I once worked on the brand strategy for a food restaurant chain with about three branches in highbrow areas of Lagos State, the MD at the time called an emergency meeting in a frenzy to brainstorm effective marketing solutions. Why? — The Place had just moved into the area and was set to stifle other restaurants.
The MD’s fear was understandable, the entrant of newer, mostly foreign owned restaurants has completely disrupted the fast food industry in Nigeria, where once Mr. Biggs was a household name that elicited instant recognition and joy (particularly amongst children), despite strong rebranding efforts it is today mostly regarded as a memory of time gone by; a relic of the past.
Curiously, the area I referred to at the beginning also had a Chicken Republic restaurant situated there, as well as other smaller chains and for years there was an unofficial status quo — those who wanted cheaper meals headed to the Chicken Republic, those who wanted varieties headed to more up scale restaurants. The arrival of The Place disrupted that model — several of the restaurant started embarking on various marketing gimmicks and promotional efforts in desperation…except Chicken Republic. For them business remained the same, traffic remained steady, the menu remained unchanged.
One might argue that it would have been difficult for that branch to embark on any meaningful marketing efforts because of the bureaucracy involved in running a chain of restaurant. Yet, the entire traffic recorded in that branch remained unchanged their target audience didn’t see the need to change their taste and the restaurant didn’t see the need to modify their offerings — they knew their market and they had cornered it.
This beloved restaurant chain was founded by Deji Akiyanju after he returned from the United Kingdom. With $2 million in seed funding raised from family and friends, he originally had a franchise deal with the South African chain, Chicken Licken’ before branching out to establish Chicken Republic. In 2003, he opened a bakery outlet, Butterfield Bakery and he also owns Reeds Thai Restaurant in Lagos.
Chicken Republic remains a private company, like most restaurant chains in Nigeria so it’s difficult to gauge their profitability, the only publicly quoted restaurant chain; Tantalizers has seen financial depreciation for shareholders over the years. A look at Tantalizers annual report for 2008–20111 shows N4.5b revenue over the years. However, most of it is eaten up by huge cost of sales and admin expenses both taking an average 54% and 45% from revenue respectively
As it remains a private company, the available financial statements cover the group as a whole but I will try to break down figures for Chicken Republic (This also includes the newly introduced Pie Express) as much as possible:
This chart depicts a curious story and shows the chain of restaurants has not always been as profitable as one would believe but here are the key facts from this:
1. The company recorded a loss in revenue between 2016 and 2018; 663 million naira in 2016 and 713 million in 2017.
2. Sales grew exponentially in 2018 by 35% due to a combination of increased locations, growth in same store sales and introduction of new products, their on year performance grew by 32% in 2018.
3. EBITDA also grew by 60% to NGN 1.7bn. compared to the previous year increasing Profit After Tax (PAT) by 305% to NGN 1.5bn.
The parent company of Chicken Republic, Food Concepts Pioneer (a Nigerian company with ties to South African investors) states that they currently operate 100 outlets with plans to expand to 300 by 2023. Chicken Republic is a true success story in the Nigerian fast food industry — I believe they are the one indigenous chain that genuinely embody what fast food is, according to the Merriam-Webster Dictionary that means “of, relating to, or specializing in food that can be prepared and served quickly”. When interviewed by CNBC in 2014 Deji Akinyanju said; When I started, I didn’t have much experience. If you have passion, the rest is easy to learn, but you can’t teach somebody to be passionate.”
2018 has definitely being a highly profitable year for the chain and I expect 2019 to be no different, in the concluding part, I will discuss the two factors I believe contributes to their growth.