A calculator on the method's rule
The Branch Gate
Before you sign the next branch lease:
Sign, sign with conditions, or not yet.
A branch is not an opening; it is a capital decision with a payback date. The gate judges it before the lease, on three things: when your riyal comes back, how much the new branch takes from your existing ones, and whether the branch nearby is even full.
Calculator · your numbers
The Branch Gate
Five numbers about the site in front of you, and a three-word verdict by the method's rule: sign, sign with conditions, or not yet.
Result at the default values (turn on JavaScript to move the numbers).
- Payback
- 29.6 months
- Net monthly contribution to the network
- 40,500
- Year-1 contribution
- 486,000
- Nearest branch at peak
- 85%: full
Sign with conditions Your riyal comes back in 29.6 months, between 18 and 30. Sign only with a written lever plan that cuts rent or capex or changes the format, approved by the board before you sign. Playbook: the site gate and the lever plan
Book a 30-min Scale ReviewBring this verdict and the site, before you sign.
Rule source: Revenue Engineering Doctrine, §5: the opening gate
The 18- and 30-month bands and the 80% line are the method’s default rule, not a market benchmark, and are not yet tested on group data (open question 2). Your group writes its own before the site visit.
| Input | Value |
|---|---|
| Capex | 1,200,000 |
| Monthly revenue | 250,000 |
| Contribution margin | 18% |
| Sales moved | 10% |
| Peak utilization, nearest branch | 85% |
| Network friction a month | 0 |
| Visible unserved demand | No |
| Test | Value | Result |
|---|---|---|
| 1. Satiety: does the branch add positive monthly contribution? | 40,500 | Passes |
| 2. Payback: capex ÷ S_b | 29.6 | Passes with conditions: 18 to 30 |
| 3. Capacity: the nearest branch full at peak, or visible unserved demand | 85% | Passes |
| 4. Replication: the format meets your group’s replication floor | — | Not computed here: check it before you sign |
How it’s calculated
- Net contribution = Revenue × Contribution margin × (1 − Share moved from your branches)
- S_b = Net contribution − Network friction
- Payback (months) = Capex ÷ S_b
- Test 1: S_b is positive. Test 2: payback within 30 months. Test 3: the nearest branch at 80% or more at peak, or visible unserved demand. Test 4 (replication) is not computed here.
- Verdict: any test fails → not yet. All pass at 18 months or less → sign. All pass at 18 to 30 months → sign with conditions (a written lever plan).
The four tests
A site is signed only when it passes four tests, in order (Doctrine §5):
- Satiety: the branch's marginal value to the network, S_b, is positive, after the sales it takes from your branches and the network's friction.
- Payback: capex ÷ S_b is within 30 months; 18 months or less is the target.
- Capacity signal: nearby branches are full at peak (80% or more, Principle 3), or unserved demand is visible, for example delivery orders from the target district. Don’t open next to a branch that is not full.
- Replication: the format you open meets your group’s Geographic Replication Index floor. The calculator does not compute this one.
The three verdicts
- Sign
- All four tests pass and payback is 18 months or less.
- Sign with conditions
- Payback between 18 and 30 months: sign only with a written lever plan (rent, capex or format), approved before the signature.
- Not yet
- Any test fails. “Not yet” is a decision, not a failure: the same site can come back with a lever plan.
The standard example Illustrative
The Doctrine’s illustrative example, with hypothetical numbers. Type them into the calculator to check it.
- Capex SAR 1,200,000; revenue SAR 250,000 a month; margin 18%; 10% of sales moved from your branches. Net contribution = 250,000 × 18% × 90% = SAR 40,500 a month, so payback is 29.6 months: sign with conditions.
- Add network friction of SAR 6,000 a month: S_b = 34,500, payback 34.8 months: not yet.
- Lever plan: a smaller format cuts capex to SAR 900,000 and a renegotiated rent lifts margin to 20%: S_b = 39,000, payback 23.1 months: sign, with the lever plan written into the approval.
The same site moved from “not yet” to “sign” without a single assumption about marketing. That is the point of the gate.
The limits are a rule, not a benchmark
18 and 30 months and the 80% line are the method’s default decision rules. They are not a market average, and they are not yet tested on group data: that is a published open question. Each group sets its own, in writing, before the year’s first commitment and before it sees the site.
Open question: are 18 and 30 months right when rent is paid a year in advance?
What the calculator does not compute
- Months to maturity: the napkin gives the shortest possible wait; the first months make it longer.
- Replication: whether the format travels is measured by the Geographic Replication Index, at months 6 and 12 of each new branch.
- The cash until the earnings arrive: rent paid in advance moves cash earlier than this napkin assumes.
Read the whole rule
- Doctrine §5: the opening gate
- Doctrine §6: the Doctrine thresholds
- Doctrine §4: Principle 3, scale follows capacity
- Playbook: Gate 2, site selection and catchment
- Essay: Your branch is a savings circle: you pay first and collect last
- Essay: Choose the neighbour before the house… unless the neighbour is your own branch
The terms, in the Lexicon
Questions before you sign
What is the Branch Gate?
A branch is not an opening; it is a capital decision with a payback date. The gate judges it before the lease, on three things: when your riyal comes back, how much the new branch takes from your existing ones, and whether the branch nearby is even full.
Should I open a new branch now?
Before the lease: expected mature revenue, contribution margin after rent, labour and delivery commissions, and the share of sales the branch would take from your existing ones. Net monthly contribution = revenue × margin × (1 − cannibalization); payback = capex ÷ net monthly contribution. If that payback runs past 30 months, or there is none, the answer is “not yet”.
What are the four tests before signing a site?
A site is signed only when it passes four tests, in order (Doctrine §5):
- Satiety: the branch's marginal value to the network, S_b, is positive, after the sales it takes from your branches and the network's friction.
- Payback: capex ÷ S_b is within 30 months; 18 months or less is the target.
- Capacity signal: nearby branches are full at peak (80% or more, Principle 3), or unserved demand is visible, for example delivery orders from the target district. Don’t open next to a branch that is not full.
- Replication: the format you open meets your group’s Geographic Replication Index floor. The calculator does not compute this one.
What do “sign with conditions” and “not yet” mean?
- Sign
- All four tests pass and payback is 18 months or less.
- Sign with conditions
- Payback between 18 and 30 months: sign only with a written lever plan (rent, capex or format), approved before the signature.
- Not yet
- Any test fails. “Not yet” is a decision, not a failure: the same site can come back with a lever plan.
Are 18 and 30 months the Saudi market average?
18 and 30 months and the 80% line are the method’s default decision rules. They are not a market average, and they are not yet tested on group data: that is a published open question. Each group sets its own, in writing, before the year’s first commitment and before it sees the site.
What does the calculator not compute?
- Months to maturity: the napkin gives the shortest possible wait; the first months make it longer.
- Replication: whether the format travels is measured by the Geographic Replication Index, at months 6 and 12 of each new branch.
- The cash until the earnings arrive: rent paid in advance moves cash earlier than this napkin assumes.
Before you sign
Bring the verdict and the site to a 30-minute Scale Review. You leave with a clear next step, whether or not we work together.