Here’s why fast food companies find Nigeria spicy

Sewuese, 29, moved to Lagos to join Femi, 35, her husband five years ago, after their wedding. They met when Femi was posted to Vandeikya Local Government Area, Benue State, for the National Youth Service Corps (NYSC).

She graduated from Law School about five years ago and wants to build a law career. Her performance recently earned her a promotion at her workplace. Sewuese currently earns N200, 000 monthly at the law firm she works.

Her office is 39.90 km away, at Victoria Island but she lives at Ikotun, Lagos mainland. On a typical day, she wakes up by 5 am to prepare their 3 years old son for the crèche. She gets to the office by 9 am the official resumption time.

Femi her husband is a computer programmer and works in a software company that makes enterprise resource management (ERM) programmes and other kinds of software for a variety of companies. He earns N300, 000 monthly. The company Femi works for is located in Ikeja.

“Babe, we are eating out this weekend. I will prepare our meals for the week and store them away in the freezer on Saturday. Then Sunday, no cooking, we will eat out,” Sewuese suggested to Femi.

This conversation comes up every other weekend. So, in a month the couple eats out twice at weekends, at least. Sewuese says this is a good deal for her. It saves her the trouble of cooking and she gets unwind too.

Fast food or quick service restaurants (QSR) are counting on Sewuese and Femi and others within this income range, more or less.

The number of people in this category is about 40 million in Nigeria, the middle class. The growth and development of towns and cities in Nigeria is throwing up a mobile middle class with a lifestyle different from what obtained 20 years ago.

Two decades ago there were more women willing to become stay-at-home mothers and pursued their careers when the children were grown. Today, the situation has reversed with more women pursuing careers at the same time as they bear children.

This means that many contemporary mothers are fighting a battle on two fronts – career development and homebuilding. This stressful lifestyle has more families cooking less and eating out more.

Students and young working graduates too in busy urban centres of Nigeria binge on fast food frequently to replenish energy. The number of people in this category could be as many as 20 million according to the analysis of statistics from the National Bureau of Statistics.

These social and economic dynamics make Nigeria a veritable sizzling market for fast food companies such as the Chicken Republic, Domino’s Pizza and most recently Burger King.

Burger King has officially announced it is coming to Nigeria to get a slice of the QSR market. BusinessDay got an exclusive with Antoine Zimmarieh, managing director of Allied Foods and Confectionery Limited. This is the company that is leading Burger King into the Nigerian market.

The interview sought to find out why the American fast food brand was coming to Nigeria when the South African retailer Shoprite is leaving. The QSR sector has also seen many brands come and go. Mr Biggs, Tantalizers and Tetrazzini are some fast food brands that had their days, took a bow and left.

Begging for an answer is why Burger King has chosen to tread where many have failed. Every business exists to make a profit for its stakeholders. This means the Nigerian QSR sector is profitable. How is this so? Zimmarieh counts on the volume of sales.

Fast food companies such as Burger King are working with the assumption that 20 percent of Nigerians are middle class; this means there are around 40 million people in Nigeria who could be called middle class.

Among them there will be 60 percent of youth, this is probably 10 million people who may be youthful and another 10 million may be matured. This will be about 20 – 25 million people in Nigeria that can afford to eat out at least once a week and can buy these menus.

Nigeria’s estimated 40 million people strong middle class is three times the population of Belgium. Of course, it is not the same income distribution. But when one is talking about three times the population of Belgium it compensates for the lower income levels in Nigeria.

In an area such as Egbeda or Ikotun where there are four million people, one does not necessarily rely on repeat businesses. The customer may come every once in two or three months, but with four million people the business is sure to ride on the volume. This compensates for fewer repeat customers. There is at least one QSR chain that could serve as an example.

Domino’s Pizza has successfully operated its chain of QSR stores in Nigeria since 2012.

Eat’N’Go, Nigeria’s master franchisee for the Domino’s Pizza, Cold Stone Creamery and Pinkberry Gourmet Frozen Yoghurt brands started as a food service company in Saka Tinubu, Victoria Island, Lagos, with enough staff to run one store.

It did not have the Pinkberry Yoghurt brand at the time.

After 9 years, with over 2, 400 employees and over 100 stores the company has quickly established a reputation for providing exceptional products and services across the three brands.

In an interview with BusinessDay two years ago, Patrick McMichael, managing director, Eat’N’Go said Nigeria just like any market in the world has its challenges regardless of the product or service.

“Years ago, before we launched Domino’s Pizza here, many believed that Nigeria was not a viable market for pizza,” McMichael said.

However, when the Domino’s Pizza introduced its products, it first tailored the menus to fit the unique Nigerian diet and tastes, and grew from there, becoming the market’s largest operator.

“We believe that there are numerous untapped business opportunities in Nigeria such as the huge population and other commercial advantages to growing a business, which is why we came here to establish our organisation,” he said.

He believes that with the right mindset, a great team of employees and an effective business plan, one can succeed.

For instance, the company introduced the Smallie Pizza in February 2019, a mini-pizza variant that went for N550. This innovation targeted a wider segment of the consumers and ensured everybody can afford a box of pizza.

Smallie has helped serve as an option for customers who may not be able to consume a medium box, but really need to enjoy a box of pizza as lunch or a snack.

Beyond sales, Smallie Pizza brought the brand closer than ever to consumers and made pizzas more accessible and enjoyable to all classes of individuals.

Nigerian households spent N40.20 trillion for consumption expenditure in 2019.

This is according to the Consumption Expenditure Pattern report published by the National Bureau of Statistics. The data covered October 2018 to September 2019.

In 2009, the last time the report was published, Nigerians spent N21.62 trillion on consumption expenditure.

The report measures spending on both food and non-food items and showed that Nigerian households spent 55.65 percent of their income on food and 43.35 percent on non-food items.

This means that household income in Nigeria is low which is why the percentage going to food is high. In the United States of America, the average is 8 percent of household income. This is because the income is higher.

Eat ‘N’ Go’s success shows that despite all the indicators that Nigerian households are hard-pressed by a harsh macro-economic environment.

The market for quick service restaurant chains in Nigeria hides acres of diamond for businesses that understand the terrain and adapt accordingly.

Burger King is the fast food company to watch as it makes its entry into the Nigerian market.

Its promoter, Zimmarieh has been in Nigeria’s food and hospitality industry for 38 years. With stints as managing director at Eko Hotels and Eat ‘N’ Go.

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