In a bid to reach more customers and boost sales, fast food restaurants have turned Lagos streets into retail channels to sell their products in cheaper and smaller packs.
According to a BusinessDay survey, restaurants in Lagos, Nigeria commercial hubs, such as Mr. Biggs, Chicken Republic, and Sweet Sensation, pioneers of the Quick Service Restaurants (QSRs) industry, have been using the ‘Sell-on-the-Go’ marketing strategy, by setting up express kiosks since 2019.
These kiosks – small, stand-alone booth-like structures placed in areas with high foot traffic – are used by these QSRs to reach their customers in an informal way. It is a type of direct, low-cost marketing strategy, according to experts.
Uchenna Uzo, consumer expert and faculty director at Lagos Business School, says many Fast-Moving Consumer Goods (FMCGs) companies are packaging their products into smaller bits to make it easier for hawking, and restaurants are late in the game.
“The power of Selling-on-the-Go makes you more accessible to the end consumer, it helps you to break down what you are offering in smaller sizes that people can afford.”
The QSRs give immediate market information on the products people buy more of, in what size, package, and quantity do they want you to sell to them, price testing like what proportion, menu, a right price point that people are willing to pay for, etc., and it also helps in brand visibility, Uzo states.
Similarly, Ayorinde Akinloye, a consumer analyst at United Capital plc, notes that the QSRs are going retail as much as possible to offer more products and services, saying, “There is also the need to go beyond the mega outlets because it is expensive and difficult to run. It is cheaper to run small kiosks.”
Two recessions witnessed in Nigeria in the last five years have led to high inflationary pressures, low purchasing power, and falling consumer income. Apart from the QSRs going into smaller formats, FMCGs now package their products into smaller sachets to target the larger segment of the economy.
Some of the advantages of using kiosks are that it improves customer buying experience, increases customer base, reduces the cost of the business, increases efficiency, etc.
“A lot of consumer food service operators are now trying to explore the format of miniaturization. It is a tread of trying to increase transaction numbers and reduce cost,” Cheng Fuller, a retail expert says.
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Fuller advises that if restaurants want to penetrate neighborhoods and reach more consumers for profitability’s sake, they should try to increase their outlets but only in smaller formats because the larger ones are expensive.
In other countries like the US, UK, and France, kiosks are well established but they are the self-ordering ones they use. With the help of technology, this type of kiosk allows customers to select and pay for products and services without the need for human interaction.
But kiosks in Nigeria do not use technology. What consumers do is to walk into them, look at the menu/price list, and place orders.
“One way to meet customers is to give them the ‘go-to service’ that meets their needs. So, the more you increase your point of sales, the more sales you make,” Wale Abioye, a manager at Sweet Sensation, says.
He further notes, “If you look at the demography of those who are patronizing these small kiosks, they are within the age group of 16- 30 something years. So, all brands have to go that direction.”
According to the Association of Fast Food and Confectioners of Nigerian (AFFCON), the Nigerian food industry is estimated to be worth over N1 trillion and is also one of the best-performing industries in the country.
A recent report by Euromonitor International, a London-based market research company, predicts that 2021 might likely see some street stalls/kiosks strive to improve their customer service by offering more attractive outlets in an effort to better compete with limited-service restaurants.
“On the other hand, some restaurant chains are launching their own street stalls/kiosks as they seek new sources of revenue. Mr. Bigg’s is particularly notable in this regard, as its Mr. Bigg’s Express kiosks use a similar bold red and yellow frontage as its limited-service restaurants,” the report states.
Although it is an interesting opportunity, Uzo advises that QSRs should not copy each other or else their business could shut down.
Fuller also says the restaurants should not copy each other blindly, “They should do it based on their own unique financial constraints and benefits that would accrue to them.”
