Fast food restaurants in KSA overcharging customers

Fast food restaurants in KSA overcharging customers
Updated 31 January 2016

Fast food restaurants in KSA overcharging customers

Fast food restaurants in KSA overcharging customers

RIYADH: Saudi businessmen who own international restaurant franchises here in the Kingdom tend to double the actual prices of meals compared to the prices in their countries of origin.
Commenting on this phenomenon, Sulaiman Al-Samahi, chairman of the National Consumer Protection Association (CPA), said the high prices are totally unjustified and exaggerated.
“Entrepreneurs seek to make a quick buck without any consideration of the other factors involved. The Ministry of Commerce and Industry must intervene to control the varying prices of meals inside the Kingdom compared to their prices in the same restaurants and for the same products abroad,” said Al-Samahi.
He explained that one of the causes of the high prices is the existence of commercial concealment, by mandating the management operations to an expatriate who establishes the strategies and the general policy of the business in exchange for an annual amount given to the owner of the franchise.
“The manager of the business grabs the remaining profits which are sometimes double the annual earnings of the owner, leading to the increasing prices paid by the consumers,” he added.
He said that some entrepreneurs are not satisfied with a profit margin of 30 to 40 percent even though this yields good revenues in general, noting that the majority of businessmen owning franchises are not aware of the fact that if they accepted reasonable profit margins their businesses would actually flourish and demand would increase, leading to higher profits in the end, or the expansion of the business.
On the other hand, Amet Jan, director of operations at a restaurant franchise, said that the high prices are the result of importing all the components of the production operations from outside the Kingdom, including the meat used in some meals, adding that "the same prices paid here in the Kingdom are paid in similar restaurants in the Gulf states."
The other reasons for such high prices, he added, are the annual amounts paid as Zakat and the full time staff with monthly salaries, unlike the other countries around the world where workers can apply for part-time jobs and the management can cut down on the number of workers if profits drop. “In accordance with the Saudi labor laws we are required to pay monthly salaries regardless of the profit or loss margins,” he said.
An inspection tour made by the publication of a number of restaurant franchises found that clients believe that the poor control and supervision of the regulatory authorities have allowed the restaurants to inflate their prices. “I used to buy the same meal in the US for about SR37. Here in the Kingdom I was surprised to find that the price of the same meal amounts to SR75,” said Sultan Al-Obaid, a Saudi client at a restaurant.
Salem Al-Houaiti agrees with him, saying that the high prices paid in the Kingdom are unjustified.