‘Competition Has Impacted Positively on QSR Industry’

16 Jan 2013

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 Mr. Vikram Varma

Marketing Head, Kentucky Fried Chicken (KFC) Nigeria, Mr. Vikram Varma, spoke with Raheem Akingbolu on marketing activities in the Quick Service Restaurant (QSR) industry, among other issues. Excerpts:

As a global brand, the emergence of Kentucky Fried Chicken (KFC) on the Nigerian Quick Service Restaurant market caused a stir in 2009, when it opened its first shop at the City Mall, Onikan, Lagos.

With five decades of experience and presence in 105 countries and territories around the world and with over 15,000 outlets, only a marketing neophyte would care less about the entrance of such a brand.

In what looked like a signal that it was coming in with a bang, former President Olusegun Obasanjo, as a special guest of honour, not only endorsed the brand but cited the fact that his farm would be supplying chicken to the new entrant, to confirm the assurance of local content. 

Raising the Bar
Three years down the line, with more outlets in the market, KFC Marketing Head, Mr. Vikram Varma, believes that the company’s coming into the market has raised the bar in QSR industry. According to him, other players in the industry have begun to change their designs and their outlets are getting better in an attempt to remain relevant in the market.

“They are also trying to copy concepts from the international brands. I think they have realised that consumers’ expectations are changing and they need to raise their game to the next level. This is important because consumers, whether in Nigeria or elsewhere in the world, want the next level of experience. A lot of developments are happening in the QSR market and we believe the industry will continue to get better while consumers benefit,”

Best Practices
Speaking on the experience of his company in Nigeria, relative to other countries where KFC operates, Varma admitted that Nigeria, as a developing nation, must be understood in line with her sophistication, culture and marketing trend by QSR operators.
To this end, he argued that Quick Service Restaurant functions differently in different parts of the world, adding that it is a very developed industry in South Africa, with a lot of international brands trying to compete for consumers’ attention and market shares.
“In Nigeria, however,” he pointed out, “there are lots of local brands that pioneered the industry and have been on ground for a long time, but international brands are now coming in”.

Serious Approach
On why the industry must not be taken with levity in the country, the Head of Marketing stated that the QSR industry has a lot to do with how the economy functions.
“There are some challenges in Nigeria that are absent in other countries. For instance, you can get things a lot cheaper in other countries than in Nigeria. Your supply chain will function properly due to many factors that are absent in Nigeria. Overall, security issues are also very much less in some developed countries.
“Of course, I am not saying that there are no peculiar challenges in other countries too. With the entrance of international QSR brands like KFC into Nigeria, local brands will only change for the better. You can therefore agree with me that competition has impacted positively on the industry.”

Growing Middle Class
Asked if he perceived any connection between the emerging middle class and the growth of the QSR industry in Nigeria, Varma referred to a research that was conducted in 2011, which revealed that the Nigerian middle class consisted of people, who earn between N1.8 million and 5 million annually.        
He pointed out that the report indicated that 70 per cent of the QSR industry revenues come from this population and that if the total revenue of the Nigerian QSR industry is N100, N70 should come from the middle class. To him, the more the middle class expands with more lower class citizens entering the middle class, the QSR industry will continue to expand.

He said; “This is because more QSR consumers will emerge and this will have a direct impact on the country’s economy as well as job creation. As more middle class people become consumers, they will add value to our industry and the effect is going to be cyclical. Definitely, the emerging middle class will attract more investors and more international brands into this market.
“Consumers do not only want something new, they want something in consonance with international standards. Most economies depend on the disposable income and spending power of the middle class and any development in the class will impact on many sectors of the economy such as automobile, QSR and others. This is also relevant to Nigeria as many industries will grow with the country’s bourgeoning middle class.”

Technology Savvy
At a time when most service providers and good manufacturers are leveraging on the emerging technological advancement in the world for efficiency, he stated that KFC has consistently technology for its back-end operations in Nigeria to ensure that its products are of high and international standard.
He further explained that as a result of the importance the company attached to technology, its operation in Nigeria is not different from what is being offered in developed countries such as the United Kingdom and United States, as well as other African countries like South Africa.

“We are also leveraging Information Technology by deploying electronics menu boards in Nigeria. Apart from enhancing customer service, it offers a much greater degree of flexibility in product pricing. We can immediately change the prices of our products if the need arises to reflect market realities. We started operations in Nigeria three years ago and we have deployed the electronic and IT-driven menu boards, whereas, KFC began operations in South Africa 14 years ago but it did not deploy such technology until a year ago. The Nigerian market is a fast one with huge potential for QSR growth,” he stated.

Market Share
In his response to a question that bordered on KFC market share in Nigeria, he disclosed that when the company entered the Nigerian market three years ago, it did not come with a two or three year plan but with a minimum of 10-years plan.
In other words, he explained that the plan of the promoters of the brand for the Nigerian market was long-term and not short-term. “We have plans to capture as much market shares as possible in the Nigerian market going forward. We have also increased our investments in the past three years since we entered the market. To show that we are committed to growing this brand in Nigeria, we have opened 11 outlets as at August 2011, and 17 as at December 2012.”

Foreign Competition
Reacting to the belief in some quarters that some foreign companies operating in Nigeria don’t deal with Nigerians fairly, he described KFC as one organisation where equal opportunities are being given to everybody working within.
“Anybody who has the capability we required, whether a Nigerian or an expatriate, will not only be given a job, such a person gets paid accordingly. It’s not that Indians get paid more and Nigerians get paid less. When our expatriates come into Nigeria, they come with a mindset of training more and more locals so that the locals, at the end of the day, can run the business.
“For your information, we have a team of 650 people in Nigeria. While only 10 of the employees are expatriates, 640 are Nigerians. Of the 640 Nigerian members of staff, however, 57 are in leadership positions.

With this background, the head of marketing pointed out that the number was more than the number of expatriates at the leadership level in the company, saying further that the company doesn’t discriminate against Nigerians in its policy and that it would not consider colours or nationality when hiring.

“But we welcome anybody who has the talent to work with us. We never asked any of the 640 people working with us whether they were Nigerians before we hired them. It’s the talent they can offer that matters and not their nationality” he said.
To support the fact that the company has tremendous respect for Nigerians working in KFC, he painted a scenario of how the company increased employees’ salaries to cushion the effect of hike in price of fuel last year. 

“For instance, when fuel price went up, we saw that there was a challenge around transportation and we saw that the prices of almost everything also went up. We immediately increased employees’ salary to make life easy for them and motivate them,” he said.

Tags: Business, Nigeria, Featured, QSR, Industry

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