Introduction
When facing a severe organizational issue or deciding whether starting a new business is a good idea, it is essential to use different efficient methods and approaches to assess the situation. For example, the PESTEL analysis allows companies to evaluate the circumstances in which they operate from the point of view of political, economic, social, technological, environmental, and legal forces. The purpose of this paper is to analyze all these factors and learn whether it is beneficial to open a café in Kuwait.
The PESTEL Analysis
Political Factors
The first group of forces to explore includes different political factors. Regarding international trade, it does not strongly affect the café business in Kuwait because there is no need to import coffee from other countries. Concerning some restrictions, in 2021, the authorities “allowed restaurants and cafes to receive customers for dine-in only from 5 a.m. until 8 p.m.” (Xinhua, 2021, para. 16). Only home delivery or takeaways are available in the evening. This requires close consideration as the café management will need to decide whether an emphasis should be placed on dine-in or takeaway services. Taxation rules in Kuwait are relatively simple, and if a business is of foreign ownership, corporate income tax is 15%.
Economic Factors
Second, specific economic factors might also make opening a café in Kuwait more attractive. According to researchers, in Kuwait, “GDP is on the rise, as well, growing 2.9% annually since 2010 — below the values of emerging markets but still high in comparison to advanced economies” (Aaron Allen & Associates, n.d., para. 2). It is also noticeable that per capita income in Kuwait is on the rise since 2009, which also results in the enhancing spending power (Aaron Allen & Associates, n.d.). Inflation rates have been growing recently, with a mark of 3.92% in 2022 (Statista, 2023). However, this point is relatively standard, and inflation is predicted to drop to 2% by 2025 (Statista, 2023). Eventually, there are relatively low rates of unemployment in Kuwait.
Social Factors
One may find some exciting factors when exploring social forces affecting the café industry in Kuwait. For instance, according to Allafi et al. (2020), it is more reasonable to focus on women and young people as most of the target audience. The authors indicate that coffee in Kuwait is the most valued drink (Allafi et al., 2020). However, “Kuwait is an affluent society, has high rates of obesity and non-communicable diseases such as hypertension and type-2 diabetes” (Allafi et al., 2020, p. 480).
In other words, while locals love this drink, they become more aware of their health concerns, which might affect the number of visitors and reduce revenue (Allafi et al., 2020). Another social factor is that Kuwait’s lack of labor regulations makes some local employees more vulnerable as the state barely protects them. However, they are responsible and dedicated workers if provided with good working conditions.
Technological Factors
This group of forces is relatively strong, suggesting that opening a café in Kuwait is a valuable idea. Research indicates that the country’s use of relevant and high-quality technologies is rising (Aaron Allen & Associates, n.d.). For instance, “more than 57% of the country’s population is on Facebook, and some 80% is connected to the Internet,” meaning that online advertising becomes available and effective (Aaron Allen & Associates, n.d., para. 6). Advances in technological solutions in the country now allow for quick food and drink deliveries, and a significant number of coffee machines and other professional kitchen technique allows to serve a vast range of drinks.
Environmental Factors
Unfortunately, several unpleasant environmental forces can significantly affect the café business. According to the International Trade Administration (2021), the country faces a lack of soil resources, water scarcity, and harsh climatic conditions that negatively impact the agriculture sector and industry. High levels of food insecurity in Kuwait lead to specific challenges, such as a lack of healthy products (International Trade Administration, n.d.). Consequently, it will be required from the café management to take an active role in enhancing Kuwait’s sustainability.
Legal Factors
Lastly, observing specific legal factors that might shape the café business is necessary. In Kuwait, cafés must adhere to the Hazard Analysis and Critical Control Point (HACCP) guidelines and receive a relevant certification. Considering the COVID-19 pandemic, cafés must also follow sanitation and safety measures to keep clients and workers unexposed to the virus (Aaron Allen & Associates, n.d.). Adhering to local legal norms should not be challenging for a recently opened café.
Conclusion
To conclude, opening a café in Kuwait seems to be a compelling business idea. The industry is negatively affected by environmental forces, and it will be required from café management to ensure it follows all guidelines and sustainability practices. Other factors are relatively positive, allowing the café to thrive in Kuwait. Among other health issues, local people suffer from high blood pressure, which, however, does not prevent them from enjoying coffee. Legal and political forces are not very different from other countries. Eventually, economic factors appear to be rather beneficial and promising.
References
Aaron Allen & Associates. (n.d.). Factors affecting the Kuwait restaurant industry. Web.
Allafi, A. R., Saleh, A., Aldughpassi, A., Al-Haifi, A. R., Hersi, A., Ahmad, F., & Aljluwi, S. (2020). Culture, gender and coffee drinking in Kuwait. Progress in Nutrition, 22(2), 479-484. Web.
International Trade Administration. (2021). Kuwait agriculture. Web.
Statista. (2023). Kuwait: Inflation rate from 1988 to 2028. Web.
Xinhua. (2021). Restaurants, cafes in Kuwait start dine-in service after months of closure over COVID-19 concern. Web.