CHICKEN REPUBLIC AS A BUSINESS FROM A NON-MBA HOLDER PERSPECTIVE
When you want a quick, casual meal but you don’t want to prepare it yourself, you have a range of options to look into. But more often than not, you hop in your car and take a short drive to a quick service restaurant.
Have you ever heard of a Quick Service Restaurant or QSR as it is fondly called by some? If you are not familiar with the term (not that I expect you to), you must be wondering what it is. Although, most people still refer to it as fast food, I should probably define what a QSR is.
A Quick Service Restaurant is a particular type of restaurant which provides specific meals to customers as quickly and proficient as possible. Unlike your regular table-service restaurant, QSR are cheaper and they serve fast food cuisine with minimal table service.
Thus, when you think of QSR, you think of global giants such as McDonalds, Starbucks, KFC, and Subway, who have been excelling in this industry for quite sometime now. In Nigeria, when we talk about QSR, we have to mention Chicken Republic.
Just in case you are wondering how big the QSR industry is, researchandmarkets.com published a report titled “Fast Food Market by Type and End User: Global Opportunity Analysis and Industry Forecast, 2020–2027” on July 20, 2020. According to the report, the global fast food market is expected to reach $931.7 billion by 2027, rising at a CAGR (Compound annual growth rate) of 4.6% from 2020 to 2027. Wow! This is huge. Thinking about the numbers, a fraction of you might just want to be part of this magnificent growth forecast.
Every day, hundreds to thousands of customers go into Chicken Republic outlets all across the nation, they place an order and they exit with what they ordered. The same dish is exact and is eaten at every other location.
Chicken Republic is a private Nigerian quick service restaurant chain and franchise that focuses in chicken recipes, particularly fried chicken. The company is a subsidiary of Food concepts Plc, a Nigerian food based company. The fast-food chain was founded in 2004 by Deji Akinyanju, Chairman of Food concepts Plc. With more than 100 locations spanning across Nigeria and Ghana- over 26 outlets in Lagos and over 70 outlets nationwide, the headquarters is situated at 190, Awolowo road, Ikoyi, Lagos, Nigeria. The QSR chain has over 1,300 employees to its name with David Butler as CEO. The fast food chain offers a range of menu from fried chicken to chickwizz to chief burger to chicken wrap to a host of other products.
The company purchases all its products, produce, poultry and raw materials through indigenous companies and does not partake in importation itself. The business through its commitment to supporting upcoming entrepreneurs purchases from them, fresh produce for its central kitchens and 100 restaurants.
Recalling a quote from the CEO, Food Concepts Plc, David Butler, “Our motto is: be happy, but never content! And, it is this ongoing quest for excellence that has led us to become the largest QSR chain in Nigeria today.” I ponder to myself, is he right by this statement? Of course, he is. Without doubt, Chicken Republic is the largest quick service restaurant chain in Nigeria. They are practically everywhere in the nation. In Lagos alone, they are at strategic locations meaning it is almost difficult not to find an outlet close to you. This means that when you need a quick casual meal, you take a short drive to an outlet or just dash there to purchase your already-made meal.
The profitability of any individual company depends largely on efficient operations and effective marketing. You may notice that most of the times you enter into a Chicken Republic outlet, you meet people on a queue and eventually, you have to be on one as well. Now the question here is, what drives consumer demand in Chicken Republic? This is highly due to the strategies put in place. I am going to be discussing a few of them now.
Demand in most cases is fundamentally driven by consumer liking and personal income. You would not expect an employee to spend a huge percentage of his earnings at restaurants. That would be highly unreasonable. In a fast moving world, time is of the essence. Consumers do not have time and they certainly do not have all day to prepare a meal for every time they want to eat, so they are drawn to the low prices of QSR over table-service restaurants. Chicken Republic meals are relatively cheap compared to the regular table-service restaurants. Imagine having to eat every time at the regular table-service restaurant, you have to be really loaded to afford that.
Owing to the large number of the population of young people in Nigeria, you couldn’t agree more that targeting such tender market is a good strategy. The QSR market is driven by young people who have their hands tied and are predominantly occupied by exhaustive daily activities. Also, with the high rate of globalization, consumers, especially the youth, want to have a taste of international recipes. They want to know what a chicken burger tastes like (it tastes great by the way). “They want to associate themselves with modern brands and modern ways of eating.” — Deji Akinyanju, chairman of Food Concept Plc, mentioned when talking about the market being driven by the youth.
Bundle pricing has been one of the most innovative strategy adopted by the fast food restaurant industry in contemporary times. Bundle pricing or price bundling is a term that is really conversant and ubiquitous in the fast food service world. Bundle pricing is basically combining numerous products or services into a single comprehensive package for a reduced price. In this context, it is the combination of several food items into a package for an all-inclusive price discount. Retailers make use of this strategy a lot to sell lots of items at higher margins while providing consumers a discount concurrently. Customers prefer this option over individual food items because of the value addition and variety to their spending. After all, they say “variety is the spice of life.” Most of the big QSR such as McDonalds, Starbucks, Burger King, Pizza Hut and Domino’s, combine the food on their menu into a bundle of complementary meals served to the customers. For instance, Burger King offers the Melt King Box which consists of any melt you choose, regular fries and a drink. Now, all that complements the burger. Chicken Republic offers a wide range of bundled meals from BigBoyz meal to Pot lovers feast to Refuel max. They make the bundle appear so attractive by giving discounts over bundled meals and set a substantial profit margin to obtain from these offerings.
Every time I step into a nearby Chicken Republic outlet, I am always lost in my thoughts as to how they make profit despite their food being relatively cheap. But then I realize the place is always crammed with people. Now, how do they make profit? Easy! They gain profit from the number of footfalls they receive. A footfall is the number of people or traffic entering a store at a given time. With the operation of multiple stores, they are able to obtain the frequency of footfalls from their multiple locations and this in turn adds value to the company. If every 4 out of 5 persons that walks into the outlet purchases a meal, then that is a win for the company. Even with the little gains on each food item, the turnovers results into large sums. It works like magic! However, a footfall is an important indicator of how successful a company’s marketing is at bringing customers into stores. Albeit, Chicken Republic has done a great job so far.
The rise of food delivery services like Jumia Food, OFood, GoFood, etc., has opened the opportunity for them to cook in bulk, store and supply to these delivery services. This has automatically improved their earning margins and availed them the opportunity to grow their brand even bigger.
In conclusion, the fast food restaurant industry is a big catch and a very interesting one at that. The Chicken Republic franchise has done amazingly well these past couple of years and they deserve all the accolades accorded to them. Other fast food restaurants in Nigeria should emulate them, in fact, not just the entire fast food industry but also, other budding Nigerian businesses should take cue from them.
This is my first article as a non-MBA holder. Henceforth, I will be writing about businesses and products as I take particular interests in them.
Cheers!
