ffin - fast food industry in nigeria v2

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The Nigerian Fast Food

Industry: A Brief The Nigerian Fast Food Industry is currently valued at

N190 billion and has huge growth potentials. In this brief

article, you will see how far the sector has come in just a

decade, what challenges it is facing and the opportunities

that lies ahead.

October, 2010



Prelude

Nigeria, with a population of 150 million people, is largest market in Africa and the world’s largest

market of black people. Fundamental needs of man including food, clothing, energy and shelter are

in huge demand and competition in on the increase.

Agriculture [the origin of food] contributed 41.84% to the GDP (Gross Domestic Product) of Nigeria

in the year 2009 [Source: National Bureau of Statistics] while crude petroleum that constitutes 95%of our export and largest part of our federal earnings, contributed only 16.05% in the same period.

The Early Development

The Fast Food Industry in Nigeria [FFIN] started from

humble beginnings in the multinational corporations like

UAC in the 1970s. Mr. Biggs was the first major entrant and

it started out only as an in-house office kitchen but the

demand for its products soon sent it into the open market

where it remains a strong player amongst many others.

The need to provide fast, on-the-go meals for those in hectic, busy and fast-paced work and lifestyle

soon made the sector an attractive one to many entrepreneurs, investors and business people.

Small food canteen owners got inspired and pursued funding to expand to large multi-branch

players in the industry.

The Boom, Current Trends and Major Players

In the late 1990s and early 2000s, the FFIN started to grow organically. Three factors where

primarily responsible for this including:

Increase in average disposable income,

International travel and exposure; and

Busier city and work life coupled with the desire for

convenience and comfort in eating out.

The last was also encouraged by the fact that the there was a decrease in the gap between the cost

of eating out and preparing ones home-made meals.

Tantalizers, Tasty Fried Chicken, Mr. Biggs, Chicken Republic, Nandos, Mama Cass, Tetrazzini,

Munchies, Chicken Licken,’ Sweet Sensation and even Kentucky Fried Chicken are just a few of the

fast food restaurants that have cropped up in the past ten years across the country.

Marketing Strategy, Branding and Value Proposition: Positioning, branding and quality of

services are a few of what the operators are using as marketing strategies to

elevate their position in the market and in the minds of their customers. An

example is the family attraction strategy of Mr. Biggs as against the couples

attraction strategy of tantalizers which is largely reflected in the architectural

design and arrangement of their outlets and targeting of their promotionals and

advertisement.

Expansion and Franchising [Pros and Cons]: Opening new outlets close to competitors has

been a major warfare whereas franchising has been one of the major tools for expansion especially

for Mr. Biggs but it has also been a problem, creating a gap in the market due to non-uniformity inquality of meals across all branches, outlets and franchises. Tantalizers, founded by a woman named Mrs Abosede Ayeni Grace, was a single-outlet restaurant

with great quality food and amazing patronage and soon expanded shop currently operating a total



of 52 outlets across the country as at 2009 [Source: ABN Digital – YouTube – Interview with

Tantalizers Deputy Managing Director].

Distribution and Home-delivery evolution: The market is also integrating vertically by extending

its reach through home and office delivery systems against the solely outlet-based purchase eat-in

or take-away system currently being offered.

The Case for Pessimism –

ChallengesFaced by many challenges, the sector like many other energy-dependent sectors in Nigeria is

confronted with erratic power supply. Self-generated power has been the alternative for many and

Tantalizers, for example, says its power generation expenses on purchase of diesel fuel only for the

year 2008 was the same as its posted profit.

The other major issues faced by the Fast Food Operators [FFOs] include but are not limited to:

Taxation: Double taxation from different levels of government that are sometimes on the

same tax item

Staffing / Manpower: High turnover after training or for reasons of further education pursuit

amongst junior staff, lack of pre-employment knowhow and

heavy dependence on permanent staff unlike other developed

countries where part-time workers are more abundant

Raw Material Supply [RMS]: RMS is highly insufficient taking for

instance that the demand for chicken is higher than its supply

and thus FFOs are competing at the supply level and may have

to be horizontally integrated to improve their competitiveness

Regulatory Issues and Customer Satisfaction: On the regulatory side comes requirements such as

health and safety issues and on the other hand is the customer satisfaction in terms high

expectations for both quality and quantity of products and excellence in customer service. Thecustomer is king and always wants more value for money.

The Case for Optimism – Growth

The FFIN is currently valued at about N190 billion ($1.27b) [Source: Association of Fast Food and

Confectioners of Nigeria – AFFCON] and still growing. With the increasing population of Nigeria, a

more stable democratic political system, better economic growth, internationalisation of local

competitors and entry of international franchises into the local market to mention a few, the growth

of the industry has just began and newer strategies to capture the market will continue to evolve.

More opportunities are opening up in areas such as raw materialsupply and product distribution across this value chain that is

promises to further increase the spread of the sector. Increase in

average disposable income, travel, tourism and exposure will continue

to push the boundaries of the market to some day be as vibrant and

large as it is in developed countries like the US and UK.

Conclusion

Food is a mandatory commodity for the survival of all living things with man at the top of the list.

With the large and increasing population of Nigeria, Nigerian FFOs can become financial giants and

international brands like their counterparts in other countries. This can be attained by greatemploying logistics and organisational efficiency, best practise and global standards in operation

and delivering the best value for money to it customers.

ffin - fast food industry in nigeria v2

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