Cairo's Halal Restaurant Industry: Exploring Sharia-Based Financing and Fatwa Influence
DOI:
https://doi.org/10.61455/deujis.v3i02.405Keywords:
sharia restaurant, sharia compliance, financing, contract, fatwa of the egyptian scholars councilAbstract
Objective: This study aims to analyze the level of Sharia compliance in the financing practices of mudharabah contracts based on the fatwas of the Council of Egyptian Scholars, using the case study of a Sharia Restaurant in Egypt. This research is motivated by the importance of implementing Sharia principles in financial transactions, particularly in the microeconomic sector, to align with the values of justice and transparency as taught in Islam. Theoretical framework: The theoretical framework of this study refers to the concept of Sharia compliance and the fundamental principles of fiqh muamalat, particularly in syirkah and mudharabah contracts, as well as contemporary perspectives on fatwas as a source of Islamic economic law. Literature review: The literature review includes previous studies on the implementation of mudharabah contracts in the microeconomic sector and emphasizes the importance of supervision by local scholars in economic practices. Methods: This study employs a qualitative approach using in-depth interviews, participatory observation, and documentation to thoroughly explore the financing practices implemented. Results: The findings reveal that the Sharia Restaurant in Egypt has implemented mudharabah contracts by the fatwas of the Egyptian Scholars Council, through profit-sharing mechanisms based on pre-agreed ratios (nisbah), transparent fund management, and active involvement of business partners in decision-making processes. These practices reflect the principles of justice, shared responsibility, and the avoidance of gharar (uncertainty) and riba (usury). Implications: The implications of this study highlight that adherence to local fatwas can serve as a strategic guide for strengthening Sharia-based microeconomics. For Islamic financial institutions and micro-entrepreneurs, this study offers insight and inspiration for implementing Sharia-compliant partnership-based contracts. Novelty: The novelty of this research lies in its focus on the local Egyptian context, which is rarely explored in the Sharia compliance literature, as well as its analytical approach to the implementation of local scholars’ fatwas in microeconomic practices.
References
H. Bello, “Financing Mosque Maintenance in Muslim-Minority Communities,” Adv. Sci. Technol. Innov., pp. 15 – 22, 2023, https://doi.org/10.1007/978-3-031-24751-4_3.
M. Dewally, S. M. V. Flaherty, and Y. Shao, “Determinants of financial policy in the hospitality sector in the United States,” Tour. Econ., vol. 23, no. 3, pp. 523–542, 2017, https://doi.org/10.5367/te.2015.0527.
A. Upneja and M. C. Dalbor, “An examination of capital structure in the restaurant industry,” Int. J. Contemp. Hosp. Manag., vol. 13, no. 2, pp. 54–59, 2001, https://doi.org/10.1108/09596110110381825.
X. Mao-Clark, Y. Koh, A. DeFranco, and K. J. Back, “African American restaurateurs’ financing behaviors: A grounded theory approach,” Int. J. Hosp. Manag., vol. 128, 2025, https://doi.org/10.1016/j.ijhm.2025.104200.
S. C. Jang and K. Ryu, “Cross-balance sheet interdependencies of restaurant firms: A canonical correlation analysis,” Int. J. Hosp. Manag., vol. 25, no. 1, pp. 159–166, 2006, https://doi.org/10.1016/j.ijhm.2004.12.011.
H. Jhaveri and A. Dash, “Financing the growth of Urban Chowk,” Emerald Emerg. Mark. Case Stud., vol. 12, no. 4, pp. 1–28, 2022, https://doi.org/10.1108/EEMCS-09-2021-0323.
T. Neise, P. Verfürth, and M. Franz, “Rapid responding to the COVID-19 crisis: Assessing the resilience in the German restaurant and bar industry,” Int. J. Hosp. Manag., vol. 96, 2021, https://doi.org/10.1016/j.ijhm.2021.102960.
S. Choi, S. Lee, K. Choi, and K. A. Sun, “Investment–cash flow sensitivities of restaurant firms: A moderating role of franchising,” Tour. Econ., vol. 24, no. 5, pp. 560–575, 2018, https://doi.org/10.1177/1354816618759201.
A. Sharma, S. Lee, and M. S. Lin, “Relationship of Precrisis Financial Decisions With the Financial Distress and Performance of Small- and Medium-Sized Restaurants During COVID-19,” Cornell Hosp. Q., vol. 64, no. 4, pp. 460–472, 2023, https://doi.org/10.1177/19389655231178264.
M. S. Lin, H. J. Song, A. Sharma, and S. Lee, “Formal and informal SME financing in the restaurant industry: The impact of macroenvironment,” J. Hosp. Tour. Manag., vol. 45, pp. 276–284, 2020, https://doi.org/10.1016/j.jhtm.2020.08.017.
D. Adhariani, “Surplus Indonesia: Tackling food waste through app,” Emerald Emerg. Mark. Case Stud., vol. 14, no. 4, pp. 1–25, 2024, https://doi.org/10.1108/EEMCS-04-2024-0190.
K. Park and S. C. (Shawn) Jang, “Pecking order puzzle: Restaurant firms’ unique financing behaviors,” Int. J. Hosp. Manag., vol. 70, pp. 99–109, 2018, https://doi.org/10.1016/j.ijhm.2017.10.014.
Z. Gu, “Analyzing bankruptcy in the restaurant industry: A multiple discriminant model,” Int. J. Hosp. Manag., vol. 21, no. 1, pp. 25–42, 2002, https://doi.org/10.1016/S0278-4319(01)00013-5.
T. Dogru and A. Upneja, “The Implications of Investment–Cash Flow Sensitivities for Franchising Firms: Theory and Evidence From the Restaurant Industry,” Cornell Hosp. Q., vol. 60, no. 1, pp. 77–91, 2019, https://doi.org/10.1177/1938965518783167.
M. C. Dalbor and A. Upneja, “Factors affecting the long-term debt decision of restaurant firms,” J. Hosp. Tour. Res., vol. 26, no. 4, pp. 422–432, 2002, https://doi.org/10.1177/109634802237487.
K. Seo, E. E. K. Kim, and A. Sharma, “Examining the determinants of long-term debt in the US restaurant industry: Does CEO overconfidence affect debt maturity decisions?” Int. J. Contemp. Hosp. Manag., vol. 29, no. 5, pp. 1501–1520, 2017, https://doi.org/10.1108/IJCHM-06-2015-0274.
S. C. Chen and J. A. Elston, “Entrepreneurial motives and characteristics: An analysis of small restaurant owners,” Int. J. Hosp. Manag., vol. 35, pp. 294–305, 2013, https://doi.org/10.1016/j.ijhm.2013.07.002.
G. Torluccio, “Financials menu at European restaurants,” Tourismos, vol. 7, no. 2, pp. 323–342, 2012, [Online]. Available: https://www.scopus.com/inward/record.uri?eid=2-s2.0-84889677477&partnerID=40&md5=49bda6bd7e0eda172b9d179da369189d
J. Gim and S. C. Jang, “The determinants of aggressive share buybacks: An empirical examination of U.S. publicly traded restaurant firms,” Tour. Econ., vol. 30, no. 1, pp. 132–151, 2024, https://doi.org/10.1177/13548166221137956.
W. D. Choi, “Do the Firms Utilize Market Timing? Capital Structure of Restaurant Firms by Pecking Order and Market Timing Theories,” J. Qual. Assur. Hosp. Tour, vol. 24, no. 1, pp. 101–120, 2023, https://doi.org/10.1080/1528008X.2022.2097975.
K. Park and S. C. (Shawn) Jang, “Is franchising an additional financing source for franchisors? A Blinder–Oaxaca decomposition analysis,” Tour. Econ., vol. 24, no. 5, pp. 541–559, 2018, https://doi.org/10.1177/1354816618757561.
L. Fang and J. Yang, “A financing perspective on DEA-based resource allocation and the aggregate profit inefficiency decomposition,” J. Oper. Res. Soc., vol. 72, no. 2, pp. 320–341, 2021, https://doi.org/10.1080/01605682.2019.1671154.
J. Kickul, M. D. Griffiths, C. C. Robb, and L. Gundry, “All for one? The Paycheck Protection Program distribution disparity,” J. Entrep. Public Policy, vol. 10, no. 3, pp. 323–335, 2021, https://doi.org/10.1108/JEPP-03-2021-0027.
K. Seo, J. Soh, and A. Sharma, “Do financial constraints affect the sensitivity of investment to cash flow? New evidence from franchised restaurant firms,” Tour. Econ., vol. 24, no. 6, pp. 645–661, 2018, https://doi.org/10.1177/1354816618768315.
D. Susanto, Risnita, and M. S. Jailani, “Teknik Pemeriksaan Keabsahan Data Dalam Penelitian Ilmiah,” J. QOSIM J. Pendidikan, Sos. Hum., vol. 1, no. 1, pp. 53–61, 2023, https://doi.org/10.61104/jq.v1i1.60.
H. Zukriadi, Sulaiman, U., “Aneka Macam Penelitian,” SAMBARA J. Pengabdi. Kpd. Masy., vol. 1, no. 1, pp. 36–46, 2023, https://doi.org/10.58540/sambarapkm.v1i1.157.
Y. Li and M. Singal, “Capital structure in the hospitality industry: The role of the asset-light and fee-oriented strategy,” Tour. Manag., vol. 70, pp. 124–133, 2019, https://doi.org/10.1016/j.tourman.2018.08.004.
C. Johnson, B. Surlemont, P. Nicod, and F. Revaz, “Behind the stars: A concise typology of Michelin restaurants in Europe,” Cornell Hotel Restaur. Adm. Q., vol. 46, no. 2, pp. 170–187, 2005, https://doi.org/10.1177/0010880405275115.
S. C. (Shawn) Jang and J. Kim, “Revisiting the financing behavior of restaurant firms: The firm-size perspective,” Int. J. Hosp. Manag., vol. 28, no. 1, pp. 177–179, 2009, https://doi.org/10.1016/j.ijhm.2008.06.006.
S. G. Mun and S. C. (Shawn) Jang, “Restaurant firms’ IPO motivations and post-IPO performances: Staying public, being delisted or merged?” Int. J. Contemp. Hosp. Manag., vol. 31, no. 9, pp. 3484–3502, 2019, https://doi.org/10.1108/IJCHM-08-2018-0677.
H. Kim and Z. Gu, “Predicting Restaurant Bankruptcy: A Logit Model in Comparison with a Discriminant Model,” J. Hosp. Tour. Res., vol. 30, no. 4, pp. 474–493, 2006, https://doi.org/10.1177/1096348006290114.
X. Mao-Clark, Y. Koh, A. DeFranco, and R. Nakajima, “African American style project pitches in business fundraising: Strategies for African American entrepreneurs,” Int. J. Hosp. Manag., vol. 120, 2024, https://doi.org/10.1016/j.ijhm.2024.103783.
L. Verbivska, H. A. Al-Ababneh, A. Korbutiak, O. Bondar, A. Panchenko, and I. Ippolitova, “The Impact of E-Business on Entrepreneurship Development in the Context of COVID-19,” WSEAS Trans. Bus. Econ., vol. 19, pp. 1824–1838, 2022, https://doi.org/10.37394/23207.2022.19.164.
K. Park and S. C. (Shawn) Jang, “Cash regimes and the franchise system: An extension of the marginal value of cash,” Tour. Econ., vol. 25, no. 2, pp. 235–252, 2019, https://doi.org/10.1177/1354816618797865.
Y. Yang and Y. Koh, “Is restaurant crowdfunding immune to the COVID-19 pandemic?” Int. J. Contemp. Hosp. Manag., vol. 34, no. 4, pp. 1353–1373, 2022, https://doi.org/10.1108/IJCHM-06-2021-0817.
A. R. Doeim, T. H. Hassan, M. Y. Helal, M. I. Saleh, A. E. Salem, and M. A. S. Elsayed, “Service Value and Repurchase Intention in the Egyptian Fast-Food Restaurants: Toward a New Measurement Model,” Int. J. Environ. Res. Public Health, vol. 19, no. 23, 2022, https://doi.org/10.3390/ijerph192315779.
I. Al-Ayouty, “Towards Environmental Sustainability: An Input–Output Analysis to Measure Industry-Level Carbon Dioxide Emissions in Egypt,” Sustain., vol. 17, no. 3, 2025, https://doi.org/10.3390/su17031035.
H. H. S. Abdelhamied, “Customers’ perceptions of floating restaurants in Egypt,” Anatolia, vol. 22, no. 1, pp. 1–15, 2011, https://doi.org/10.1080/13032917.2011.556212.
P. Rachapaettayakom, M. Wiriyapinit, N. Cooharojananone, S. Tanthanongsakkun, and N. Charoenruk, “The need for financial knowledge acquisition tools and technology by small business entrepreneurs,” J. Innov. Entrep., vol. 9, no. 1, 2020, https://doi.org/10.1186/s13731-020-00136-2.
A. M. Elshaer, “Restaurants’ Response to COVID-19 Pandemic: The Realm of Egyptian Independent Restaurants,” J. Qual. Assur. Hosp. Tour, vol. 23, no. 3, pp. 716–747, 2022, https://doi.org/10.1080/1528008X.2021.1911732.
M. M. Sleem, O. Y. Abdelfattah, A. A. Abohany, and S. E. Sorour, “A Comprehensive Approach to Biodiesel Blend Selection Using GRA-TOPSIS: A Case Study of Waste Cooking Oils in Egypt,” Sustain., vol. 16, no. 14, 2024, https://doi.org/10.3390/su16146124.
S. S. Abdel-Hakeem, G. A. E. Mahmoud, and H. H. Abdel-Hafeez, “Evaluation and Microanalysis of Parasitic and Bacterial Agents of Egyptian Fresh Sushi, Salmo salar,” Microsc. Microanal., vol. 25, no. 6, pp. 1498–1508, 2019, https://doi.org/10.1017/S143192761901506X.
