I have done it in the past and can do it again – Zammarieh
ANTOINE ZAMMARIEH is the managing director of Allied Food and Confectionary Services Limited with 38 years of experience in Nigeria’s food and hospitality industry under his belt. In this interview, he talks about the fundamentals of Nigeria’s retail market that would make Burger King successful. He spoke to Stephen Onyekwelu. Excerpts:
How has the quick service restaurant business in Nigeria changed in the last two decades?
First I am in the food and hospitality business, which is related to the quick service restaurant (QSR) sector. My first twenty years were in the hotel. I was the managing director at Eko Hotels for 10 years.
QSRs started being visible in Nigeria in the late 1990s and early 2000s. Mr Biggs first started. Unfortunately, it did not follow the rules and regulations. Let me quickly add that now they are coming back.
The next QSR brand to open shop in Nigeria was KFC, and then the Chicken Republic followed, then Dominos, Coldstone, and others. Some South Africans came but they did not succeed and left.
The good companies started and stayed. All of a sudden this QSR business is one of the hottest in Nigeria now. It employs many people. It contributes significantly to Nigeria’s gross domestic product. It is not a business that will not have an impact on the Nigerian economy, on taxes both federal and state.
The expansion of the QSR space with new entrants offers Nigerians options to choose from.
By the way, let us look at the evolution of the Nigerian mentality. First, among many couples today, both partners work. There is no time anymore to cook much at home. So, if once or twice a week you had a quick service serving (eaten on the spot or taken away), this easies the burden to cook.
This behaviour was not there in the past. This is because it used to be that the husband is working but the wife is a stay-at-home mother. This is not happening anymore because it is unsustainable. This is one of the fundamentals of the QSR business and makes the sector an emerging one.
What are some of the assumptions that are making you and Burger King confident about the Nigerian market?
The Nigerian market is of course the number one market in Africa with 210 million people, 60 percent of who are youth. You cannot say that this not a good market, especially for this kind of business – QSR.
So, the market is there. The next question is how to enter the market. This means adapting your product to the local market. This is important. The adaption does not have to be complete. Whoever wants some jollof rice and plantain knows where to buy them.
Nevertheless, flavouring is important. Therefore, you have to adapt the flavour and menu to the Nigerian pallet. Plus you have the Nigerian factors.
For instance, you enter this market, you have no infrastructure. Some companies come and they think it is a plug-and-play environment.
This means you flip the switch and there is light. You turn on the tap and water flows. Unfortunately, this is not the case. You have to factor all this in. some do not have this foresight and could fail as a result.
Logistics in the distribution of food is another important infrastructure gap an entrant must consider. Training of staff is important too. If you do not have the proper training of staff you are in trouble too.
We are beginning to see a pool of QSR talent forming in Nigeria. This is because of the variety of companies in this sector. The quality and quantity of labour have improved.
About 10 years ago, you could not find people with QSR talents ready for employment. You do not just pick up a graduate and tell them to make a pizza or hamburger. You have to train them. Without this proper training, the company will fail.
Personally, I did not know how to make pizza or hamburgers. Well, I knew because I studied hotel management but what I meant is that I had to get trained to those standards. Training is a fundamental success factor. That it is quick service does not mean you can cut corners.
If you cut corners on training, logistics, and the other factors we have mentioned, you will fail. If you go the whole nine yards as we say, you will succeed.
Nigeria’s population is a young one and unemployment is high among this demography. Then, there is the healthy living movement that considers QSR meals junk – what is your response?
Well, define healthier. You go home and you are eating pounded yam or garri with the soup, is it healthy or a little bit heavy? So, what is this compared to rice and chicken on a healthy scale?
Those who say they are eating healthier, are they eating salads only? Healthy is salads. You do not eat bread; you do not eat this and that.
The trend of healthy is there but it is not sustainable. Each person requires a kind of meal that would sustain them to do 10 – 12 hours of hard work. If you eat salads, which we have assumed to be the healthiest, would you sustain yourself to work 12 hours? No way!
Having said that, you have to make sure that what you are eating, say, a hamburger with the fries or chicken burger with the fries has to be with healthy cooking oil. This is healthy. It does not have to be that the fries were fried in oil that has been burnt. This is not good because it may lead to sicknesses.
However, when you choose the oil properly, this is okay. You can indulge yourself once a week with that kind of meal. This is what we are aiming at, to indulge people with a proper, full meal once or twice a week.
You cannot expect anyone to come to Burger King every day. It is not sustainable. So, the healthy part of it is neither here nor there.
I try to eat healthily myself. What I do is that I eat French fries not every day but twice a week. I am fine with that because I will burn it. My lifestyle is adapted to what I eat as well. Healthy is a lifestyle, physical exercises et cetera.
You need the energy to sustain your daily activities. Imagine someone who leaves their house around 6 am to be at the office by 9 am. This person has already spent three hours on the road. How would they sustain themselves to go home at 6 pm, to get home at 9 pm? Where would they get the energy from?
How do you respond to youth employment and the availability of disposable income?
I have done some studies around disposal income in the past and know that Nigeria ranks number two in the world among countries where food takes up to 55 percent of disposable income. This means the income is low which is why the percentage going to food is high. In the United States of America, the average is 8 percent of income. This is because the income is higher.
We rely on the volume. If you say 20 percent of Nigerians are middle class, this means you have around 40 million people in Nigeria can be called middle class. Among them you will have 60 percent of youth, this probably 10 million people who may be youthful and another 10 million may be matured. This will be about 20 – 25 million people in Nigeria that can afford our product.
This is three times the population of Belgium. Of course, it is not the same income distribution. But when you are talking about three times the population of Belgium it compensates.
When you have an area such as Egbeda or Ikotun where you have four million people, you do not rely on repeat businesses. The customer may come every once in two or three months, but with four million people you are sure to ride on the volume. This compensates for fewer repeat customers. There are pluses and minuses but when you find your balance, you will be alright.
How will adapt your product pricing to the Nigerian market?
In the USA or Europe, there is something called a dollar or euro menu. This is an entry point for someone who cannot afford a three-dollar menu.
For Nigeria, the equivalent of a dollar menu would one that costs about a thousand naira. With a thousand naira you can eat a nice small menu. This is a kind of adaption to this market.
A thousand naira menu a day is affordable. The middle class can afford this once or twice a week, which is normal.
Nevertheless, if a customer decides to eat a whopper that costs N2500 or N2800, this is a treat, an indulgence. But a small menu of a thousand naira will be a need, with a coke, some fries and burger, this will sustain one.
What are your expansion plans?
We plan to be everywhere in Nigeria. We will start with Lagos, then Abuja, Port Harcourt, these big cities. Then we will go into different market segments depending on demand and the economics of it. We will go to where there is market and sustainable demand.
Generally, we have a very aggressive expansion plan. I have done it in the past and can do it again.