Whenever we speak about food, the word “Restaurant” always comes to mind. “Where are we going to have dinner this Saturday? “ 

While we think about our dinner, the investors always think about its profitability. Over the past decades, the restaurant business in Dubai has proven as one of the most profitable businesses in Dubai. As per statistics, more than eleven (11) thousand restaurants have been formed in the past twelve (12) months, which is almost 900 to 1,000 restaurants are formed in a month in Dubai, which is a sign of how demanding a restaurant business is!

When speaking about serving food, it’s not always related to restaurants, it can also be a cafeteria. So, if you are planning to start a restaurant business in Dubai, it’s crucial for you to understand first the key differences between a restaurant and a cafeteria before you start the licensing procedures of your new food establishment. 

Restaurant Vs Cafeteria: similarities and differences

Operating a restaurant activity in Dubai means opening a physical space which is equipped with suitable installations to prepare and serve food and snacks inside, as well as various beverages for immediate consumption by the public and to sell the prepared food in non-commercial quantities.

While opening a restaurant allows you to prepare the food inside the restaurant’s kitchen, a cafeteria does not allow the preparation of the food. Instead, a cafeteria license only allows you to sell ready-made food (i.e. snacks), juices and beverages to the public. 

This difference in operating each of these activities is decisive to know which license you should get from the Licensing Authority, as for each activity there are different rules, procedures and requirements to fulfill.

Nevertheless, both restaurant and cafeteria activities are classified under the same activity group “Restaurants and Coffee Shops”. Therefore, both activities can be combined under the same trade license, allowing you to prepare food in your restaurant and to serve ready-made food at the same time. However, having a restaurant license only can allow you to do the same, but having a cafeteria license will not allow you to prepare food unless you add the restaurant activity to your license, while fulfilling all the requirements that must be met in a restaurant. 

Depending on your business plans, whether your plan is to set up a restaurant or a cafeteria, you should be aware of the minimum size required for each business:

• For a restaurant license, you are required to rent or own a physical space in Dubai that should be a minimum of 750 sq.ft size (area of the kitchen should be (300) sq.ft size or 40% of total whichever is bigger);
• For a cafeteria license, you are required to rent or own a physical space in Dubai that should be a minimum of 500 sq.ft.

Note that for both activities, additional space might be required based on the equipment, storage and quantity of food produced/processes.

Despite the differences, whether in the nature of the business operations or in the size of the space required for each business, it is important to know that both activities are regulated in Dubai, as getting the license cannot be instant and it’s subject to Dubai Municipality’s approvals (Food Safety Department & Drainage Department) to meet all health and safety requirements for the interest of consumers. However, Dubai Municipality requirements might differ in its conditions between a restaurant and a cafeteria in terms of food safety management, ceilings, equipment, plumbing systems and others due to each activity’s type and module.

Additionally, the issuance of a restaurant/cafeteria license are both subject to Dubai Civil Defense rules and safety standards, as once the license is issued by the Licensing Authority, the owner should get a Certificate of Safety from Dubai Civil Defense immediately, to ensure that the restaurant/cafeteria meet all annual maintenance and safety requirements.

Is it required to have a local partner to get a restaurant/cafeteria license in Dubai?

Before 1^st of June 2021, any expatriate who wants to open a business on the mainland in Dubai had to have a local partner who owns 51% of the shares as a mandatory requirement to get the license. So, most of the expatriates preferred to set up a business in one of the free zones to avoid such requirement.

However, effective from 1^st of June 2021, the UAE Commercial Companies Law was amended, and expatriates can have 100% foreign ownership for most of the businesses, even though their business is on the UAE mainland. Such changes attracted more investors to open their business on the mainland instead of free zones. Moreover, since this amendment to the law, most of the businesses that are allowed to be 100% foreign ownership amended their licenses by removing the local partner and they started enjoying full foreign ownership of their business.

The restaurant/cafeteria activity was one of these activities that became exempt from having a local partner to get the license. You can now be the sole foreign owner of your restaurant/cafeteria on the mainland in Dubai without the need to have a local partner to get your license.

Is there a difference in opening the restaurant/cafeteria on the mainland or in a free zone in Dubai?

It all depends on the location that you choose for your restaurant/cafeteria. If the location that you chose is in a free zone, then you should get your license from the authority of that specific free zone. And if you choose the location on the mainland, then you should get your license from the Department of Economy and Tourism in Dubai. However, there’s no difference whether you open your restaurant or cafeteria on the mainland or in a free zone in terms of serving the food to the public, but the Licensing Authority who will issue your license will be different. For both activities, it is important to know that even if you open your restaurant or cafeteria in a free zone, it remains subject to Dubai Municipality’s approvals, which is a point of similarity between a restaurant and a cafeteria as both activities are related to food service which remains regulated despite the business location.

How much is the cost to open a restaurant/cafeteria in Dubai?

In terms of cost, setting up a restaurant is more expensive than setting up a cafeteria in Dubai. This difference in costs and fees is related to many factors:

• The minimum required space: the minimum physical space of the restaurant (750 sqft) is bigger than the minimum physical space required for the cafeteria (500 sqft), which affects the rent price. Moreover, the annual rent price would affect the license fee as 5% of the annual rent price shall be included in the license fees paid to the Department of Economy and Tourism. 
• The activity module and type: in a restaurant, the food is prepared inside the kitchen which requires a fully equipped kitchen place that meets all Dubai Municipality’s requirements, but in a cafeteria, the food is already made, and it needs to be sold directly to the public without any preparations, which affects the cost and expenses while setting up a restaurant than setting up a cafeteria.
• Labor cost: having a fully equipped restaurant to prepare and serve food to the public can incur a lot of costs in terms of the staff (i.e. chefs, waiters, supervisors) who must fulfil their obligations inside the restaurant and towards the customers. As the food preparation is inside the restaurant, the number of staff would be higher than the number of staff in a cafeteria, which also affects the cost that it incurs.

How can CorpLex help you?

To setup your restaurant or cafeteria smoothly and in compliance with legal requirements in Dubai, it is always recommended to seek a business consultant’s advice before starting the process of your company set up. 

At CorpLex, we always tend to understand your business plans first to give you the best option that helps your plans to grow!

If you are hesitant to understand which license you shall get and frustrated from the long legal journey to finalize all the formalities to get your license, CorpLex team is here to take it over! We can help you from the first step to start the licensing process until your license issuance. And we do not stop there! We can help you with everything you need to run your business from obtaining visas, opening bank accounts, managing your accounting, to filing taxes. We look after all your legal documentation to ensure that your business is in accordance with all UAE standards. By the end of the day, we want you to succeed and it’s great to have a nice dinner in our client’s restaurant!