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Thursday, February 2, 2017

How Lucrative is a Shawarma Spot Business in Nigeria?



The business of selling shawarma is a lifestyle venture and can also be called a branch of hospitality. The main customers are people who want to relax and have a good time and hence view shawarma as a snack or a light meal you take in between meals. It is very popular with girls in their late teens and early twenties and is very popular as a menu item on romantic dates or friendly get together.

Is Shawarma business lucrative in Nigeria and if so to what extent?
That is the crux of this article and I will be sharing ideas with you on how to start and run this business profitably. Kindly note my use of Abuja in this article is because I live in Abuja and my study area for research into this article is also Abuja but many similarities exist with other Nigerian cities especially Lagos and Port harcourt.

How high is the profit margin?
From my research I’ve discovered it could be as high as 200% but usually not less than 20% depending on who you are selling to. There are restaurants in Abuja where the cheapest Shawarma – usually a small size - goes for N2,000 while there are other places where a large Shawarma goes for N1,000. So location and target market can determine the price but how much is the ingredients used in making each Shawarma? The price is less than N600 per Shawarma meaning if you’re selling for N1,500 then your gross profit should be N900 per Shawarma but there is more to it than that this as several factors can make or mar this business.

How much sales can one look towards from selling Shawarma?
If you have a good location, your Shawarma is very good and you operate in a conspicuous, clean and very attractive environment you should be able to attract enough sales. I know a restaurant in Wuse 2 Abuja that sells over N200,000 per day worth of Shawarma and they also do deliveries which is not included in this estimate. So if you set out to sell Shawarma for N1,000 each and can do at least 80 a day you should be able to make N80,000 per day as sales

What are some of the Success factors to achieve good sales and high profit margins in Shawarma Business in Nigeria?
There are many factors that can determine whether or not you will succeed in this business and the most common factor is the taste of your shawarma. A very delicious shawarma has huge sales potentials because it can create loyal customers many of who will refer more customers to you, so ensure your shawarma will outclass every other one in the market. Another success factor is hygiene. The person serving the shawarma should be neat and presentable, also the environment where it is made must not stink, shouldn’t be close to a dirty place and should have something entertaining to it e.g feel good music playing in the background. Third factor is price of the shawarma, a good customer may want to buy more than one but your price could discourage him/her making them buy fewer number of your shawarma instead and there are several other factors that affect success in this business but not enough time to explain them.

How much do you need to start?
With as little as N450,000 you can start a shawarma business with a stand in a little corner on a busy street. The money can be used to pay for rent, buy second hand equipment, outdoor print adverts and initial supplies.

How quickly can you recoup your investment?
You can make back your money in as little as 3 months if you can achieve your sales target. For instance an investment of N450,000 working on 20% net profit margin (note I didn’t say gross profit margin) assumption and daily sales of N30,000 for 25 days in a month should recover your initial capital investment in 75 days or 2.5 months if you are able to achieve your sales target.

To get more ideas and information on how to identify suitable locations for setting up a shawarma stand and marketing tips to reach your target market plus financial management tips Give me a call: 0803 206 4106 or email me and I’ll prepare a bankable business plan which you can show to investors or partners if you’re looking to raise capital and go into it.

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