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 in
quality 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 – Challenges

Faced 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. The
customer 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 material

supply 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 great
employing logistics and organisational efficiency, best practise and global standards in operation
and delivering the best value for money to it customers.