I’m not sure if you’ve recently seen news of a law that was passed on the 10th of April and enacted on the 17th of April.
The Law, in its first article, states the following:
“Delivery charges –
Within the town of the restaurant 0.250 KD
Outside of the town of the restaurant 0.500 KD
Minimum order amounts will not be allowed on meals or single items. Delivery must be done according to the rules above.”
It has a few other articles that are reasonable, but it’s this first one which I believe to be unreasonable.
First a little background on myself. I’m a budding entrepreneur with almost no key money. I don’t have a family office I can withdraw funds from at leisure and as such predicated my entire business model on hard work and financial projections that I update on a daily basis and continue to tweak to ensure I can manage my cash appropriately until I break even.
I have been operating for almost a year now, and recently I’ve been able to just about touch the horizon of break even-Dom. Ah yes, the fabled land of not having to worry about whether or not you’ll have enough cash to pay your rent and employees.
A big part of seeing this horizon has been based on my restaurant’s ability to attract orders on a daily basis to supplement direct cash injections into the company that I regularly make from my own day job salary. I was able to accurately model the income and growth of these cash deliveries by building my model according to a fixed minimum order amount when I make a delivery.
Here’s the best part. As any startup will attest, it’s physically impossible to make all deliveries ourselves on a daily basis with just one driver and a car. As such we have two solutions:
1- Pray to our lucky stars that we somehow find enough cash lying around to pay for more drivers and cars. (Oh, and that’s if we can get more drivers on our Shu2oon documents, but let’s leave that for another day).
2- Contract a third party to do our deliveries for us at an exorbitant but necessary price.
Naturally, being the pragmatic fellow I am, I went for the latter, though on occasion my partner does leave a few offerings for the cash Gods to somehow rain upon us. He’s a believer though.
Anyway, we began looking for perishable delivery services with as quick turnaround as possible ( ps quickest turnaround available is an hour from placing the call, which is why restaurants delivery times on Talabat are normally one hour or more – yes, a lot of us use third parties). Once we got a shortlist, we started using them to find someone that can stick to a schedule.
No trials come free of course, so this is out of pocket money to make sure we can deliver on time before we even start delivering.
Here’s the kicker though:
Price per trip within the first 6 ring roads?
2.500 KD – 3.000 KD
So before we even start preparing your order, I’ve already paid 2.500 to 3.000 KD of your order amount to this third party.
Let’s assume I’m a brilliant negotiator and got the 2.500 KD per trip rate (ps – I am…)
So here I am looking at your order for let’s say 3.500 KD of food.
In order for me to make money on this order, I’m going to have to make sure your ingredients and the labor cost to make it cost are equal to or less than 1 KD.
Let’s assume I’m Superman and somehow make the above work (hint: it’s pretty impossible if you’re using quality ingredients and quality staff).
So now I’ve got 2.500 KD delivery cost and 1.000 KD ingredients AND labor/staff overhead costs rolled into one.
That’s a total of 3.500 KD in this best case scenario in costs.
If I have to follow this new law without placing a minimum order value on deliveries, I have broken even on this delivery. I have not made not lost any money.
And maybe for some that’s all well and good (honestly it isn’t good…for anyone), in which case they’re simply fulfilling orders for people without any gain.
And actually they’ve lost something even more valuable, the time they had to spend fulfilling an order that made them no money. So this break even model assumes there’s no inherent cost for time…
And that, my friends, is bogus.
If time had no value, your sitting at a desk doing nothing on some days should by default also equate to no pay. And yet you do get paid, because your employer understands your time has an implicit value that you have contracted to and seek to honor.
In the above scenario, my business breaks even on your order and loses the implicit value of time spent painstakingly preparing your order. But we get no recompense because we are a seller in a supposedly free market that you buy from.
But this market isn’t free at all, because all its done is protect the consumer’s right to eat whatever they want whenever they want (which mind you, isn’t really a right at all).
So here I am, looking at this law and thinking about how I can work as a business moving forward.
I can’t predict cash flows any longer from my orders. My bills are piling up, and I can’t get cash from banks or funds. I’m pretty much staring down the barrel of a gun, and my government has decided to pull the trigger.
Good bye, and good luck,
Signed,
Ahmad Jafar (Al Nata Co-Founder)
Ahmad has already submitted a letter of grievance but he’s certain they won’t hear it without other parties being a party to the grievance claim. So Ahmad’s asking anyone that owns or runs a restaurant that feels this law will negatively impact them to contact him directly to create a union or class action filing of sorts. To get in touch with him you could contact him on [email protected]
