“If the rent doesn’t kill your business, then operational costs and excess permit fees do. If you survive that, you’ll have to withstand Qatar’s lack of buying power,” one former business owner told Doha News.
An eerie silence pervades a once vibrant street in Qatar, as shuttered cafes and restaurants stand there as reminders of what once were individual business dreams.
This scene, captured in a video by a local influencer, has sparked conversations about a business landscape teetering on the edge of over saturation and the unrelenting rise in operational costs.
Qatar post-World Cup: the business boom that busted
The 2022 FIFA World Cup spotlighted Qatar in unprecedented ways. Beyond the football field, the event was a chance for the country to showcase its economic potential.
Fast forward eight months, the remnants of that buzz can be seen in the businesses that have remained – and those that have not.
“In Qatar we are facing an economic slowdown due to hosting the world cup. This is very common in the economy with serval nations that hosted either the World Cup or the Olympics, which could be either good or a bad thing,” Majed, an entrepreneur who asked to remain anonymous, told Doha News.
While the World Cup brought a surge of activity and a temporary economic boom, some businesses did not survive the aftermath.
From high rents to an overflow of similar business ideas, entrepreneurs faced a post-event reality check. “Many businesses launched with an eye on the World Cup bonanza, but few considered the ‘what next?’” Alaa Ali, Owner of Paradox Events & Marketing, told Doha News.
“Qatar has one of the most ripe markets in the region,” Ali added.
Yet, the entry of countless businesses vying for the attention of the same customer base has led to an overextended marketplace.
Lack of market research
One of the biggest issues plaguing new businesses is lack of industry research. Many entrepreneurs enter competitive industries without a clear competitive edge, expecting clientele loyalty without the necessary groundwork.
“They enter a very competitive industry with not a lot to offer,” said Ali.
“In the last few years, we had a wave of burger restaurants and cafes open in the country. You’d see one in every corner. It almost became a trend, and everyone with a little extra money did it,” Muneera, who requested to remain anonymous, told Doha News.
Two of Muneera’s friends had opened businesses that did not hit the one year mark before having to close down.
“It’s very sad seeing money and effort wasted, just because no time was put into coming up with a different idea or concept than what’s already in the market,” she added.
Being different is at times insufficient
While uniqueness can be a competitive advantage, it is not the only factor that determines business success in Qatar.
The economic climate, especially the escalating rents and operational costs, is a daunting challenge. Even establishments with a dedicated customer base, like Anime Cafe, find it hard to keep afloat amid the rising tide of expenses.
In February, customers of a popular cafe frequented by artists and anime fans bid farewell to the business after its announced closure, urging action from authorities to balance out high costs for entrepreneurs across the country.
Based in The Pearl, Anime Cafe served as a hotspot for creatives in Qatar as a space to gather and indulge in art, anime, comics, gaming and more.
The cafe suffered greatly because of the seemingly never-ending price increases business owners had to put up with, and like many others, the business just wasn’t able to keep up, causing its eventual closure.
Qatari businessman and social media influencer, Khalifa Al Haroon, recently took to Twitter to share his latest encounter with the Ministry of Culture at the newest branch of Store 974.
“The Ministry of Culture passed by my store in Vendome. They told me that I need an additional licence to sell PlayStation games. I can sell the Playstation and accessories, but not the games, and I need a permit to let people read magazines in the shop,” he said in a tweet.
They informed him that he needs to get a permit to sell PlayStation games, despite him selling the gaming devices and their accessories at his store. So far, the entrepreneur has had to acquire nine different licences for his new store in Vendome Mall.
He is also in need of an additional permit for customers to read magazines and he’d need to pay a fee of 15,000 QAR to obtain the permit.
“Turns out they want me to pay 15,000, and I can’t pay the amount, just to give people a corner to read Superman comics for free,” the Qatari influencer said in a tweet.
“I almost didn’t open my business just because I felt lost,” Ahmad, a business owner who requested to remain anonymous, told Doha News. “Even when I was more educated about the system, instead of calming me down, it made me feel further discouraged.”
To set up a business in Qatar, entrepreneurs must obtain a multitude of permits from various authorities.
The list, though exhaustive, includes commercial registrations, civil defence permits for safety compliance, environmental clearances, and trade licences. Then there are industry-specific licences, like the one Al Haroon required for selling PlayStation games.
The unpredictability of these requirements, coupled with the costs involved, pose significant barriers for start-ups. The financial burden of acquiring these licences can be a drain on limited funds, potentially stifling innovation and growth. The administrative maze also consumes a valuable resource that no start-up can afford to lose – time.
The Qatari government has been proactive in recent years in applying efforts to simplify the process. The single-window system, for example, an initiative designed to unify the process of applying for permits, has been a significant step forward.
Additionally, the “one-click” service from the Ministry of Commerce and Industry (MOCI) promises to expedite commercial registrations and licences digitally.
While these reforms have brought about substantial improvements, the challenges faced by Al Haroon and others suggest there is still work to be done. It is in no o
“I think the permit structures have to be revised in a way that they should actually serve a real purpose not just being there because a think tank the government hired a decade ago suggested them,” Ahmed, a businessman who has requested to remain anonymous told Doha News.
Al Haroon suggested in a tweet that the government follows other models set by other countries for permits.
“In many countries, you pay the right to a unified licence such as an “online store” and pay 5,000, which includes all fees to the relevant ministry,” the tweet read.
As Qatar aims to become a global entrepreneurial hub, balancing stringent regulatory oversight with the need for a business-friendly environment is critical.
This is particularly important for start-ups, who need a straightforward and predictable system to thrive.
However, it is notable that there have been a lot of positive changes that were recently implemented.
“While it may seems bad for many people, there are many good changes coming from MOCI where they are making the regulations and process easier and straight forward. As well as allowing foreign investors to enter the market without having a Qatari partner aside from QFC,” Majed told Doha News.
Lack of buying power
Sara, who requested her identity be anonymous, opened a cafe earlier this year in Al Aziziya.
“The location felt right, and the initial response was encouraging. But sustaining a cafe, especially in a competitive area like Al Aziziya, requires consistent foot traffic and sales.”
While she was passionate about her small project, she soon realised that passion was not enough.
“After five months, I had to evaluate the situation objectively. The numbers were clear: the revenue wasn’t matching our overheads.”
If she could go back in time, Sara said that she would choose to invest in a different project, and better look at the market first.
“In other countries, restaurants and cafes survive in an overcrowded market. However, here, there is not enough buying power like there is in the UAE or Kuwait.”
What makes a successful business?
Yet, amid these tales of despair, success stories persist. Nor does all the weight falls on the shoulders of the business owners, as many are calling on the government to intervene in re-evaluating the existing regulatory framework and the associated costs that entrepreneurs have to bear.
Qatar’s rapid evolution has necessitated regulations and policies to ensure the business environment remains structured, but as the quiet streets of Doha hint, perhaps there’s room for recalibration.
Entrepreneurs suggest a more collaborative approach, where the government and business community can come together to find a middle ground.