The Nigerian quick service restaurant industry is about to witness the birth of a new baby. Burger King, the world’s second largest quick service restaurant chain, after McDonald’s, is coming to the country.
As markets in the West and other developed countries become saturated, big brands like Burger King are seeking new frontiers in other continents and countries like Sub-Saharan Africa, especially Nigeria.
With a population of close to 200 million and a 65 per cent youth population, Nigeria remains the destination of choice for big brands like Burger King.
Burger King seeks to compete better with the market leaders like McDonald’s and has decided to enter the volatile African market.
José Cil, president of Burger King, believes fast-food restaurants “aren’t really well penetrated yet” in sub-Saharan Africa. “We think Nigeria is an amazing opportunity, we think East Africa as well,” he said.
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Burger King has been moving into the region over the past 18 months, striking partnerships to expand in markets including Kenya and Ivory Coast.
“Nigeria, Africa’s largest economy, was “one of the places I try to go to as often as possible to meet investors and potential partners,” Mr Cil said, adding that Burger King had “a lot of work to do” in Nigeria “in terms of infrastructure and supply chain.”
What’s the lure?
“The western market is matured and brands are witnessing a drop in numbers. There is no real growth prospect there. Africa, especially Nigeria, with a growing economy populated by 65 per cent youth community that is fun-loving and style-driven represents a major frontier,” Brand analyst and Publisher of Brandish, Ikem Okum told The Nigerian Xpress.
For him, approximately 200 million population is enough driving force for any brand coming to the country.
It is estimated that by 2050, the population of Africa will be about two billion people and it is expected to double before the end of the century. Nigeria represents 27 per cent of that figure, meaning every 3 out of 10 persons in Africa is a Nigerian.
A stifling environment?
Okuhu believes Burger King may witness what he calls ‘early shine’ as was the case with newer brands like KFC and Nando’s.
“I am not sure there are great hopes for folks in the QSR business beyond what I call early ‘early shine’, as we saw in KFC, Nando’s and few others,” he said.
The QSR business in Nigeria has been declining because of the harsh economic climate. Local and indigenous brands have been struggling.
Despite the challenges of doing business in Nigeria, the country has moved up 24 positions on the World Bank’s ease of doing business index, from 169 in 2016 to 145 in 2017.
But the Nigerian government has also come under heavy criticisms lately in the treatment of a telecoms company, MTN, a South African company.
After being fined heavily for not disconnecting preregistered phone lines, the company is at loggerheads again with the government over what the country’s Central Bank called capital flight in dividends.
According to the Central Bank of Nigeria, MTN illegally repatriated about $8.1 billion in dividends to its home country, South Africa. The company has also been slammed by Nigeria’s Attorney General’s office with about $2billion in back taxes.
Analysts believe this will drive away from the much-needed foreign direct investment (FDI). Just last week two global financial institutions, HSBC and UBS, closed shops in the country, resulting in loss of jobs and capital flights.
Local palate to the rescue?
But Okuhu believes that the only way for Burger King to weather the storms in Nigeria is to do what McDonald’s did in China.
“Health-conscious people are on the increase and their influence on the rest, pervasive. Many people are going back to normal diets or where available, organic foods, have become the real deal, even for the young,” he said.
“Remember KFC came with major hypes and struck great chords in the early days. But people forget the same fate befell Mr Biggs, Tantalisers, Tastee and even Sweet Sensation.”
For him, the only way for Burger King to avoid infant mortality is to infuse local cuisines in their menu.
“The only way for them (Burger King) to survive is to do what McDonald’s did in China by factoring in the local palate from the onset. Failure to infuse from the very day they open shop will spell infant mortality like it was the cases of others before them”, he told The Nigerian Xpress.