Coming to Nigeria: The curious case of Burger King

Burger King, the world’s second-biggest burger chain, is planning to come to Nigeria.

While this might be a piece of exciting news, the current economic situation – high inflation, unemployment, and rising poverty levels – makes many wonder why the burger chain is coming at this challenging time, and what tricks it may have up its sleeves to survive.

The Nigerian market is attractive to international investors due to its young population of over 65 percent.

Nevertheless, with current economic realities and a tough business environment, many foreign companies have left the country. Others who have stayed are targeting the larger segment of the economy that is at the pyramid’s bottom, by packaging their products into smaller packs that are more affordable.

“I am wondering what Burger King’s aspiration might be coming into Nigeria at this time, because if you look at the aspiration market 20 years ago, eating junk food was aspirational but now, we have entered an era where people are more health-conscious,” Ken Egbas, marketing communications, and brand expert, says.

He explains that the Fast Food retail space has been gradually shifting from pastries to actual meals because the average consumer now understands the effect of what they eat on their health.

Read Also: Nigerian households fight to meet food needs as prices quicken

In 1986, when Mr. Bigg’s, the pioneer of Fast Food Service started in Nigeria, its limited menu of pastries; beef, chicken, and apple pies, sausage rolls, doughnuts, and beef burgers were greeted with fanfare by consumers and families, making the restaurant always fully booked. These days, the pioneer and others struggle for market share.

According to the Association of Fast Food and Confectioners of Nigerian (AFFCON), an umbrella body of Quick Service Restaurants (QSRs), the Nigerian food industry is estimated at over a trillion naira, with the Fast Food segment gulping over N250 billion.

Apart from that, in 2019, Nigerians spent about N22.8 trillion on food, N4 trillion, the largest chunk of the food expenditure, was spent on food consumed outside the home (restaurants, bars, roadside joints, among others), according to the National Bureau of Statistics (NBS).

Read Also: Five things to know to start your day

In 2016, when Nigeria was hit by an economic recession that shrunk consumer’s wallets, the Chicken Republic and Tasty Fried Chicken introduced Combo meals, a combination meal that typically includes small food portions and beverages.

The success of the Combo meals from the initial starters made other QSRs follow suit. Also, Consumer Goods companies, especially the premium ones, had to key into the sachet market by packaging their products into smaller sachets at affordable prices, to grow market share and bolster demand for their products.

However, a typical Burger King Bacon Cheeseburger that costs $1.49 (N610.9), when compared with a normal small beef Burger of N300-N500 could appear expensive. Burger King’s target market may then not be those who would be overly concerned about price.

“The Nigerian market is not really a rewarding market. When the price is cheap there is always that new craving by consumers to taste the new thing in town,” Ayorinde Akinloye, a consumer analyst at United Capital plc, said.

This is not the first time Burger King made a move for the Nigerian market. In 2018, Daniel Schwartz, chief executive officer of Restaurant Brands International, the parent company of Burger King, made a similar statement of penetrating the market but the company failed to show up.

Burger King outlets are already in seven African countries – Egypt, Ghana, Ivory Coast, Tunisia, Kenya, South Africa, and Morocco.

Abiola Gbemisola, a consumer analyst at FBNQuest, states that the Nigerian market is a multidimensional market, no single strategy can win the market because it is not effectively identified.

“Their strategy may not be only focussing on aspirational Nigerians but a mix of volumes as well as premium. What that means is that they will establish a brand name by targeting working-class and premium consumers in high-end locations, and over time they will begin to pursue volumes by going to other places to attract a larger number of consumers,” Gbemisola says.

The service sector is seen as the second largest employer of labour in Nigeria, and if Burger King makes good on its planned launching it could contribute towards generating some of the much-needed jobs.

“It is always good to see foreign brands that are held in high esteem come into Nigeria. They are extending their franchise to a new market but also creating employment opportunities for Nigerians,” Egbas states.

In addition to the opportunities that it might bring, there are also fears that the burger giant may affect the demand for substitute products like pizza, shawarma, small chops, and other pastries.

“If their Burger is juicy, fresh, nutritious, and cheaper than other substitutes, people will prioritise it over other things just to get their product,” Cheng Fuller, a retail expert, says.

Get real time updates directly on you device, subscribe now.