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Home Business News

Why Tantalizers Keeps Recording Recurring Losses

Editor by Editor
April 29, 2016
in Business News
Why Tantalizers Keeps Recording Recurring Losses
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It is no news that Tantalizer, Nigeria’s foremost fast food company, has been recording recurring loses since 2012; a situation that calls for urgent restructuring or the company faces the inevitable, bankruptcy.

The once flourishing business that started its first outlet at Festac Town, a Lagos suburb of 1 million, has been hit below the belt as smaller restaurants have tapped into its business model.

This is called the cannibalization of sales or stiff competition.

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Why will l go and eat at Tantalizer when a small restaurant can give the same utility, probably at reduced costs?

This stiff competition and lack of strategic thinking on the part of management and owners impacted on top lines as Tantalizer’s sales dropped significantly by 75.22 percent to N478.27 million as at March 2016 from N1.93 billion the previous period.

The company posted a loss after tax of N102.60 million in March 2016 as against a loss of N707.08 million in March 2015; as operating expenses of N347.93 million swallowed all of gross profit of N199.37 million.

Tantalizer has a negative working capital in its balance sheet as current liability of N2.44 billion swallowed the whole of current assets of N626.23 million.

Aside the fact that Tantalizer has been unable to meet its obligation as at when due, a buyer usually considers negative working capital in a target as detrimental because it signifies additional capital that will be required to run the business after closing.

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The aforementioned beckon on the company to either seek merger or carry out a scheme of capital reduction and reconstruction as this strategies will enable it tap into the Nigeria huge population that crave for consumption.

It must be noted that the country’s fast food business is its embryonic stage and customers under served.

As of 2014 there were over 800 QSR outlets in Nigeria, the vast majority of them branded by about 100 small and medium-sized local companies, according to the Association of Fast Food and Confectioners of Nigeria (AFFCON). They generated about N200bn ($1.22bn) in revenue and employed more than 500,000 workers, according to AFFCON’s president, Bose Ayeni.

The 800 QSR for a population of 170 million people means the company is under-served.

The country needs as much as 20000 QSR for its huge population.

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