Nando’s Case Study: A Restaurant With Excellent Execution of Basic Marketing Principles
What marketers can learn from Nando’s mouth-watering marketing strategy
Since its inception, the highly profitable Nando’s restaurant franchise has grown steadily since a modest beginning in South Africa back in 1987.
Today, the chain boasts over 1,000 outlets globally, trading in over 20 countries.
Strategic marketing and a risqué advertising approach, coupled with its unique Peri-Peri flavouring, have all played a big part in its meteoric rise.
This article will explore the impact of Nando’s marketing strategy.
Segmentation, Targeting, and Positioning
The application and execution of this fundamental marketing principle is a tactic that Nando’s deploy very well.
Nando’s market segmentation focuses on two key variables:
- Demographic Segmentation: Generation Y (18 to 30-year-olds) is the primary focus for the restaurant chain with some overlap in Generation X (30+ years old) consumers.
The sub-demographic segmentation is aligned to target and capture consumers who meet this criterion:
- Gender: Both male and female.
- Income: Moderate to high.
- Occupation: Graduates and young professionals/young family.
- Social class: Middle to the upper class.
CSO figures also provide supporting evidence as to why this consumer segment is particularly attractive to Nando’s in Ireland.
The average annual earnings for the market segment is highly attractive considering the life cycle earning potential in addition to a strong emotional loyalty/influence within the “young family” consumer profile.
Furthermore, high population growth in Ireland will impact on Nando’s future expansion in terms of sustainability and profitability with the next generation of consumers.
The likelihood of a Nando’s adopting a Lidl/Aldi-like EU expansion drive over the next decade is highly probable, given that nine outlets have sprung up in Ireland alone (North and South) in a relatively short period of time.
2. Geographic Segmentation: Nando’s outlet location focuses on a high density and a high concentration of consumer footfall — geographic segmentation is therefore critical.
In Ireland, the majority of outlets are located in large retail centres with some high street locations. It is very clear that in Ireland and the UK, Nando’s have selected retail centres as the preferred location, unlike competitors such as McDonald’s, Burger King or KFC, who mix locations in order to accommodate the drive-thru concept for convenience.
The matrix above compares the three primary consumer profiles whereby Nando’s adopt multiple segmentation bases to accurately define target groups; this in turn impacts on customer loyalty in a highly competitive market.
The implication of retaining consumers has been a mainstay in terms of Nando’s success to date.
The statistics available from the CSO offers restaurants valuable information to determine the viability of:
- Location suitability.
- Defining market profile suitability.
- Clarity of segmentation.
- Demographic suitability.
- Segmentation attractiveness.
A substantial and accessible segment can be further determined by a specific, measurable, attainable, relevant, and time-bound analysis prior to investment to accurately predict the likelihood of success in a specific location.
“A segmentation basis is defined as a set of variables or characteristics used to assign potential customers to homogeneous groups” — Wedel & Kamakura, 2000
Targeting has already begun to take shape around Nando’s segmentation definition. Key questions that Nando’s have analysed, with respect to targeting, are as follows:
The graph below provides evidence that in the UK, Nando’s growth rate and strategic marketing effectiveness is making inroads as a new entrant.
Since 2004, the social interest in Nando’s has successfully surpassed fast food outlet, Burger King, in 2006, and KFC for a period in 2011.
That said, the fact is that Nando’s does not compete with the big-three above.
In Ireland, they physically distance the brand from fast-food halls, positioning each outlet at:
- The main entrance in a shopping mall.
- Opposite a cinema for increased traffic.
The evidence to support this was observed at three locations.
- Liffey Valley Shopping Centre, North West Dublin, Ireland (see below).
- The Square Shopping Centre, South West Dublin, Ireland.
- Pavillions Shopping Centre, North Dublin, Ireland.
While all brands overlap in terms of their marketing mix, Nando’s offers an alternative approach by deploying a differentiation positioning tactic, and in doing so imply four unique positional characteristics:
- Attribute Position — healthy food, healthy living.
- Benefit Position — healthy heart, vitality.
- Product Category Positioning — chicken with unique Peri-Peri taste.
- Quality Positioning — organic source.
See “Marketing Mix” below for a deeper discussion on in-store positioning.
Furthermore, the “shock” factor advertising reinforces “competitor alienation”. Nando’s use sexual or cheeky double-meaning left-field adverts, pushing the boundaries while bordering on controversial.
The adverts above solidify Nando’s market positioning with its target audience. The risqué approach appeals to the more affluent and young consumer-profile, deemed less-offensive or more attractive rather.
Integrated Marketing Communications (IMC)
Nando’s employ a very effective IMC strategy, ensuring that all forms of communication link together whereby promotional and advertising tools work in harmony.
This harmonious tone speaks consistently to the consumer providing reinforcement at each interaction. The benefit of this is that the IMC is enhanced by channels working together as opposed to in isolation.
The marketing mix is clearly designed to cater to the targeted segment, carefully reinforced through advertising.
“This ‘Relationship Marketing’ cements a bond of loyalty with customers which can protect them from the inevitable onslaught of competition. The ability to keep a customer for life is a powerful competitive advantage”
— (Multimedia Marketing, 2013).
The impact with Nando’s not so subtle use of double-meaning advertising with risky content is powerful amongst its targeted consumer. It’s actually endearing to the anti-status quo generation of consumers due to the rebellious theme.
Some celebrity examples of this are evident in the following adverts:
Nando’s not only used famous celebrities to communicate to their target segment, but they also mock current affairs across all social sectors, like the sporting world. The image below is their satirical response after Luis Suarez’s (Uruguayan footballer), biting incidents:
And, the political world:
Nando’s political mocking did, however, backfire in Africa when an ad depicting Zimbabwe’s Robert Mugabe with Iraq’s Sadam Hussein and former Ugandan leader, Idi Amin:
“The ad was broadcast in South Africa, where Nando’s middle-class target audience found it hilarious. But Nando’s also has restaurants in Zimbabwe. Threats ensued. Fearing violence against its staff there, the ad was pulled” — (The Economist 2013).
Publicity and social media
Nando’s publicity focus, in terms of a mode of promotion, manifests in the form of random celebrity comments via social sites such as Twitter or Facebook, and beyond.
Singer Ed Sheeran commented recently after he was given a Nando’s “High Five card” (see below), which entitles the holder to get free meals: “It’s kind of a mark of your career success to having one,” he added:
“Forget Grammy awards — it’s all about Nando’s.”
— (The Sun, 2013)
In fact, the organisations’ star-spotting is a common theme throughout their social media campaigns. This clever publicity tactic, unique to Nando’s, adopts household celebrities including David Beckham, Tinchy Stryder, Ricky Gervais and “Jay-Z, who asked for Nando’s chicken on his rider at the Brit awards” (The Guardian, 2013).
When associations or comments by A-list celebrities appear in the public domain, the brand heavily promotes such content thereafter. This advantageous strategy has a positive impact on Nando’s, such as:
- Instant exposure (via social media).
- Connect with the target audience globally, 24/7.
- Validate credibility.
- Stimulate cognitive and emotional associations with the audience.
- Improved frequency of interaction.
- Creative expression/identity.
Minor disadvantages are ignored, like:
- Lack of control (in terms of others comments) or
- Lack of proofing input/content.
The latter is deemed insignificant from Nando’s perspective. It seems that they truly believe there is no bad press, as they’re not risk-averse in this realm.
Nando’s embrace guerilla advertising.
The company embraces ways it can differentiate from competitors and use free publicity to achieve this. This creative outlet occurs internally equally as much as externally.
An example of this was highlighted when they officially appointed comedian Kagiso Lediga as its new CEO, or “Chicken Excellence Officer” (Independent, 2013). Lediga claims that he is employed to promote the brand’s “5Gs” — Five Great Sauces.
Again a comic undertone is clear such how they play on the CEO title in addition to adopting telecommunications terminology — 5G.
Nando’s offers two forms of consumer loyalty, firstly the “High Five” card given to celebrities which supports their publicity strategy to ensure that such people present at their outlets as often as possible and eat for free.
This novelty promotion is cost-effective given that the card expires after 12 months, therefore, Nando’s can select higher profile customers each year to get a higher return on investment.
Secondly, the reward card, shown above, is available to the masses. In principle, this form of promotion operates like other vendors with a unique variation.
This variation is in the form of a three-staged reward system that enables consumers to get something back in return after three, six or ten visits. The impact here is simple, incremental rewards capture multiple levels of diners.
In terms of the marketing mix alienation, “price” is not a primary focus for Nando’s. Their emphasis is on:
- Physical evidence.
Nando’s pricing strategy does, however, focus more on the non-monetary value, specifically internal reference pricing cues with the consumer. This is implied via the numerous ad campaigns and associations with celebs.
Pairing the brand with certain people in the public eye is a powerful manipulation of value with respect to reference pricing. The impact message here is that wealthy celebrities choose to eat at Nando’s, yet it is an affordable eatery accessible to all.
It’s worth noting that the zone of tolerance is far less an issue in such instances. Word of mouth also has an impact. The “word of mouth” aspect has in recent times undertaken a new dimension via social media through the Internet and magnified by globalisation.
Nando’s exploit this very well.
Another non-monetary aspect is the organic food products that stimulate consumer price-quality inferences.
Consumers expect to pay a higher price for organic and fresh food.
This justifies with the consumer that Nando’s higher prices compared to McDonald’s, KFC or Burger King (and others) is due to better quality and therefore acceptable.
Furthermore, value-based pricing, whereby the buyers’ perception rather than the sellers’ concern, such as cost, takes precedence.
This involves due accountability of numerous marketing mix variables before the marketing programme and, indeed, pricing is set.
True consideration of price at Nando’s encompasses both monetary and non-monetary value to ensure alignment with market positioning coupled with desired market perception.
To a lesser degree, Nando’s successfully implement optional product pricing by increasing the amount a customer spends once they start to buy. They accomplish this by utilising their in-store process.
These “extras” increase the overall order-value which reflects on the bottom line revenue for a given outlet, quite evident within the process implementation and delivery.
To appreciate consumer behaviour, I decided to observe both myself and fellow diners during a recent visit to Nando’s at Liffey Valley in Dublin. The image below was taken soon after arriving at the outlet, at which point I began to observe other consumers.
I noticed that the consumer profile was an accurate representation of the target segment. Most diners were between the 20 to 35 age-group bracket, with some families slightly beyond, early to mid-40s at most.
The grouping was quite consistent, excluding families, all groups consisted of either two, three or four people. The implication is that consumers tend to behave in such a way that Nando’s is a social experience and not simply a source of fast-food.
Search Behaviour and Choice Criteria
The consumer decision-making process — following my need recognition in the form of physical hunger, my search behaviour would typically gravitate towards a healthier option.
Past experience and experiential sources would influence my eatery choice. A low-involvement purchase (as with most FMCG transactions) as did other consumers on the day.
As regards choice criteria, my technical evaluation in selecting Nando’s would always focus on taste whereas the economic aspect is certainly value for money.
For the most part, the social aspect is negligible but on the contrary, my personal criteria did have emotional connotations given my undertaking to create this body of work.
The “Marketing Mix”
In terms of the marketing mix, the two obvious attributes that influence consumer behaviour at Nando’s are:
1. Physical evidence
The Nando’s experience is all about physical evidence and process. The fact is both physical evidence and process are cleverly intertwined throughout the consumer experience to influence behaviour.
Firstly, the décor is different than other fast-food chains. Each Nando’s outlet has its own signature fit-out where no two outlets are identical.
This offers consumers a new experience when they dine in different cities or countries, unlike traditional fast foods, another differentiation factor.
Also, each outlet has South African artwork. A nice touch. Nando’s own the single biggest collection of South African artwork anywhere in the world. it’s estimated that the chain owns in excess of 3,000 pieces of art.
This again captures the uniqueness of the local outlet themed décor with respect to physical evidence.
Another aspect of physical evidence is the outlet location in relation to competitors.
The Liffey Valley outlet in Dublin, for example, is physically positioned with the following considerations:
- Main entrance thorough-fare = high traffic.
- Adjacent cinema = outside traditional centre opening hours (extended opening time potential).
- Dissonance from low-cost fast food = perceived value.
- Adjacent similarly priced competitors = mid-market pricing.
- Visibility = Immediately on view upon arrival.
This truly sets Nando’s apart from its competition. Process in many ways is used for cost-efficiencies from a supply-chain perspective and indeed within service marketing, but Nando’s intelligent application of this marketing mix attribute contributes to consumer behaviour.
The image above and six-phase flow-chart below illustrate how this concept works in practice. After phase 1, seating allocation, the process directs the consumer to phase 2 (see image), the point of payment.
Phase 2 is carefully constructed by Nando’s given that price is now removed because the menus are at the table.
From personal experience, hunger is a powerful driving force when, at the counter, you observe fresh chicken sizzling within a few feet, crucially at a time when you are about to part with money.
At this point, I observed both myself and other consumers ordering extras such as stuffed olives, nuts, and a portion of chicken wings in addition to the main course.
The net effect was that my (and others’) behaviour was hugely influenced resulting in an increased spend of 25–30% than initially intended. The Nando’s process creates a captive opportunity, encompassing basic human desires and senses:
- Hunger — a basic need (Maslow).
- Biological — satisfaction (outcome).
- Senses — see below.
The latter stimulated three of my senses:
- Sight — seeing food and extras available.
- Smell — open kitchen aroma at the till.
- Sound — sizzling chicken on the grill.
By removing price, the behaviour is more easily influenced by primal needs rather than logic, economic or otherwise.
Upon reflection, I was only able to understand what had actually occurred once I was satisfied and returned home to write this article. A humble acknowledgment of how the marketing mix affected my behaviour.
Both physical evidence and process massively influence consumer behaviour once inside a Nando’s outlet. Without the availability of statistical evidence, it would be safe to assume, based on my experience, that this aspect of brand exposure increases revenue by at least 10–20% on average.
Furthermore, Nando’s reinforces the experience at each interaction along the six-phase path, and in doing so eliminate the risk of cognitive dissonance, guaranteeing more frequent repeat business.
The interactive experience also engages the consumer with the brand (and brand extension i.e. Peri-Peri), as often as possible during each visit compared to that of other restaurants, free-refills on drink also helps the cause.
The consumer behaviour discussion above captures two prominent attributes regarding the marketing mix element in relation to services marketing. There are, however, more aspects at play here, namely:
Characteristics of service marketing
The first takes the form of:
The purchase and consumption occur simultaneously, discounting the time gap between Phase 2 (order) and Phase 5 (food served), a common feature across the industry sector. In the case of Nando’s however, the process reinforces a special feature of high-interaction, discussed in detail above.
From my own experience the employee interaction was frequent, as follows:
- Arrival — waitress (1)
- Order — till operator (1)
- Food delivery — outlet manager, Lorcan, delivered our order (1)
- During meal — outlet manager checked in on our level of satisfaction (2)
- Conclusion — waitress again to clear table (1)
- Departure — greeter opened the door (two employees also individually said goodbye and thanked us for our business on the way out). (3)
In total nine, the sum of (x) above, interaction points took place between the consumer with six different members of staff in the space of 45 minutes. Averaging once every five minutes.
The impact of Nando’s marketing strategy here is that it is culturally embedded throughout the service delivery culture.
Hunger and fresh organic chicken (unfrozen) represent the two perishable commodities.
Firstly, hunger must be satisfied within a reasonable timeframe and secondly, one of Nando’s USPs is that their chicken must be delivered from farm to plate within a very narrow window of time.
Dimensions of Service Quality
The second takes the form of the following dimensions:
Credibility is supported by IMC promotion using household names, discussed in detail above.
Another supporting factor is represented by the queues outside each outlet or near capacity utilisation inside. Indirectly, media publications critiquing the social impact of unhealthy fast-food vendors which leads to future health issues add further credibility to Nando’s dietary alternative, albeit difficult to accurately measure from a marketing perspective. It’s simply a natural and fortunate consequence today.
Staff interaction at regular intervals delivered with the prevailing helpful and amiable demeanour, described under inseparability, is consistently delivered in-store.
This mannerly interaction also influences mirrored consumer behaviour, which in turn reduces complaints and unnecessary arbitration. Monkey see monkey do.
The fresh organic food served up and delivered within an acceptable period of time provides the “touch and taste” tangibility for consumers.
Another sub-dimension is also present at the self-service counter where the customer chooses additional Peri-Peri sauces and drinks.
Prior to that, tangible evidence is visible at the till in the form of product placement such as nuts and olives on the counter, and chicken cooking a short distance behind the till.
The fact that the consumers’ zone of tolerance is adequately met time after time is a desirable expectation when eating at fast-food restaurants. This leads to repeat business, as previously noted capturing repeat custom is a strong competitive advantage.
This is a fundamental objective of convenience dining.
Nando’s operate a hybrid model with respect to fast-food and self-service (for competitive reasons), consumers critique convenience dining with reference to their zone of tolerance.
As previously discussed, Nando’s unique method and the edgy content of their communication is aimed towards their desired target segment.
This theme continues in-store, an example of which is displayed on their napkins “for the bits your tongue can’t reach” (Nando’s Napkin, 2019).
The Nando’s model eliminates cognitive dissonance as it triggers a natural bio-chemical human reaction, releasing endorphins which act upon the pleasure and reward centre of our brains.
Eatery outlets have a distinct advantage here.
For me personally, I experienced a sense of pleasure and satisfaction after the transaction so I will most definitely return.
Final Thoughts and Recommendations
Having immersed myself in the Nando’s experience I was able to gain a unique perspective on how their marketing strategy is implemented at every interaction along the consumer buying cycle.
Looking back, I found it challenging to surmise recommendations given that I witnessed an expert execution across multiple marketing touchpoints.
After some deliberation and barrel-scraping to be honest, I have managed to conjure up some suggestions, takeaways for Nando’s and other food outlet owners reading this article, as follows:
1. Coffee and dessert
This struck me as a missed opportunity. Having just spent €42.50, at least €10 of which was a result of what I would term the “Nando’s process led upsell,” my partner and I left and headed towards Costa coffee for a caffeine-sugar combo hit, spending a further €12.
Why did we behave in this way? Was it the draw of Costa or did Nando’s fail to satisfy our post-meal search criteria?
Commercially, most would argue that losing an existing customers’ potential business is a cardinal sin as you will not find an easier sale — the hard work has been done.
Maybe Nando’s aren’t concerned whether or not customers buy coffee and dessert as this is not their core business offering.
The facts argue otherwise because they sell both, but it’s hidden away in a small menu on each table — hardly consistent with their marketing strategy.
Also, I didn’t notice any fellow diners avail of coffee or dessert either.
If I was appointed marketing manager or strategist at Nando’s tomorrow I would implement one of the following:
1. Promotion: Offering existing customers a free coffee with dessert, for example, is an easy sale. This added-value sale could increase order value by a further 20–30% for minimal cost.
In total Nando’s could potentially increase sales per person by 50%, it’s a colossal coup to achieve this and Nando’s are well-positioned to do it quite easily.
2. Collaborate/strategic alliance: Collaboration leads to innovation. Collaborating with other industry players is viewed as a sustainable function that accelerates innovation and revenue.
A by-product of strategic collaboration enables partnerships to outpace their competitors. In doing so, collaborators immediately amplify imagination, leverage cooperation and share expertise.
An example of this is Google’s encouragement of staff to spend 20% of their time working on their own projects. Also, Microsoft has in recent years teamed up with device suppliers to compete against giants like Apple and Samsung in the telecoms sector.
Nando’s could collaborate with Costa or Starbucks by either offering products in-house or promoting by means of a joint-venture discount.
Brand-dilution is a concern but if done correctly a risk-free strategy could realise a mutually-beneficial alliance.
2. Take out
Peri-Peri sauces are available to purchase for home use, as shown below.
I noted that customers, however, did not purchase any during the time I was there. I considered buying one before leaving but the queue had swelled therefore I chose to leave rather than wait at the till again.
Buying a Peri-Peri sauce during Phase 2 just didn’t appeal to me. I thought that other diners behaved likewise and Nando’s missed some sales. There are two problems here:
Location: The sauce is positioned to the side of the counter, almost entirely out of view from the consumer point of payment.
The solution is to reposition sauces near the exit.
Timing: It’s more likely that consumers will purchase after a meal and not beforehand. Returning to the till a second time is a nuisance i.e. inconvenient.
The solution is this:
Take cash or tap card from the customer using direct selling prior to exiting the outlet.
Offer a promotion, such as three for the price of two, a proven fixed price deal that converts.
This simple adjustment will result in multiple sales far exceeding that of the current system — New sales would be instant.
Nando’s has grown dramatically due to its increased popularity. With the exception of celebrities ordering food for events around the world, as Jay-Z did at the Brit awards, the commercial element is weak.
The commercial segment could be lucrative for Nando’s. One opportunity is the volume of wealthy multinationals with EMEA headquarters in Ireland, an untapped opportunity to bring food to the client.
Nando’s proven agility to adopt new technological media as part of their marketing strategy has played a key role in their explosive growth since 2004.
So they have an audience who they can sell to from afar. Most businesses do. Novelty items could work well, like hoodies, Hats etc.
The benefit, considering Covid-19 constraints today, means that an online revenue stream would maintain some trade for Nando’s and indeed other food outlets from their loyal cohort of followers.