Rita Ogunleye, a banker, often likes to eat out on free weekends in Lagos. She was, however, recently discouraged by her friends from going to the regular local Quick Service Restaurant (QSR).
Then a friend of hers suggests Domino’s Pizza because of its variety of cheesy pizzas served with a drink or a variety of ice-cream flavours.
Ogunleye decides to go to Domino’s Pizza and is blown away by the welcome cheer from the salesmen and women who applauded her. She feels welcome and loved. She examines the environment as it is spacious, well ventilated and furnished. She goes to place her order for a smallie combo pizza snack with a 50cl coke for as low as N600 and a ColdStone ice-cream.
She sits down to wait for her order. While she waits, she takes notes of the high volumes of consumers patronising the restaurant.
In an increasingly intense fight for fast-food diners, pioneer local chains are not keeping pace with newer foreign rivals.
The rising success of foreign brands like Domino’s, Debonairs Pizza, KFC, Johnny Rockets, Krispy Kreme doughnuts and others is in contrast with erstwhile leaders such as Mr Bigg’s, Tastee Fried Chicken, Tantalizers, Chicken Republic, Sweet Sensation, Mama Cass, Kilimanjaro, and so on.
Domino’s Pizza, a subsidiary of Eat ’N Go, is an American company which came into Nigeria in 2012 with just two branches. Today, it has 90 branches comprising 43 Domino’s Pizza stores, 39 ColdStone Creamery and eight Pinkberry gourmet frozen yoghurt stores.
Domino’s has now become a popular spot for those who want to impress their lovers and go for family outings.
Yinka Ademuwagun, a consumer analyst at United Capital, said that quality of restaurants is what did some of the locals in.
“When Mr Bigg’s started, they were everywhere but later their quality of service began to diminish gradually,” Ademuwagun said.
Mr Bigg’s, the first pioneer of the QSR owned by the United African Company of Nigeria plc (UAC), was established in 1986 in Lagos.
It began with only a limited menu of pastries such as beef, chicken and apple pies, sausage rolls, doughnuts and beef burgers, yet the restaurant was always fully booked.
And this led it to expand its outlets across the country, especially around mobile filling stations. The success story of Mr Bigg’s led to the emergence of local eatery brands such as Tantalizers and Tastee Fried Chicken, Chicken Republic, Sweet Sensation, Mama Cass, Kilimanjaro, etc.
Today, however, most of these pioneers of QSR are closing shop due to lack of patronage, making the brands and franchisees sit on heavy revenue losses.
A BusinessDay visit to Mr Bigg’s Ogba in Lagos tells the story better. As at the time of the visit at about 12:30 pm, the restaurant was quiet with few customers and only one salesperson.
When asked about the possible reasons for the low turnout of customers, a staff speaking anonymously attributed it to management’s inability to listen to customers, rebrand and spice the menu from time to time.
Michael Echeme, a former franchisee of Mr Bigg’s, blamed the ugly development on the choice of business partners and business model adopted by most of the indigenous eatery brands.
“Most indigenous brands still run as one-man business and so cannot adopt policies and corporate governance that can attract viable investors, grow the business and reduce the risk they have been bearing alone,” Echeme said.
He also noted that Mr Bigg’s went the way of franchising when time was not ripe for such in the Nigerian fast food market.
“It flooded the market with lots of franchisees who were after quick return on their investment and hardly maintained their outlets nor complied with the regulations of the franchise owner,” he added.
In another visit to a Sweet Sensation outlet in Lagos, the manager who spoke anonymously said the restaurant was struggling due to competition from other quick service restaurants, especially foreign brands.
Bola Akande, a manager at a Chicken Republic outlet in Ikeja, said the outlet was running huge expenses as a result of crazy electricity bills the Ikeja Distribution Company piles on it, adding that the DisCo preferred estimated billing to the prepaid meter that would have checkmated its expenses.
Tantalizers on its part lost more customers when it couldn’t sustain the local menus or refresh them afterwards. At some point in its recurring loss record at the capital market, Tantalizers, which posted a dismal performance in the market, planned to undertake a sale-and-lease-back arrangement on some of its unfettered assets with a view to raising about N1 billion working capital. This was after it experienced 86 percent increase in net loss in 2013.
Muyiwa Kayode, a Lagos-based brand expert, said the misfortune of the local eateries was because they all failed to innovate.
“Some brands need to constantly innovate because of the kind of services or products they offer and the quick service restaurant falls into that category. All they need to be in business is to periodically introduce something new in terms of recipes, products, services and even presentation,” he said.
When asked what Domino’s is doing differently so it doesn’t follow the path of other struggling QSRs, Amalia Sebakunzi, its marketing director, said the QSR doesn’t run as a franchise but as a corporate company.
“We are also doing a lot of trainings for our staff and we have strict standards. We are innovating in our menu dishes; we try to make it juicy, affordable and cheesy,” Sebakunzi said. “Additionally customers’ feedback is important to us. We work with our suppliers and partners to get the best quality and ingredients. By localising a lot of our suppliers, we have been able to get good quality at very good prices.”
The QSR sector in Nigeria has over 800 outlets that are likely going to shut down if business does not improve. The sector contributes N200 billion annually to the Nigerian economy, with over one million direct and indirect employees.