Over 700 out of about 900 outlets of indigenous Quick Service Restaurants (QSRs) shut down operations across the nation, between 2015 and 2018. This was revealed in an investigation by Nairametrics.
Market findings conducted by the United States Department of Commerce’s Commercial Service and Oxford Business Group confirmed that only a little over 200 QSR outlets were operating across Nigeria.
The popular brands are Mr. Bigg’s, Tantalizers, Food Concepts (the parent company of Chicken Republic), Tastee Fried Chicken and Sweet Sensation.
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From the N250 billion revenue recorded in 2016, an anonymous source in the Association of Fast Food Confectioners of Nigeria (AFFCON) disclosed that the sector could not boast of revenue worth N100 billion as at the end of 2018.
The source added that the situation had increased the unemployment rate in the country, as their workforce dropped from over 400,000 in 2016 to about 150,000, representing a 62.5% slide.
While some of the brands are struggling to keep their heads above water, others have either shut down totally or concentrate on major cities across the country. For instance, outlets like Mr. Bigg’s, Tantalizers, Tastee, Mama Cass, Sweet Sensation, Chicken Republic, King George, Bumfy Burger, Just Chicken, Mr. Food, and Golden Gate Restaurant have one sour tale or the other to tell.
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Reasons for the massive shutdown
Brand and human resource experts have blamed the development witnessed in the QSR sector on operators’ lack of consistent service delivery, succession plans, and good managerial skills.
Lack of consistent service delivery
Mrs. Bola Adeniyi-Taiwo, the Managing Partner of the Workplace Centre, admitted that while Nigerian entrepreneurs’ tenacity could be rated over their counterparts in other developed and developing nations, it was regrettable that most of the indigenous brands and entrepreneurs could not build sustainable brands.
She said, “The poor level of patronage of some local QSRs, which led to their gradual extinction, is connected to the ‘carefree’ attitude of either the managers or the chief executive officers of the brands. When compared to some businesses that invest immensely in great customer service strategies, several Nigerian restaurants still have a long way to go.
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“The most immediate and important factor is establishing an orientation of respect. That is one element that is immediately felt by the consumer. This alone can either lead a hesitant customer to make an instant purchase or cause them to walk right out of the door.
“After the respectful attitude is established, then it is vital to anticipate and very importantly focus on the customers’ needs. This is when active listening skills are essential.”
Lack of managerial skills
According to Ms Lola Omole, Managing Director of Singularis Limited, a brand public relations firm, in most cases, most owners of the indigenous firms were either bad managers or “they hire managers that are not capable.”
Contrary to the argument of some operators that lack of fund was the bane of the growth of the sector, Ms Omole said that their problem was more of implementing required managerial skills.
She argued that, “The management of Tantalizers raised several millions of naira from the Nigerian Stock Exchange when it listed its shares in June 2008, only to delist in 2010 after spending fortunes to list and meet up with requirements.
“Between 2010 and 2011, the International Finance Corporation also invested $28.5million in the firm and as we speak, the fund does not translate into growth for it. It should not have rushed to the market when bigger firms within and outside the sector were still watching the tides.
“Another factor hindering the growth of the local brands is the inconsistency of their offerings. Most of them, especially Mr. Bigg’s, have been losing market shares because of variations in quality from branch to branch, which has been attributed to its franchising system.”
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Low quality of food
A former patron of Mr Biggs’ and Sweet Sensation, Mr Charles Aina, shared his experiences with the QSR outlets. According to him, the problem of most of the local brands is that they don’t pay attention to the quality of food served. He had bought meat-pies from some of them several times only to find out that it was spoilt.
He alleged, “They microwave the leftovers of the previous day and sell to customers. They sell stale food between 8am and 11am and they prepare fresh meals after exhausting the stale ones. Most victims would assume they have bad cooks and don’t forget, word of mouth is the fastest, cheapest and best advertisement or a spoiler.”
Lack of unique selling proposition
A banker, Ms. Kemi Onabanjo, alleged that the firms had lost touch with their Unique Selling Proposition, which she said was their strength and crowd puller when they started.
She said, “The problem started when they started giving franchise to different kinds of individuals, especially those who lacked knowledge of the business. The firms issued franchise to anyone that had money and because the franchisees wanted quick returns on their investment, they began compromising quality.
“In some cases, they used the same workers that served customers’ food as the toilet cleaners. Some of the outlets of the affected brands are either dirty or not as neat as they used to be. The kitchens of some are very dirty and the ambience is no longer there.”
The blame is not solely on the QSRs
However, operators have argued that they have some of the best managers in the continent sailing the boats of the QSRs, but they are overwhelmed by some factors that have eaten deep into their finances.
Our source from AFFCON, who pleaded anonymity as he was not permitted officially to comment on the issues, insisted that the harsh economic environment in Nigeria, irregular power supply and multiple taxes imposed by both the Federal and State Governments were responsible for the ailing state of the industry.
“We use over 50% of our gross profit to cover running cost, compulsory taxes and levies. This is compounded by the overlapping functions of several regulatory agencies.
“These overlapping functions and a lack of coordination among such regulators lead to heavy financial burden on fast food companies. Again, insecurity, inflation, and high-interest rates are some of the myriads of challenges having a direct impact on our sector.”
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