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Africa: Why the local eateries are disappearing amid foreign brands’ incursion

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While pioneers of the quick service restaurants, popularly known as fast food restaurants, seem to be struggling or shutting down, a few foreign brands in the country are enjoying good patronage, observe OBINNA EMELIKE and BUNMI BAILEY.

When Mr.Bigg’s opened its first restaurant on No. 51 Marina Street, Lagos in 1986, it was greeted with fanfare by patrons who thronged the eatery for a taste of the difference it brought to bear in food business on Lagos Island where ‘mama-put’, local food vendors, held sway. Though only a limited menu of pastries; beef, chicken and apple pies, sausage rolls, doughnuts and beef burgers was available then, a far cry from the extensive menu on offer today, yet the restaurant was always fully booked.

The long queue that often snaked out of the restaurant was a testimony to the huge patronage then. As well, the popularity was so huge that the restaurant became a spot for those who wanted to impress their lovers, and for family outings. The pressure on the first restaurant eventually resulted in the opening on the second one two years later in 1988, and thereafter, one Mr.Bigg’s restaurant was opened in Lagos and across the country almost every six months. Following the success story of Mr.Bigg’s, from 1997 more local eatery brands emerged with determined effort to get their share of the fast food business, especially Tantalizers and Tastee Fried Chicken.

While Tantalizers came with local menus, which were in addition to what Mr.Bigg’s offered then, Olayinka Pamela Adedayo, founder of Tastee Fried Chicken, based her restaurant, starting from her first location in Surulere Lagos, on the business model of Kentucky Fried Chicken (KFC), the American fast food chicken restaurant where she had previously worked as a manager. As well, the likes of Chicken Republic, Sweet Sensation, Mama Cass, Kilimanjaro, among others joined the scramble for customers. Today, the scramble is not as hot as it used to be as Nigeria’s Quick Service Restaurant (QSR) is no longer the goldmine it used to be in the late 80s. While operators in the business had swell time and opened more restaurants even at fuel refilling stations across the country in the heyday of the business spanning over two decades, today more restaurants are closing than the ones opening, though with the exception of foreign brands.

As at today, over 70 percent of Mr.Bigg’s opened at Mobil filling stations and many of the Tastee Fried Chicken restaurants inside Oando’s service stations are closed due to lack of patronage, making the brands and franchisees to sit on heavy revenue losses. At some point in its recurring loss record at the capital market, Tantalizers, which posted a dismal performance in the market, planned to undertake a sale-and-lease back arrangement on some of its unfettered assets with a view to raising about N1billion working capital. This was after it experienced 86 percent increase in net loss in 2013. The effort achieved little in getting Tantalizers back on the path of profitability and same with Mr.Bigg’s. In September 2013, UAC sold a 49-percent stake in its restaurant businesses, which includes the Mr.Bigg’s chain, to Famous Brands, a South African-listed company.

At the close of the deal, Kevin Hedderwick, CEO, Famous Brands, said Mr.Bigg’s had an extensive on-the-ground presence and huge loyal customer base, demonstrated by the 100,000 consumers who visit the brand’s restaurants daily. Today, Famous Brands, the South African dining and fast-food giant, may be regretting the deal as some of Mr.Bigg’s 165 franchised restaurants in 32 cities across Nigeria and Ghana are still closing today because of low patronage. Beyond Mr.Bigg’s, every other indigenous eatery brand is facing similar challenges. The prevailing harsh economic climate and poor management, among other issues, have led most of the brands to shutdown some of their outlets across Nigeria. On a visit to a Sweet Sensation outlet in Lagos, the manager who spoke anonymously said that the restaurant was struggling and that it was not as good as before due to competition from other quick service restaurants, especially foreign brands.

The scene at Mr.Bigg’ Ogba tells the story better. As at the time of visit, around 12:30 pm, the restaurant was quiet with few customers and one salesperson. Without much inquiry, it was obvious that the menu was still the same, prices increased and presentation poor, hence customers look for trendy brands and outlets. When asked possible reasons for the low turnout of customers, an anonymous staff whose salary may be at stake, attributed it to management’s inability to listen to customers, rebrand and spice the menu from time to time. However, Michael Echeme, a serial investor, and a former franchisee of Mr.Bigg’s, blamed the ugly development on the choice of business partners and business model adopted by most of the indigenous eatery brands. “Most indigenous brands still run as one-man business, hence cannot adopt policies and corporate governance that can attract viable investors, grow the business and reduce the risk they have been bearing alone”, he said.

In the case of Mr.Bigg’s, Echeme noted that while most of other food outlets are fully managed by their respective owners, Mr. Bigg’s went the way of franchise, when time was not ripe for such in the Nigerian fast food market. So, it flooded the market with lots of franchisees who were after quick return on their investment and hardly maintain their outlets or comply with the regulations of the franchise owner.

Eme Onuma, a manager of an eatery outlet on Awolowo Way, Ikoyi, Lagos, noted that even when the business model is right and the franchisees comply with all the regulations, the high cost of operation is a major reason eateries are closing down. “Our external auditors always query the cost of running and maintaining the generators. About 30 percent of the profit from my branch goes into power generation and maintenance. In such case, an impatient owner, who smells fraud will close down the outlet and invest in more viable business”, Onuma said.

In same vein, Bola Akande, a manger of a Chicken Republic outlet in Ikeja decried the crazy electricity bills, noting that the Ikeja Distribution Company prefers estimated bills against the prepaid that will checkmate their expenses. She lamented the multiple taxes from almost every constituted authority in Lagos and some federal agencies. “We pay over 10 taxes from local government, state and federal. Most of the taxes are duplicates of same tax, but paid to different bodies or agencies. Imagine three health taxes in Lagos alone”, she disclosed.

But she could not defend the serving of leftover products by some eateries. While she tries to defend the industry, Munir Ahmed, a banker who prefers local mama-put, said the eateries failed to rebrand and refresh their menu and even décor over a long time. “We are in a fast-paced world where changes even in eating habit, choice of restaurant and menu take place every moment. People will throng any new eatery to sample its menu. If the quality and service are high, they will stay. They will move if the restaurant remains same after some time. It is normal”, Ahmed explained.

For Ahmed, Mr.Bigg’s lost many customers when Tantalizers came up with local menus, as well, Tantalizers lost more customers when it couldn’t sustain the local menus or refresh them afterwards. But all the local brands lost over 40 percent of their customers to foreign brands that came with innovative and improved menu offerings.

Muyiwa Kayode, a Lagos-based brand expert, said the misfortune of the local eateries was because they all failed to innovate. “Some brands need to constantly innovate because of the kind of services or products they offer and the quick service restaurant falls into that category. All they need to be in business is to periodically introduce something new in terms of recipes, products, services and even presentations”, he said. Innovation for him does not mean that you should change what your brand stands for but constantly making it relevant to your audience. “Even if you are not introducing a new product, you can offer your existing product in a new way so that people do not switch off”, he concluded.

Monica Yakur, a dietician with Lagos University Teaching Hospital, noted that the trouble with eateries in Nigeria started with more campaigns on quality healthcare, especially against junk food over the decade. “With more children becoming obsessed, diabetes and other sugar-related diseases on the rise, and several accusations of using unsafe recipes in their menu, eateries suffered heavy blows and revenue declined,” she said. “Before, young couples thronged eateries just for the fun of it and not necessarily for eating out, today, many are conscious of the harm an extra cube of sugar in a bottle of Coca Cola or sweetener in an apple juice can cause”, she explained, insisting that eateries are beginning to offer healthy food menu to lure back adult customers.

But the bigger trouble for the local eateries is the incursion by well-known foreign brands. They come with different menus, better presentation/campaigns, trendier facilities, better management and maintenance culture. The foreign brand with the most impact is KFC, which has the biggest reach across the continent out of international brands with 771 outlets. Now the likes of Domino, Debonairs Pizza are joining forces with KFC to lure more Nigerians to dine at their outlets. The popularity of the foreign brands at a time when many outlets of the local ones are closing down is because they tailored their products to local tastes and have added popular local ingredients. The Cold Stone ice cream by Domino is luring many back to eateries. As well, Domino’s innovative pizza topped with Jollof rice and suya is a sellout at all Domino’s stores in Nigeria. In same vein, KFC offers jollof rice-inspired dish that adds to its tasty chicken offering.

The intrigue for many is that despite the high prices of the offerings at the outlets of these foreign brands, Nigerians still throng them to have a taste of the foreign menu. Some attribute it to the fad for foreign things. But while the local eateries take the heat, there seems to be a few that are standing up to the competition and incursion of foreign brands. Kilimanjaro, which has over 20 outlets, is growing because of its fresh local menu and trendy appeal to customers. For Ebele Enunwa, the founder of the quick service restaurant, the strong point of the brand is its unique offering of local menu. “Nigerians love their local meals. People like the fact that they can walk in and find food they grew up on — food they prepare and eat at home and have grown accustomed to”, he explained.

Another new and ambitious brand is Hubmart. The outfit, which opened in 2015 is combining restaurant offering with grocery just to avoid the pitfall of others on time. So, the attraction for customers is food and grocery at the same place. As well, new local brands such as The Place, Mega Chicken and Jevinik are keeping it trendy and local in order to appeal to those who want it local, trendy and most importantly healthy. Despite the foreign incursion, there is need to save Nigeria’s Quick Service Restaurant (QSR) sector because it offers over 800 outlets that are likely going to shutdown if business did not improve, over one million employees that will lose their jobs and over N200 billion, which it contributes annually to the Nigerian GDP will no longer be feasible.

Source: businessday.ng

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