RIYADH: Saudi Arabia’s rapidly expanding foodservice industry is fueling demand for new financing models as Vision 2030 accelerates tourism and hospitality growth.
With restaurant sales rising about 7 percent annually, according to Bain & Co., alternative funding platforms are increasingly stepping in to support premium dining concepts.
Vision 2030 has transformed demand in the F&B sector faster than traditional capital providers have adapted. According to Arjun Vir Singh, partner and global head of financial services at Arthur D. Little, Saudi Arabia ended 2025 with small and medium-sized enterprise credit reaching SR467.7 billion ($124.7 billion), up 33 percent year on year, with banks accounting for SR446.6 billion of total financing.
Lending to MSMEs now represents 11.5 percent of total bank loan portfolios, up from 9.6 percent a year earlier, though still below the Vision 2030 target of 20 percent.
“The distribution of this capital reveals the structural issue. Micro enterprises — those with annual revenues below SR3 million, where most independently owned premium concepts sit — received only SR83.3 billion, while medium-sized enterprises absorbed SR220.9 billion. Capital is available, but it is concentrated where underwriting is easiest rather than where growth is most dynamic,” Singh told Arab News.
Financing landscape
Singh noted that Saudi Arabia’s tourism sector, which welcomed an estimated 122 million visitors and generated SR300 billion in tourism spending in 2025, is driving sustained demand for premium dining across giga-projects and major events.
However, traditional banks remain cautious about financing asset-light, brand-driven restaurant operators, accelerating the rise of alternative funding models such as revenue-linked financing and non-bank lenders.
Federico Piro, partner at Bain & Co., said: “MENA’s growth is being shaped by channel evolution and rising expectations on convenience, especially in markets like the UAE, where e-commerce is already meaningful and still expanding. Companies that adapt route-to-market, sharpen their portfolios, and execute with discipline can capture growth while strengthening brand resilience.”
According to Arthur D. Little, traditional bank financing falls short in Saudi Arabia’s premium F&B sector for three key reasons.
“First, approval timelines — often measured in weeks — do not match the speed at which operators need to act, whether to secure locations, expand, or capture demand. Second, collateral-based underwriting is ill-suited to asset-light, brand-driven businesses with limited tangible assets. Third, fixed repayment schedules are misaligned with highly variable revenues shaped by seasonality, Ramadan cycles, and tourism,” Singh said.
He added: “As a result, these businesses do not primarily rely on banks for capital. Instead, they tend to default to family capital, supplier credit, and community-based funding — informal capital sources. In practice, the real competition is not between financial institutions, but between formal finance and informal funding sources.”
Singh also said alternative financing models are gaining traction by offering faster, more flexible funding structures aligned with restaurant cash flows while reducing reliance on personal guarantees.
Technology and data
Technology and data are also becoming critical in improving restaurant performance and attracting investment.
“On the operational side, AI-driven tools are materially improving unit economics. Applications such as menu engineering, demand forecasting, dynamic pricing, and personalized customer engagement enable operators to optimize margins, reduce waste, and stabilize revenues. As adoption scales, these capabilities are rapidly shifting from competitive advantage to operating requirement,” Singh said.
Capital is available, but it is concentrated where underwriting is easiest rather than where growth is most dynamic.
Arjun Vir Singh, partner and global head of financial services at Arthur D. Little
“On the financing side, the impact of data is even more transformative. Restaurant POS data now captures revenue patterns, customer behavior, and seasonality in real time — making revenue traction effectively the new collateral,” he added.
Singh noted that Saudi Arabia’s e-invoicing, payroll, credit reporting, open banking, and POS infrastructure are enabling more accurate real-time credit assessments for restaurants and small businesses.
Paolo Misurale, partner at Bain & Co., said: “While many European markets are still struggling to resume volume growth and several emerging markets remain heavily price-led, the Middle East continues to stand out as a growth engine where demand is expanding on the back of real consumption growth. Markets like Saudi Arabia and the UAE are growing volumes by around 4-6 percent, compared with a global average of less than 2 percent.”
Misurale added that consumers are becoming increasingly selective and time-constrained, making execution and in-store performance more important.
“As a result, success will depend less on innovation alone and more on scaling what works efficiently, supported by data and AI to improve forecasting, availability, and shelf conversion,” he said.
Rethinking financing
SPICE is a Saudi-born premium dining platform focused on helping upscale and fine dining restaurants access growth capital in line with the Kingdom’s hospitality ambitions under Vision 2030.
Zeid Husban, co-founder and CEO of SPICE, said banks still treat restaurants like traditional SMEs, overlooking seasonality, footfall volatility, and brand equity.
“That experience is what SPICE was built on, and it is why our model is designed the way it is to put restaurants and their growth first,” Husban told Arab News.
Success will depend less on innovation alone and more on scaling what works efficiently.
Paolo Misurale Partner at Bain & Co.
He explained that SPICE provides Shariah-compliant, non-dilutive growth capital to premium restaurants by pre-purchasing future food credits, allowing venues to access upfront funding without debt or equity dilution. Repayment is tied directly to customer spending through its app.
The model is designed to curate both restaurants and diners to protect brand equity and align incentives, creating what Husban described as a demand-linked financing ecosystem.
Husban said Saudi Arabia’s foodservice market is projected to reach nearly $62.7 billion by 2033, growing at more than 8 percent annually, with restaurants and cafes already accounting for 29 percent of all point-of-sale transactions worth SR99 billion.
He added that Vision 2030 has positioned premium dining as a core part of the Kingdom’s tourism strategy as Saudi Arabia targets 150 million annual visitors by 2030. “The single biggest opportunity would be broader encouragement for participation in demand-backed dining capital as a recognized data-driven asset class. Saudi Arabia has built genuinely world-class financial infrastructure over the past 10 years.
“The foundations are strong, and we believe the next natural evolution is for capital providers, investors, and institutions to develop a deeper understanding of what demand-backed, data-backed dining finance actually looks like as an instrument,” he said.
“Saudi Arabia gave us the space to take risks, to move fast, and to build something that did not exist before. There is genuinely no better place in the world right now to create a new category from scratch, and that conviction is why we chose to headquarter SPICE here after two previous exits in the region.
“We built ifood.jo, Jordan’s first food aggregator, which was acquired by Delivery Hero and renamed to Talabat in the region, and then POSRocket, a cloud POS system that was acquired by Foodics. Both journeys taught us where the biggest gap in the restaurant industry is, and SPICE is our answer to that,” the CEO said. Husban added that SPICE has launched its Apple and Android apps exclusively in Saudi Arabia, offering restaurant discovery, bookings, seamless payments, and 20 percent uncapped cashback. The platform is also expanding through partnerships including Cool Inc at Via Riyadh, with brands such as Gymkhana and Berenjak already live.
The company said it is building a Saudi-first model that could later be replicated across the GCC and beyond.
