"I'd like a sausage biscuit, please." "I'm sorry, sir, but sausage is haram. Here is a plain biscuit and a complementary copy of the Holy Qur'an."
"Will Caribou's Shari'ah Affect Shares?," from the Motley Fool, with thanks to Susan:
When my Foolish colleague W.D. Crotty recently gave investors a good look at the newly public Caribou Coffee (Nasdaq: CBOU - News), there was one interesting detail he omitted. And this detail, if misunderstood by the investing public, could cause some rather significant problems in the future. After the deal is done, Caribou Coffee will still be controlled by its primary investor -- Arcapita Bank, formerly known as First Islamic Investment Bank. Those who run Arcapita (and its subsidiaries) do so according to Islamic principles collectively known as shari'ah (or shariah or sharia). Shari'ah encompasses a wide range of rules and customs, including some that directly impact the running of a business.
Specifically, shari'ah influences how the company borrows or lends money, how it may engage in derivative transactions, and what sorts of products it may sell. On the subject of borrowing and lending, shari'ah can be a bit confusing, and there is disagreement within the Islamic community as to what constitutes acceptable or unacceptable transactions. While Caribou has borrowed money in the past, investors should realize that negotiating future borrowings that comply with shari'ah could take a little time and might impair the company's access to quick sources of capital.
Other areas are decidedly clearer. Caribou will not engage in derivative transactions, which could impair the company's ability to hedge future coffee prices. Elsewhere, the company will not be engaging in activities pertaining to alcohol, gambling, pornography, or pork. I don't see how any of the first three will have any bearing on running a coffee shop to compete with the likes of Starbucks (Nasdaq: SBUX - News) or Peet's Coffee (Nasdaq: PEET - News), but I suppose it's conceptually possible that not being able to sell pork products (like a ham sandwich or bacon wrap) could hurt Caribou's standing with some customers.
The bigger risk in my view, though, is ignorance. Islam is not exactly well understood in this country, and there are a lot of people who go into knee-jerk reactions when they hear the word. Accordingly, companies in the U.S. like Caribou and its sister company Church's Chicken that run themselves according to shari'ah may be the unfair targets of malice, bias, and flat-out ignorance from time to time.
Um, shouldn't that be Mosque's Chicken? After all, if a Church's Chicken burns down, will they be allowed to rebuild it according to Sharia?
(Yes, Ibrahim, yes, Stephen, that's a joke.)
Seriously, I think the biggest risk is ignorance, too: I think people should inform themselves thoroughly about Sharia and its implications. No one should act out of malice or bias, but they should know that the same Sharia by which Caribou and Church's are run mandates second-class status for women and non-Muslims. And that is not just an issue of a sausage biscuit, but of basic human rights.