What are the realities of Nigeria's fast food industry?

Feb 04, 2022|Gbemisola Alonge

Nigerians love to eat out.

On average, about 20% of our spending on food goes to meals consumed outside the house—everything from street-side snacks like Gala and plantain chips to proper meals at restaurants, including fast food.

Some takeaways:

Nigerians spend about a fifth of their income eating out, which informs why the Quick Service Restaurant (QSR) sector is worth over ₦280 billion. Despite the large potential of the sector, many businesses have failed.
Choosing the right kind of funding to sustain and expand the business is critical to providing the cash required for growth in the QSR sector.
To earn significant revenue and profit, QSR brands must combine sufficient working capital with quality products and services suitable for Nigerian customers.

Basically, the business of fast food is big business. The sector was last publicly valued at about ₦280 billion in 2018 and has probably grown since then in direct proportion to our ever-expanding population size. The enormous growth potential of the industry is why entrepreneurs venture into the food business over and over again in Nigeria. It's also why the international restaurant chain, Burger King, expanded into the Nigerian market despite the country still reeling from the negative demand shocks of the pandemic.

However, despite the massive opportunity, not everyone who has attempted to build successful restaurant franchises in the sector has survived. We've seen the likes of Mr Biggs, Mama Cass, Tantalizers, the QSR sweethearts of Nigerians in the 90s and early 2000s struggle to operate sustainably. More recent entrants like Dominos and Chicken Republic have had their own challenges. We've also seen foreign franchises like KFC and Nandos struggle to expand and, in some cases, shut down existing branches.

There are many reasons for these operating challenges, but we'll talk about two of the most important: funding and the market.

Let's start with getting money.