Sample Business Plan: Fast Food Restaurant in Nigeria (2020)

In this sample business plan on setting up a fast food restaurant business in Nigeria we are going to be looking at the benefits, opportunities, challenges and some startup expenses and first year projections for a startup fast food business.

Overview of Fast Food Restaurant Business in Nigeria

A fast food business is a hospitality service that provides meals on the go for individuals and businesses usually in a busy city with very large number of very busy people holding corporate jobs and who have the disposable income that will support patronage.

As a lifestyle service, fast food restaurants serve the middle class market and not the low income earners. That means places with a large number of middle class residents and workers would be an ideal place to locate a fast food restaurant.

In addition to being a quick source of meals to very busy people, fast food restaurants also provide catering service to social and corporate events such as; wedding receptions, parties, seminars and product launches to name a few.

There are more than 900 registered brands and trademarks in the fast food market in Nigeria with some of the more popular ones owning close to 200 outlets nationwide. The more popular ones are; Mr Biggs, Tasty Fried Chicken, Chicken Republic, Sweet Sensation, Southern Fried Chicken, Drumstix and Tantalizers to name a few.

In all, these restaurants generate over 360 billion naira a year in gross sales but are very much challenged by high operating costs and stiff competition among operators. The list of these challenges and threats are available on request by email: paulonwueme@gmail.com

Market Opportunity for Fast Food Services in Nigeria

There is a huge market for fast food restaurants in Nigeria. At least 18 million Nigerians are eligible to patronize fast food restaurants with many having the ability to spend 2,000 naira per order and making on average one order a week. This conservative estimate can imply that the overall industry revenue would be at least 360 billion naira excluding corporate orders which are potentially huge as well.

With the rise of cashless payment options, growing influence of social media and digital marketing services in Nigeria, operators of fast food restaurants can expect to make huge sales through deliveries to homes and offices based on online orders.

The cost of cooked meals from fast food restaurants is not that much different from local food bukas (canteens or mama puts) which many Nigerians with tight work schedule patronize mainly for lunch. That means for people with decent incomes, there isn’t a better choice than to patronize the fast

Add the cosmopolitan nature of most Nigerian city dwellers. Many people go to work early and return late from work with little or no time to cook. That leaves them with no choice

Challenges of Fast Food Restaurant Businesses in Nigeria

The fast food restaurants will remain perpetually bugged down by high operating costs provided power supply remains inadequate. The high cost of diesel and long operational hours means at least 40% of operating costs on gross profit besides overhead and rent cost.

Secondly the machinery used comes at a high cost to acquire. Operators complain about their inability to access affordable alternatives locally and how the huge forex cost also contributes to declining profit margin.

There is still the problem of declining purchasing power among consumers – the recession of 2015 – 2016 hit the industry very hard with many outlets closing shop. It would take a while for peak sales of 2014 period to be replicated even as another recession is looming in 2020.

Relaxing requirements for entry into the industry has also watered down the service standards.

Startup Expenses for a Medium Scale Fast Food Eatery

Item	Cost
Entertainment Packages (DSTV etc)	180,000
Electronics (TV Sets, sound system)	450,000
Electrical Gadgets (ACs, fridges, freezers, lighting etc)	600,000
Furniture	250,000
Generators	2,200,000
Other fixed Assets	1,800,000
Subtotal	5,480,000
Admin Startup Costs (Rent, salaries, working capital, renovations and decorations etc	7,000,000
Grand Total	12,480,000

The return on investment is relatively high and quick as within 3 years one can recoup his entire investment and expand organically if the promoters so wish. More details in the financial summary

Financial Summary

·                     Gross Sales – 94,830,000

·                     Gross Margin – 56,411,000

·                     Operating Profit – 28,462,000

·                     Total Expenses – 15,421,000

·                     Profit Before Tax – 13,041,000

·                     Taxation – 3,912,000

·                     Profit After Tax – 9,129,000

·                     Dividend – 4,564,000

·                     Retained Earnings – 4,565,000

·                     Breakeven Month – 7^th

·                     Payback period – 2 years

 

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com