Nigeria’s stubbornly high inflation has made street food stalls/kiosks a fast-growing choice for cash-strapped Nigerians, new data obtained by BusinessDay have shown.
A report by Euromonitor International, a London-based market research company, said the fall in consumers’ purchasing power and high unemployment rate have made street stalls/kiosks the most dynamic segment in the country’s consumer food service industry.
The consumer foodservice industry, which comprises cafés/bars, full-service restaurants, limited-service restaurants, self-service cafeterias and street stalls/kiosks in the formal sector, recorded total sales of $13.5 billion last year, up from $11.6 billion in 2021.
A breakdown of the total sales show that street stalls/kiosks saw the largest increase of 20 percent to $3.0 billion in 2022 from $2.5 billion in 2021. It was followed by limited-service restaurants, whose sales rose by 17.4 percent to $5.4 billion from $4.6 billion.
Full-service restaurants saw their sales increase by 15.7 percent to $577.6 million, while cafés/bars recorded a 15.4 percent growth in sales to $4.5 billion.
A further analysis shows that between 2020 and 2021, street stalls/kiosks recorded the second largest growth of 13.6 percent, compared with limited-service restaurants’ 15 percent, full-service restaurants’ 11.8 percent and cafés/bars’ 11.4 percent.
“As a result, street stalls/kiosks are a growing segment and the service is constantly evolving and improving. Many street stalls/kiosks are made to look attractive and some even offer direct delivery to, for instance, office workers and some also use third-party apps such as KongaGood and JumiaFood,” the report said.
It said Food Concepts Limited maintained its leadership position in consumer food service last year, due both to the affordability of its offerings and the continued rapid expansion of Chicken Republic outlets across Nigeria.
“The company has also benefitted from diversifying into street stalls/kiosks, with several brands – the most recent launch being chop box, which offers local cuisine,” it added.
Street stalls/kiosks provide livelihood for millions of middle- and low-income people.
“Owners of stalls offer marginally cheaper prices because they don’t bear the overhead cost that comes with running a restaurant and they are able to break what they sell into smaller units and make affordability possible than before,” said Uchenna Uzo, a consumer expert and faculty director at the Lagos Business School.
“You will find a larger share of consumers on a go on the streets which enables them to have a wider access to the market and can experience in real time what foods are moving and what price points are sustainable,” he said.
Nigeria’s inflation rate rose for the second consecutive month to 21.91 percent in February 2023, the highest in 17 years, from 21.82 percent in January, according to the National Bureau of Statistics.
Food inflation, which constitutes more than 50 percent of the country’s inflation rate, also rose to 24.35 percent in February from 24.32 percent in the previous month.
Over the years, street food business has gained more momentum among young people as a means of survival as the recession experienced in 2016 and 2020 pushed more people out of the job market and into poverty.
Victoria Isong and Mercy Akpan, who are in their early 20s, sell noodles at Ogudu and make up to N5,000 daily.
“We started it in 2020 when our previous jobs as sales girls were affected by the COVID-19 pandemic,” Akpan said.
Sunday Goodwin, a 27-year-old Shawarma vendor at Fadeyi, Lagos, told BusinessDay that he had to learn Shawarma business in order to survive as he came from a poor background.
“When I came to Lagos, I looked for work for almost seven months, but I could not find one. So, I decided to go into the business based on the advice from my friends,” he said.
According to the Senior Secondary School Certificate Examination holder, his business makes at least N80,000 daily, from which he saves N200,000 monthly and has opened another outlet last year.
“The reason why there are a lot of vendors is that there are no jobs, and in need of means to survive they turn to street food because they sell fast and require little capital to start,” Abiola Gbemisola, consumer goods analyst at FBNQuest, said.
Read also: February inflation accelerate most in Bauchi, Rivers, Ondo
Data from the NBS show that the number of unemployed people in the country jumped 100 percent to 23.2 million in the fourth quarter (Q4) of 2020 from 11.6 million in Q4 2016.
The number of unemployed people within the age group of 15-34 rose by 62 percent to 12.8 million in Q4 2020 from 7.9 million in the same period of 2016. The unemployment rate for those within that age group is usually the highest compared to other groups.
Experts say food retailing holds the key to quick growth. According to the World Trade Organisation, Nigeria ranks as the largest food market in Africa, with significant investment in the local industry and a high level of imports.
Data from Euromonitor International estimated the combined value of food and drinks in Nigeria at N16 trillion.
BusinessDay reported last year that some fast-moving consumer goods companies were repackaging products into smaller units (sachets) to make them more affordable.
Cordros Securities said in a recent report that food and home personal care producers had strengthened their positioning in the bottom segment of the pyramid in response to consumers’ growing preference for affordability.
“With consumers’ high level of acceptance, we believe the new wave of ‘sachetisation’ in the consumer goods sector will persist as producers strive to maintain their market share,” it said.
