Kuwait's Chocolateness Is Ready For All Your Dessert Cravings
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This article is part of a series on pioneering entrepreneurs in Kuwait that Entrepreneur Middle East has built in collaboration with Kuwait Finance House. Kuwait Finance House is considered a pioneer in Islamic finance or Sharia’a compliant banking, with it being the first Islamic bank established in 1977 in the State of Kuwait, and is today one of the foremost Islamic financial institutions in the world.
Established in 2010 by Rakan Alfadalah, Chocolateness started from a family cake brought to the Kuwaiti market in 2007 at Gulf University for Science and Technology’s annual carnival. Kicking off as a just-for-fun business, it became a home-based business and eventually launched with the aim of bringing freshly baked desserts deliverable within 60 minutes anywhere in Kuwait, Chocolateness started with a capital of US$500, then acquired a turnover of $3 million in the third operational year.
Once they opened their first branch in Kuwait, the team set a new goal of expanding across the country with their delivery service. The company received positive feedback upon their launch, mainly on their products and delivery assurance, and notably, on their decision to hire Kuwaiti team members on all levels of work- from receiving orders as call center operators, baking the cakes, packaging, dealing with suppliers and delivering products to customers.
Within a few years, Alfadalah says that they’ve achieved domestic expansion and a good return on capital. He lists marketing, CSR, maintaining costs correction and product specialization as drivers of profit in their business. Using CSR to differentiate their brand within the competition in the small business market and distincit packaging designs and social media strategy has worked well for the business. But a main factor, Alfadalah says, is ensuring the best allocation of the cost of each product and service, which plays a major role in calculating the profitability of each product, as well as focusing on signature product or mastering a service as a vital business practice in market penetration and positioning.
They’ve achieved quite a few milestones too. They’ve been able to acquire Lgaima Sweets, which produce Arabic traditional sweets that targets different customers segment, and also establish Connectness, to offer logistics services for both customers and businesses- with a leading food delivery platform as one of their strategic clients as they use their fleet and drivers with a customized plan. And lately, they’ve been testing the market with a new project called Pie & Co.
Going forward, the team is looking to expand internationally with a franchising model and expanding their product range. They’re also considering establishing new complementing businesses or acquiring them, using horizontal and vertical integration approaches.
His advice to aspiring entrepreneurs? “Choose the right team, develop a scalable business based on quality product, continuously learn and train yourself to keep focusing and to refresh your passion, solve problems and not only offer good ideas, and don't ignore customers feedback nor leaving your employees back. And always try to add value to communities using CSR or sustainability approaches.”
Excerpt from a conversation with Rakan Alfadalah, CEO and founder, Chocolateness:
What has been the most negative feedback on your services that you have received and how did you go about it?
Since we positioned our delivery as a very fast service, our biggest negative feedback was delayed deliveries especially during our peak seasons. So, we developed an operational model that reduced the influence of the delayed order on the other scheduled deliveries from one side, and from another aspect, increased the size of our fleet and delivery team. Therefore, with this step, we faced another challenge wherein sometime during the day, we have several drivers and vehicles who are not working because of the off-peak hours. Later on, we established a new logistics company and transferred all the fleet and delivery team to it, then we as Chocolateness, outsourced our needs from the logistics company, and offered the rest of the team and fleet to our neighbor businesses during our off-peak hours. After this strategy, we utilized the usage of our resources to its optimal level.
What are some of the main considerations that entrepreneurs should keep when starting up a business in Kuwait and why?
From a business planning perspective, there should be a problem that the entrepreneur is aming to solve by going through a series of steps, including market research about competition, substitutes, prices, and market size, plus analyzing all aspects of the opportunity, then it is very important to do customer discovery and customer validation. Later on, if the opportunity seems to be feasible and there is enough base of customers who are willing to pay for it, then the next step is to create an MVP (Minimum Viable Product) using available resources. It is challenging yet very important to create a prototype and get feedback about how to develop it until it reaches the minimum requirement to solve the main problem, in order to startup the business and moves forward in the right direction.
Also, it is very important to create an engaging social media strategy that maintains consistent image and presentation on all used platforms and taking into consideration the quality of media’s content. Plus, there should be a harmony between marketing, operations, and accounting in order to reach best possible results in terms of profits, teams, and culture.
Source: Lgaima Sweets
Entrepreneurs who are planning to start up a business in Kuwait nowadays should consider two main challenges: first, consumer behavior toward spending is now different than few years ago, consumer is more conservative in spending because of different reasons including but not limited to, an increase in the gasoline prices, increase in the electricity and water prices, and because an important part of the F&B market (restaurants, coffee shops, etc.) is considered a secondary expense which is for some people an avoidable cost. The second point is the aggressively fiercer competition, that contributes in the increase of some basic costs such as rents, which brings another problem of high turnover on expensive locations.
What are some of the opportunities that you see available in the Kuwaiti market today and what would be your advice to aspiring entrepreneurs?
I think Kuwait is now the food hub of the region based on the extraordinary local concepts that attracts regional tourists, and based on three elements that Kuwait has right now- which are entrepreneurs, chefs, and investors, I think there is huge opportunities in food-related apps, suppliers-related apps, supply chain apps and technology, fine dine restaurants, improving micro-food businesses, and bringing food sciences and educations to our market in order to reach a new level of professionalism that can complement the tourism scene in the region.