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Food Industry: What Now?

By Tarek Musanna

· Dhaka,Food Industry,Market Insight 2016

After the recent incident in Gulshan, Bangladesh was expected to get hit on several fronts. Those included the export of readymade garments industry, which did take a dip; but local businessmen attributed that to the Eids, rather than the incident. One industry that was severely affected by the incident was the hotel and restaurant industry.

Initial Reaction

Gulshan, Banani, Baridhara, Uttara – Dhaka’s posh zones have up to 500 restaurants, employing nearly 100,000 people. The ones that felt the heat the most, initially, were the ones set up in or near diplomatic zones and had foreigners as target customers in Gulshan and Banani. Restaurants in Gulshan and Banani experienced a drop up to 95% in customers in the first few weeks. A number of foreigners living in that area straight up left the country, making a hole in those restaurants’ existing customer prospects. As for the rest, people were not comfortable showing their faces in public. Even if the security of the places were tightened like the rest of the capital, people were still afraid. Some avoided the area altogether because of the large number of security check posts. Youngsters eating out as groups saw the check posts as an inconvenience. The month of July, most of August and some of September were an unsettling time for restaurant owners. More so when Government decided to shut down some of the places excusing businesses in residential areas.

Compared to the expensive places, the medium and small ventures didn’t sustain as much damage, except for the food courts in the shopping malls. The food courts in Shimanto Square, Bashundhara City and Jamuna Future Park struggled for a couple of weeks as there were rumors of possible attacks in these places. But these places have recovered quicker than the ones in Gulshan. Establishments in Dhanmondi and Uttara didn’t incur as much loss either.

On the contrary, the food delivery services such as Foodpanda, HungryNaki! And Go! Fetch saw a surge in business as people would rather dine in than venture out.

The State Right Now

Since October, the situation has improved a lot. Due to the new trend of Bangladeshi people checking in at restaurants during Eid and other festivities, the places are crowded again. The fear among people has diminished quite a bit and they feel comfortable moving around again. Some of the restaurants evicted by the Government have relocated themselves and started operations. The usual scene has returned as most places have recorded sales more than July and August combined in a few days of September.

Investing in the Industry

There’s an idea among people that a restaurant in Dhaka will be profitable no matter what. Even though the industry is very saturated and competitive, people still look to invest here. After the incident, it proved to be a very volatile and high risk sector. But the actions taken by the Government seemed to have worked and normality has returned, at least among the Bangladeshi people. The foreigner oriented, expensive restaurants took a big blow and still haven’t recovered fully as a significant amount of their customers have left the country. But the investors haven’t given up on this sector yet as many establishments are still coming up in full swing and some are being rebranded as well. It has been made quite apparent that the people of the country will always have their love of food and eating out.

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