all required permits from local authorities. When selecting a property, consider factors such as:
- Accessibility
- Foot traffic
- Parking availability
4. Register Your Restaurant Name
Pick a unique and appealing name for your restaurant. Once chosen, you’ll need to register it with the Ministry of Commerce and Investment (MCI) to make it official.
5. Obtain a Commercial Registration (CR)
A Commercial Registration (CR) is mandatory for any restaurant operating in Saudi Arabia. This can be acquired through the MCI, allowing your business to operate legally.
6. Health Department Approval
Before opening, the Saudi Health Department will conduct an inspection to ensure your restaurant meets all health and safety regulations. Once approved, you’ll receive official authorization to operate.
7. Get the Required Licenses
In addition to your business registration, you’ll need to acquire various operational permits, such as:
- General Business License
- Permit for Outdoor Seating
- Permit for Live Music or Entertainment (if applicable)
Cost of Opening a Restaurant in Saudi Arabia
Starting a restaurant in the Kingdom involves both one-time and recurring costs. These expenses vary based on several factors, such as restaurant size, type, location, and design.
One-time costs include:
- Licenses and permits
- Furniture and interior setup
- Kitchen equipment
- Legal and consultancy fees
- Security deposits
- Technology systems (like POS software)
Recurring costs include:
- Rent
- Employee salaries
- Ingredients and groceries
- Insurance
- Advertising and marketing
- Utility bills (electricity and water)
Advantages of Opening a Restaurant in Saudi Arabia
Launching a restaurant in Saudi Arabia comes with numerous benefits, such as:
- A growing population with strong purchasing power
- A diverse mix of locals and expatriates
- A continuously expanding market
- Supportive government initiatives for entrepreneurs
- A tech-savvy customer base
- Strategic geographic location
- Attractive tax incentives
Saudi Arabia’s cultural diversity and government-backed business environment make it an ideal destination for ambitious restaurateurs. To ensure a smooth setup process, it’s advisable to consult experienced business advisors like Fahdan, who can guide you through every step.
Frequently Asked Questions (FAQs)
1.What types of restaurants are most successful in Saudi Arabia?
Restaurants offering international cuisines, fast casual dining, and specialty cafes tend to perform well, especially in urban areas with diverse populations. Traditional Saudi cuisine also attracts both locals and tourists.
2. Are there restrictions on serving alcoholic beverages?
Yes. Saudi Arabia strictly prohibits the sale and consumption of alcohol. Restaurants must comply with these regulations and focus on serving halal beverages.
3. How important is online presence for a restaurant in Saudi Arabia?
Extremely important. Social media platforms like Instagram, Snapchat, and X are widely used for discovering restaurants. Having a strong online presence helps attract customers and build brand awareness.
4. Can foreigners own a restaurant in Saudi Arabia?
Yes, but foreign investors typically need to partner with a local sponsor or follow regulations set by the Saudi Arabian General Investment Authority (SAGIA) for foreign-owned businesses.
5. What are the labor laws I should be aware of?
Employers must comply with Saudi labor regulations regarding employment contracts, working hours, annual leave, end-of-service benefits, and Saudization (employment of Saudi nationals).
6. How can I ensure food safety compliance?
Restaurants must follow SFDA guidelines, including proper food handling, storage, and preparation. Regular staff training and periodic inspections help maintain compliance.
7. Do I need insurance for my restaurant?
Yes. Insurance is recommended to cover property damage, liability, employee accidents, and other operational risks.
8. How should I price my menu items?
Pricing should balance affordability with profitability. Consider factors such as food costs, operational expenses, target audience, and competitor pricing in your area.
9. Are there opportunities for franchising in Saudi Arabia?
Yes. International and local franchises are popular and can be a faster route to market, benefiting from brand recognition and established business models.
10. How can I attract repeat customers?
Focus on high-quality food, consistent service, cleanliness, loyalty programs, promotions, and engagement through social media to encourage repeat visits and build a loyal customer base.
