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Portes Five Forces Analysis

Autor:   •  February 28, 2014  •  Case Study  •  1,283 Words (6 Pages)  •  1,903 Views

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Fast food in the traditional sense is not new to Nigeria. The corner seller of suya, akara (fried bean cakes), roasted plantain, fried yam, and roasted corn has been an age-old feature of many Nigerian towns serving snacks for those on the go for everyone from little children to working adults. While traditional fast food delicacies still remain as well as mobile market fast food vendors, what has contributed significantly to the growth of fast food restaurants in Nigeria has been increased urbanization and changing work roles.

Since the 1960s Nigeria has had one of the fastest population growth rates in the world. In 2010 almost half of all Nigerians live in cities - a number totaling 73 million. As more people choose to settle in Nigeria's crowded cities, the time to prepare meals has become more demanding. With more women joining the work force their traditional roles have changed. As a result, many urban people now opt to eat some of their meals outside the home. To meet the demand, many small restaurants known as bukkas have mushroomed all across Nigerian cities to serve this working population. These restaurants generally serve Nigerian traditional meals either in open-air areas or in low-cost small rudimentary dining buildings. Meals are relatively cheap and as a result they have gained a loyal following among the Nigerian urban masses. Indeed, the size of the informal fast food sector is estimated at $600 750 million a year.

More recently, modern Nigerian fast food restaurants have also sprung up to cater to a more up-market consumer with western tastes. Unlike bukkas which tend to vary in quality and service, modern fast food restaurants place an emphasis on cleanliness, hygiene and comfort. Care is taken with food handling and the dining environment is kept clean, air-conditioned and furnished with comfortable seating and premium television. These restaurants serve western snacks and fast foods such as meat pies, burgers, fries and ice cream together with traditional Nigerian dishes.

Modern fast food restaurants have experienced rapid growth over the past decade of almost 30% year-on-year to reach a total revenue of around $400 million from around 800 outlets in 2009. Expansion in telecommunications, banking, and retail has meant that many more Nigerians are joining the middle class with increased disposable income. In addition, modern fast food companies have gained increased access to capital through bank loans, private equity and stock market listings to roll out many more outlets around primary Nigerian cities such as Lagos, Abuja and Port Harcourt.

The global financial crisis of 2007 2009 has temporarily slowed down the growth of the modern fast food industry by cutting into short-term consumer spending at modern fast food restaurants. In addition, increasing competition from newer entrants both local and foreign has cut into industry margins. However, over the medium-term (2010 2015), disposable

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