Raheem Akingbolu takes a look at the rapid growth in the quick service restaurant market and how increased urbanisation and changing work roles have conditioned Nigerian consumers to adjust to a new way of life. An historical excursion into the Nigerian consumption pattern shows that fast food in the traditional sense is not new to Nigeria. It began with the corner seller of suya, akara (fried bean cakes), roasted plantain, fried yam, and roasted corn, which are age-old feature of many Nigerian towns.
Local operators of such shops used to serve snacks for those on the go, from little children to working adults. While traditional fast food delicacies still remain as well as mobile market fast food vendors, analysts believe that what has contributed significantly to the growth of fast food restaurants in Nigeria has been increased urbanisation and changing work roles. By mid 80s when the UAC Group entered Nigerian market with Mr. Biggs, to serve the culinary needs of the upwardly mobile working class people, the innovation was second to none. This explained while it was touted by many analysts as one of the most insightful marketing decision the group had embarked upon in recent time.
It was over two decades after it had started as coffee shops inside Kingsway Department Stores and 13 years after the shops were rebranded as Kingsway Rendezvous, which became Mr. Bigg’s in 1986. It was not long however before the leadership of Mr. Biggs was challenged by competitions, the fact that it was the first in the industry notwithstanding.
Population as advantage
Since the 1960s Nigeria has had one of the fastest population growth rates in the world. In 2010 almost half of all Nigerians live in cities – a number totaling 73 million. Speaking on the new trend, the Managing Director of Kiishi Lagos, a Public Relations firm, Mr. Adeola Adejokun said the compelling need for more people to settle in Nigeria’s crowded cities, made the time to prepare meals more demanding, thereby necessitating the need for mobile consumers to seek alternatives. “As more women were joining the work force their traditional roles changed. This forced many urban people to opt to eat some of their meals outside the home. To meet the demand, many small restaurants known as bukkas have mushroomed all across Nigerian cities to serve this working population.
These restaurants generally serve Nigerian traditional meals either in open-air areas or in low-cost small rudimentary dining buildings. Meals are relatively cheap and as a result they have gained a loyal following among the Nigerian urban masses. Indeed, the size of the informal fast food sector is estimated at $600 750 million a year,” he said. The analyst went further to state that in recently time, modern Nigerian fast food restaurants have sprung up to cater for a more up-market consumer with western tastes. According to him, unlike bukkas which tend to vary in quality and service, modern fast food restaurants place an emphasis on cleanliness, hygiene and comfort.
“Care is taken with food handling and the dining environment is kept clean, air-conditioned and furnished with comfortable seating and premium television. These restaurants serve western snacks and fast foods such as meat pies, burgers, fries and ice cream together with traditional Nigerian dishes” he further stated.
Though Mr. Biggs still remains the largest retail food business in West Africa with over a hundred restaurants, many local and international brands have since surfaced in the market with equal resolve to make considerable mark and attract consumers.
Among others; Chicken Republic, Tantalizers, Sweet Sensation, Tasty Fried Chicken, Mama Cash and Kilimanjaro, are today competing for consumers’ attention. Few years ago, a few international brands, Kentucky Fried Chicken and Domino Pizza came into the market.
Unfortunately, the new comers have made but little impact because the existing players are also upping their games through innovation and alignment with global practice.
Chicken Republic, which began operation in 2004, exactly 10 years ago, has turned out to be one of the largest chicken chain in West Africa, with over 60 stores. Considering the company’s heritage and strong attachment to Food Concept; its parent company, Chicken Republic can be said to pioneer international QSR in Nigeria.
Today, aside the fact that the company’s store by store is growing annually at almost 10%, a recent business plan released by the company has indicated that it will roll out 500 stores within five years through equity and franchise stores. The plan also indicated that it will soon open shops across West Africa in addition to its expansion plan in Nigeria and Ghana, where it currently domiciled. The strength of the company is not only in the fact that the quality of its offerings remains strong as it was from day one, the ambience look of the stores have remained a driving force to customers.
One of the home grown brands in the industry, Sweet Sensation had a humble beginning, when a Mrs. Kehinde Kamson, then a young entrepreneur established it at the gatehouse of her house before opening the first outlet in Ilupeju area of Lagos. It pioneered the Africa meals and therefore indentified very well with Nigerian spirit in approach and operations. To have competitive edge, the company soon moved a bit away from the norms by creating an ambience environment that has aquarium, artworks and space for children to play.
Kilimanjaro also came from a humble beginning with a single restaurant in Port Harcourt but later spread to other locations in Port Harcourt, Abuja and Lagos. Despite the assurance of the management to explore other markets, its presence in Lagos is still restricted to the Island part of the commercial city. Until recently when it closed down its outlet at the Palms in Lekki, Kilimanjaro’s shop at the shopping mall and the one on Sanusi Fafunwa used to be hot spots for mobile corporate consumers.
KFC and Domino Pizza
At a time many industry watchers thought the market was saturated, Kentucky Fried Chicken (KFC), landed with a bang. As a result of its global influence, many expected so much from KFC but because the existing brands have not in anyway, allowed complacency to slow them down, neither KFC nor Domino Pizza that came after it have been able to change anything in the market.
Like Sweet Sensation and a lot of other local names in the industry, Tantalizer, Tasty Fried Chicken (TFC) and Mama Cash are home grown brands that have continued to give international brands in the market a run for their money. Tantalizer started operation in Lagos in 1997 but now has about 30 outlet locations in Lagos, Ibadan, Abuja, Port Harcourt and Ado Ekiti. TFC was established around the same time as Tantalizer with the determination to meet the yearnings of Nigerians and promise of raising the bar in the industry.
Consumers’ adjustment to QSR industry and their services have been attributed to the fast lifestyle of today’s consumers. There have however been recent concerns about the decline in the quality of the products and services of these quick service restaurants. To this end, it has been speculated that the industry is facing a decline in patronage. Operators too have, for some time now, been lamenting about multiple taxation, increase in the prices of raw materials and lack of right people to sustain the standard of the industry as some of their challenges. Adejokun has however punctured the argument that there is decline in the industry. To him, if there is anything that is affecting the industry it is purely competition.
“Much as I agree that the market is getting saturated each passing day, I disagree that there is decline. The truth is that we now have many operators, compared to when Mr. Biggs alone was shining, today; many are jostling for consumers’ attention. We shouldn’t forget that aside the major brands, there are hundreds that are thriving on one outlet in particular area and they are doing well,” Adejokun stated. From the available data, modern fast food restaurants have experienced rapid growth over the past decade of almost 30% year-on-year to reach total revenue of around $400 million from around 800 outlets in 2009.
Expansion in telecommunications, banking, and retail has meant that many more Nigerians are joining the middle class with increased disposable income. In addition, modern fast food companies have gained increased access to capital through bank loans, private equity and stock market listings to roll out many more outlets around primary Nigerian cities such as Lagos, Abuja and Port Harcourt. Meanwhile, the global financial crisis of 2007 2009 is believed to have temporarily slowed down the growth of the modern fast food industry by cutting into short-term consumer spending at modern fast food restaurants.
In addition, increasing competition from newer entrants both local and foreign has cut into industry margins. However, over the medium-term (2010 2015), disposable income is forecast to grow due to continued high oil prices which will lead to a preferential shift away from informal fast food vending. Consequently, the modern fast food restaurant sector is expected to expand away from Lagos where half currently operate into other Nigerian cities.