The following example illustrates the scope of detail contained in each guide. However specifics will vary with the nature of the business.
Fast Cash
The Chips & Chicken Cafe Quick Guide
Contents
Total: 35 pages
Fast Cash
The Chips & Chicken Cafe Quick Guide
Contents
- Introduction
- Market Overview
- Classification of Chips and Chicken
- Licenses
- Other Regulatory Bodies
- Equipment
- Deep Fryer
- Potato Peeler
- Potato Cutter
- Warmers
- Chicken Rotisserie
- ‘Kitchen and Dinner’ Items
- Cash Register
- Renovations, Tables, Stools, Signage
- Freezer
- Fridge
- Rent
- Stock
- Capital Breakdown
- Notes on Capital
- Operations
- Sourcing
- A Note on Frozen Chips
- Peeling
- Slicing
- Frying
- Chips Preparation
- Sodas
- Other Items
- Work Schedule
- Revenue
- Some Figures
- Case Study One
- A Casual Look at Revenue
- Number of Plates from A Sack
- Profits from Chicken
- Factors Influencing Revenue
- Pricing
- Location
- Costs
- Variety
- Management
- Operating Hours
- Critical Success Factors
- A Note on Competition
- Factors Influencing Competition
- Some Extra Observations
- Management Notes
- Employees
- Marketing
- Consistency
- Costs
- Suppliers
- Appendix
- Some Equipment Suppliers
- Finacial breakdown, projections and scenarios.
Total: 35 pages
Introduction
This quick
guide refers to the business of Chips and Chicken cafes found in urban areas.
The guide touches on a little of everything in some sections it’s biased
towards chips (or fries) which is the main serving. Although not entirely focusing on Nairobi
some of the data is inclined towards the city. Otherwise most of the information
to do with licenses, equipment revenue and operations is applicable in any
urban center.
Market Overview
In the last
10 or so years there have been a lot of public and private conversations about
healthy eating which tended to discourage consumption of junk of which chips
are considered to be. However with the increasing urban population, a young and
more liberal population, expanding colleges and office spaces, the consumption
of chips has not dramatically decreased as predicted, rather it has increased
at least going by revenues and the resurgence of chips cafes .
Consumption
of chips and chicken in urban center is not necessarily driven by an increase
in consumer’s income but a shift towards spending more on leisure and social
activities. That’s the reason despite
inflation rates being high at times (case in point 2017 ) , and thus
reducing disposable income the target market of urban chips and chicken cafes,
the middle class in all its definition, still flock the fast foods. Keeping everything constant the bigger the
urban center the more resilient and profitable a fast food café will be,
The fact that
‘junk food’ multinationals like KFC and Subway are making significant
investments in the local market through franchises and even establishing in
relatively mass market areas like Kenyatta Avenue in Nairobi is a positive
indicator of the feasibility of business.
Between 2006
and 2010 quite a number of chips and chicken operating in Nairobi CBD were shut
down. The main reasons being change of user after the buildings from where they
operated from were purchased and converted to exhibition halls, electronic
shops or three star hotels.
For instance,
along Luthuli Avenue, Nairobi, there were six cafes which were closed. But since 2011 or so fast food cafes have
managed to make back their way in the city. To illustrate between 2015 and 2017
four fast food cafes have been opened within about 100 meters radius from Tea Room,
at the junction of Accra and Rive Road, Nairobi. One of them being a chips and
chicken café run by the proprietor of several other fast foods within Nairobi
CBD.
Even though
the bigger picture gives a rosy prospect of the business, the success of an
individual fast food café will depend on local conditions, which include location,
management, quality, service and marketing. This will become clear below.
Classification of Chips and Chicken Cafes
Chips
cafeterias can be grouped into 5 broad categories:
a Purely
Take Away Cafeterias
– Here customers don’t eat on premises, which is usually a very small
space. Rather they purchase for
consumption elsewhere.
Purely take away fast foods thrive in estates, near bus stations, or
office blocks located away from shopping centers. They also thrive in urban
sections where there are student populations or office blocks with no
alternatives for quick affordable food and snacks within a short distance.
b) Standing
- no seats - Cafeteria
– Here customers can purchase chips and eat on premises, but there are no
seats, not even stools, so customers eat standing, placing their chips on fixed
benches. Usually this is to maximize space. Since customers are standing they
can’t hang around more than necessary.
Some
of these kinds of cafeteria charge lower prices as compared to those with
seats. Others charge same or higher prices as other cafeterias with seats this
depends on their location, competition in the area and if they have a superior
offering. Some in this category will have a section with a few stools and
another without.
c) Bar
Stools Fast Food Cafeterias
– These have stools for seats but with no proper tables and in their stead they
have benches fixed to the walls or in the middle of the room. These can be
grouped into two: classy cafes like the chain of chips and chicken cafes in
Nairobi CBD with South American names and with mirrors fixed, fans, an extended
menu, drinking water. Secondly are the bare knuckles cafeterias with not much
interior decoration, simple chairs, and basic menus and with only a standard
level of cleanliness.
d) Chairs
and Tables Cafeteria
– These have proper tables and chairs. Customers sit and have their chips. Such
cafeterias often charge a premium.
e) Hotels
With Chips as part of an Extended Menu
–These are not traditional chips and chicken cafeterias but they serve a whole
range of foods and include chips as part of the many accompaniments like ugali,
rice and chapati.
This guide is
biased towards the first 3 types of cafes. The last kind has so many other
attributes affecting that it requires a separate guide.
The kind of
cafeteria you decide to start will depend on your capital, location and target
market. Of course a take away and standing cafeteria requires less capital. On
the other hand such may not work where consumers have relatively high income
and looking for a richer eating experience.
Large urban
centers like Nairobi CBD have a big and diverse population to support all kinds
of chips cafeterias. You should always look at your location, capital and
tastes of most consumers around and use that to decide the best kind of
cafeteria to maximize the returns. For instance if setting up at an up market
street a stool or take away cafeteria rather than a standing cafe would be more
attractive. Still this depends on what exactly you are offering.
Also look at
your competition. If everyone around is doing a standing cafeteria then there
could be an opportunity for a stool cafeteria and vice versa.
In estates or
where the population is not so diverse then it’s prudent to take your time and
decide the best fit. There are cafeterias which have failed by being too classy
in a neighborhood without enough population who appreciate ‘class’ or can pay
for it. Class does not necessarily mean expensive food but how comfortable a
customer feels in that setting. When in doubt go for a basic, clean friendly
fast food with a few bar stools.
Licenses
Single User Business Permit (Trade
license) – This is
issued by the county government to all businesses operating within the county. The
process of acquiring the license and the cost will depend on the county, size
of premises and the location within the county. Some counties like Nairobi – have shifted the application process online. The cost will range between Kshs. 8,000 and Kshs. 40,000.
Budget at least Kshs.20, 000 for this license.
Public Health License – This is issued by public officers
in the area to make sure the premises are okay for handling food. Among the
check list is availability of water, a sink, and condition of floors, painted
walls, chimney and generally a clean environment.
In some areas
the public health officials will insist on the basics and with some monetary
conditions turn a blind eye on anything that you have not fulfilled. The
license averages Kshs.3000. Before you
invite the health officials for inspection make sure the premises are well
painted, the floors well covered, there is adequate water and the drainage is
good.
Different
counties could have some ‘lesser’ licenses associated with the health license but
which cost less than Kshs.1000.
Signboard License – This allows you to hang a signboard
to advertise your business. The cost depends on the county and the size of the
signboard. Budget at least Kshs. 15,000 for this license
Medical Certificate / Food Handlers
License – Everyone
handling food for public consumption is required to have a medical certificate
to make sure they don’t have any communicable diseases which can be spread to
customers. These are acquired at the
individual level and cost an average of Kshs. 1000. Staff should get the
medical certificates for themselves since they can use them even if they leave
your cafeteria. This can be acquired from a clinic or the local government
hospital/ clinic after some tests or bribes.
Fire License – By law every businesses premises
should have a fire extinguisher. The
license is acquired from the county government’s fire department. Inspectors
from the department visit and inspect your premises checking if you have the
right kind of extinguisher and the right number considering the size of your
premises. The license averages Kshs. 1500 but varies from county to
county.
PRISK / Kamp License – This is a collective rights management body
representing musicians. If you are going to play music or have a television at
your premises then you need to have this license. Cost depends on the size of
the premises. Budget at least Kshs. 3000 for this.
Waste
Management License – This is issued by the
county government so that they can assist in waste disposal. The license
averages Kshs.1000.
You can start
to apply for the license as you renovate your premises.
Other Regulatory Bodies
These are not
licenses per se but regulatory bodies who you are likely to bump into in the
cause of your operations.
·
Kenya Revenue Authority (KRA) will come nosing around to make sure
you are paying your taxes. This is a case by case based for example based on
your turnover and whether you are making profits or not. Get the advice of a
good book keeper. Know what to do, know what loopholes are there. KRA don’t
make good enemies. (If you need help
with book keeping we can recommend a good accountant )
· National Environmental Management
Authority (NEMA)
officials could also be popping in once in a while to enquire how you dispose
your waste. Have clear answers and a clear plan if they decide to harass you.
·
County Officials and Police – And although your staff could be
having all the licenses, the county officials (and police) could harass and
arrest them for whatever petty reason especially when leaving for work late at
night or reporting early in the morning. You should be prepared for that.
County
Health officials could also do random inspections in once in a while to ensure you are maintaining
required health standards .
More often
than not this is usually an avenue for them to squeeze money from you.
Equipment
Here we focus
on the major items that you could need for a chips and chicken café. The exact
items you need will depend on the nature of your operations.
Deep Fryer
This is used
to deep fry the chips. You could start with one, but for greater efficiency and
quality of the chips at least two are best. And then again if you are expecting
relatively high traffic then one fryer won’t be enough.
There are single and double fryers. Most of
the small and medium chips café use a double fryer which goes for an average of
Kshs.35, 000.
The market
has fryers ranging from Kshs.15, 000 to as high as Kshs.500, 000 depending on
size, where you are buying, new or second hand and the brand. When planning a
budget of at least Kshs.40, 000 for a fryer is good for a start.
You can
either chose to buy jua kali fryers, ‘branded’ or imported fryers. In Nairobi
the jua kali fryers can be bought in that metal works area along Jogoo road
near City Stadium and behind Shauri Moyo. You can also get them at Gikomba
market near Machakos bus station.
The challenge
with jua kali items is quality control. So make sure you have a good look at
the items; joints, connections, materials used and also ask about the
efficiency. There have been cases of
poorly constructed fryers which end up consuming so much electricity or
leaking. Ideally the fryers should be made of stainless steel. With jua kali
this is not always the case. Still there are many jua kali fryers which have
worked pretty well and tens of cafes are using them. They are worth considering
especially if you have limited capital.
If you don’t want to go jua kali you can
purchase from kitchen equipment suppliers. There are a couple of shops on the
upper side of Tom Mboya and near Koja mosque.
You can also check the area of River Road around the Latema junction on
towards Tom Mboya there are a couple of shops there. You can also check Nairobi
Kitchen Care along Luthuli Avenue, Hotpoint at Sarit Center, Housewives
Paradise Kenyatta Avenue. Mombasa Road
has a number of dealers too. (See appendix for a list and contacts of some
suppliers)
Try
negotiating. In most cases there will be
room to lower the price.
Also enquire about the features, efficiency and
durability of the different fryers. Branded fryers are not necessarily the
best. One brand which for obvious reasons will remain unnamed is especially
notorious for breaking down after six or so months. That does not mean that all
branded fryers are bad but don’t have blind faith just because a fryer is
imported and branded; look at its specific features. When buying new request for a warranty of
sorts.
Out of
Nairobi check the jua kali areas which are common in almost all major
towns. You can also check major
supermarkets and household equipment suppliers.
The chips
business is also reaching a point of maturity meaning there are many people
opening and closing their chips outlets. This has created a noteworthy second
hand market for fryers. Sellers at times advertise in newspaper classifieds and
as is common these days through online classifieds such as www.olx.co.ke .
When
purchasing second hand equipment make sure they are working properly. Test and
test. A second hand fryer could go for as low as Kshs.20, 000. At least Kshs. 60,000 for a standard double
fryer of decent quality.
In summary
among the factors you should consider are:
Size – If your kitchen or hotel is small
then a large fryer will leave you with no space to place other equipment. You
also need working space. A small low capacity fryer means that you will deep
fry a lesser quantity of chips at a go. Choose the size based on the size of
hotel, expected foot traffic and of course cost. Also note in addition to the
overall physical size consider the capacity which is the actual size of the
frying tank, where you put the oil. See a fryer could be large but the fry area
is small meaning you can only fry a few plates of chips at a time. Some branded fryers will give an estimate of
the chips output in terms of kilograms.
Cost – The price range is wide. The
difference is based on whether new or second hand, jua kali or branded, who is
selling and other factors. Although chips are the basis of a chips and chicken
café it should not take a beyond proportion share of the budget such that you
are left with not enough money for other items and more important working
capital.
Power Consumption - The more efficient a fryer is in
terms of power consumption the lower will be your costs. Ask about power
consumption.
Ease of Use – The easier it is to use a fryer the
higher the productivity of the workers, the higher the levels of safety and the
less steep is the learning curve for new workers.
Recovery Time
– When you deep raw chips (especially if they are from a freezer) into the
fryer the temperature of the oil goes down first then heats up and ‘ cooks’ the
chips. Recovery time means how soon the fryer is able to reheat the oil to the
right temperature. If the time is long them it means more power will be
consumed, productivity will be lower since it will require more time to cook a
batch of potatoes and if the longer the chips stay in the oil the more ‘ oily’
they become.
Controls - A
good fryer should have easy to use controls to regulate the heat, switch on off
and such. It’s especially important to be able to control the heat because at
times the oil overheats and this could result in burnt chips.
Potato Peeler
This is used to peel the potatoes instead of
doing it manually by hand. The peeler can help save time and money. Performance of the
peeler vary; some are not poorly crafted and don’t peel very well such that the
potatoes have to be redone again. Still the very good ones help increase
productivity.
Potato
peelers are sold based on capacity. A 20 liter peeler averages Kshs. 50,000.
Potato Cutter
A potato
cutter is used to slice the peeled potatoes to chips. Rather than doing it by
hand the manual or semi automatic potato
chips cutter makes the process faster, thus where you could possibly have required an
extra worker you now need one.
Just like
with fryers there are jua kali and branded ‘professional ‘cutters. Manual
cutters are made of a frame where you place a potato and press downwards, the chips fall
on a container below. When purchasing consider the ease of use and efficiency.
Semi automatic machines will cut more potatoes at a go. In the market too are
cutters which can cut different shapes of chips
Jua kali
cutters which are common in many cafes average Kshs.5000.
Warmers
Warmers are
used to keep chips and other items like smokies, samosas and sausages warm
after cooking. Basically they consist of a glass structure and a bulb. Without
a warmer it means you will be serving customers cold items or keep warming
which will increase your costs both in terms of money and time. Budget at least
Kshs. 20,000 for a decent warmer.
They cost
between Kshs. 5000 and Kshs. 30,000 depending on the size and where you
purchase them. You can get these from juakali vendors or the kitchen shops.
Chicken Rotisserie – (Some will refer
it as a chicken ‘grill’ or ‘oven’)
If you have
been to a fast food cafeteria then you have seen the silver equipment with the
raw and cooked chicken rotating; this is the rotisserie. But in the local
market it goes by many names including grill or oven. The rotisserie cooks the
chicken using heat and when a customer comes in the chicken is deep fried to
‘dry' it.
At the very
basic rotisseries are sold based on capacity; that is how many chicken it can
hold. For instance 18, 24, 48 or any other such figures. Price will also depend
on the features.
Like with the
rest of the equipment there are both juakali and branded rotisseries. With jua
kali equipment you have to consider the electrical connections and power
consumption. To insist this does not mean the that jua kali equipment are
always of poor quality.. Some are very high quality. Judge on a case to
case basis.
Whether
purchasing from a shop or jua kali insist on a warranty. Often in the jua kali
sector the warranty is for one year.
A jua kali
rotisserie with a capacity of 18 chicken averages Kshs.55, 000 while a 24
chicken capacity averages Kshs. 65,000. Branded rositerrie will start at Kshs.
120,000 all the way to Kshs. 600,000 depending on the brand and capacity.
You also need
a deep fryer to go hand in hand with the rotisseries. This is used to ‘dry’ the
chicken after removing them from the rotisseries. Budget at least Kshs. 60,000 for a deep
fryer.
‘Kitchen and Dinner’ Items
There are
other equipment to think basic equipment like knives, plates, buckets, spoon,
tongs, cups, forks, sufurias, jugs, sauce, vinegar, kachumbari containers,
wrapping papers and the like. Budget at least Kshs. 40,000 for these items.
Costs could be lower or higher depending on the scale.
Cash Register
A cash
register helps you monitor your sales, reduce cash leakages and manage and
monitor taxes if need be. For instance
with many cash registers by a click of button you can easily know what the
total sales in a day were. If you are
operating on a small scale then you don’t need a cash register. However if you
are in a busy setting such like a major town, you will definitely need one not
only because of the afro mentioned reasons but so as to be able to serve
customers faster and efficiently.
The price of
a register varies depending on the dealer, brand, whether new or second hand
and features. A basic register, like some of the Casio models cost as low as
Kshs.10, 000, while others can be as high as Kshs.60, 000. Features include
ability to generate different reports, level of programming, speed, ETR if
necessary and so forth. Cash registers can be acquired from electronics shops.
When going to purchase a register have a clear mind of what you want to achieve
with the register. Depending on your budget you do not have to necessarily
start with very advanced registers.
Renovations, Tables, Stools, Signage
Your premises
will need renovation . You need to set the cafe in a way
that there is a smooth flow. From the point of payment to the point of serving
and consumption. If you are personally
manning the cash point you need to design it in a way that you are able to
easily monitor operations from your position.
You could
have an open counter with no grills or one with grills but in all cases make it
friendly. A big menu display which consumers can see immediately they enter the
café is important. Other items like paintings, a television, music or mirrors
on the walls are a matter of taste but more often than not are a
necessity. Mirrors are increasingly
becoming part of the fast food décor in urban settings so if you are competing
with cafes with mirrors then you could do well to have them. Try creating a
bright yummy environment.
There will
also be the benches which serve as tables. There are many carpenters who can do
this. Bar stool seats the kind that is used in many fast food cafes can be
acquired from a number of black smiths. Basic stools cost an average of
Kshs.800. Prices range between Kshs.800 and Kshs. 1500. An upholstered well
painted simple stool will do. Some cafes go for stools with a back rest. If
your space is limited this is not the best option. There are many blacksmiths
making the stools.
In Nairobi if you have no clue start with the jua kali area
near city stadium, parts of Gikomba and even some supermarkets stock the
stools. Remember you will need labor for all this; a carpenter, electrician and
perhaps some casual worker.
Depending on
your setting and size the renovation could cost as low as Kshs. 20,000 to as
high as Kshs. 200,000 (the higher figure is from a café in Nairobi). At least
plan Kshs. 50,000 for this. The more
bells and whistles you have the more money you will need the figure could be
lower if you are purchasing an already running café.
Signboard
You need a
signboard to advertise your business. A
standard signboard will cost between Kshs.10000 and Kshs.50, 000 depending on
the size and the sign maker. It’s a very open market with no standard fees. You
have to pay a signboard license to the county government.
In addition you have to pay the county
government to put a sign board outside your premises. The amount will depend on
the size, county and location within the county. The price could range between
Kshs.5000 and Kshs.20, 000 depending on the size.
There are
signage companies in all major towns. The easiest way to identify signage
companies is to look for contacts usually at the bottom of existing signs. In
Nairobi there is a high concentration of signage companies along the upper part
of Kirinyaga road towards globe cinema and the surrounding lanes.
Freezer
A freezer is
used to store items like chicken, smokies, sausages and even dough. Also if you
peel more potatoes than are consumed within the day, you can store them in the
freezer for next’s day’s consumption. (See more on frozen potatoes in
Operations section). A standard freezer costs around Kshs.40, 000 depending on
the size and make. You can purchase from supermarkets and kitchen equipment
suppliers.
Fridge
Coca-Cola
supplies shops and restaurants making significant sales with fridges, but you might not get it as soon as you open up your cafe. Sometimes it can take up to
six months. Meanwhile you need to satisfy customers seeking cold sodas, water
or other juices. And then even if you have a Coca-Cola fridge part of the
agreement is that you should not use it to store products from rival companies.
This rule is often flouted but to avoid colliding with the company and have the
freedom to stock as many products as possible invest in your own fridge. Have a
budget of at least Kshs.30, 000 for a fridge. Again the exact cost will depend
on size, make and where you buy it.
Other Considerations
Rent
The exact
amount of rent that you pay will depend on the location, size of the premises
and owner. More often than not, for commercial premises you have to pay at
least 3 months’ rent in advance.Where possible sign lease agreements.
At times, especially in major urban centers
such as Nairobi, you have to pay goodwill too. Goodwill figures tend to be
random and based on what the owner thinks the premises is worth in terms of
future returns. As much as a premise has high potential negotiate to pay a
reasonable amount of goodwill. You need to remain with as much cash as possible
to run the business.
Stock
You need to
purchase potatoes, sodas, chicken, smokies, salt, sauces, chilies, kachumbari
ingredients juices all those items depending on what is on your menu. You start
with reasonable quantities and increase gradually as per demand and tastes of
the customer.
Budget at
least of at least Kshs.30, 000 for the initial stock. The amount could be more
or less again depending on your size, menu and scale. Always keep aside some
extra cash because despite how keen you are at the beginning there is
likelihood you might miss or underestimate quantities of some items.
Capital
(See attached breakdown)
Item
|
Breakdown
|
Total
(Kshs.)
|
Licenses
|
||
Single User Business
Permit
|
1
|
20,000
|
Public Health License
|
1
|
3,000
|
Signboard License
|
1
|
15,000
|
Medical Certificate
|
1
|
1,000
|
Fire License
|
1
|
2,500
|
PRISK
|
1
|
3,000
|
Waste Management
License
|
1
|
1,000
|
Sub Total
|
45,500
|
|
Equipment
|
||
Deep Fryer
|
2
|
120,000
|
Potato Peeler
|
1
|
50,000
|
Potato Cutter
|
1
|
5,000
|
Warmer
|
1
|
20,000
|
Freezer
|
1
|
40,000
|
Rotiserrie
|
1
|
60,000
|
Kitchen Items
|
All
|
40,000
|
Cash Register
|
1
|
15,000
|
Furniture and Interior
|
All
|
150,000
|
Fridge
|
1
|
30,000
|
Signboard
|
25,000
|
|
Other Items
|
1
|
50,000
|
Sub Total
|
605,000
|
|
Stock
|
All (Potatoes,
Chicken, Soft Drinks, Sausages, Flour and all )
|
55,000
|
55,000
|
||
Premises
|
||
Rent
|
2 months deposit + 1
month rent. Will depend on location. (@ Kshs.50,000 per month)
|
150,000
|
Sub Total
|
150,000
|
|
Working Capital
|
||
Salary
|
3 months @ Kshs.90000
per month( 6 employees @ Kshs. 15,000
per month each)
|
270,000
|
Electricity
|
3 months @ Kshs.5000
per month
|
15,000
|
Miscellaneous
|
30,000
|
|
Sub Total
|
315,000
|
|
Grand
Total ( Adding all the above sub totals)
|
1’125’000
|
Use the above figures as a guide. Figures listed
will vary depending on your supplier, type of fast food, size location and
negotiating skills. Thus the figures could be slightly higher or lower. For
planning purposes it’s better to overestimate rather than underestimate.
For instance the cost of rent can be much less(or
higher f you have to pay goodwill). Equipment can cost less if you buy all jua
kali. Or more if you go for branded equipment.
All in all for a basic chips outlet the amount could
be slightly less, while for a large chips and chicken say in Nairobi CBD the amount could be as high
as 5 million. But with a budget of Kshs.300, 000 and above you are set to start
a basic chips cafe.
Look at capital not just in terms of equipment and
rent but also in meeting expenses before you break even. You should have a cash
reserve to sustain you for at least 3 months after you start operations.
The average
break even period for cafeterias in Nairobi is 5 months but of course it will
depend on your exact location and management. When planning and thinking of
revenue don’t overestimate, work with moderate figures for that is the reality
of business.
You may not
turn much profit in the initial months and not because there are not enough
customers. The reason is that you will
be learning the ropes, you might be very inefficient, it make some time to
correctly predict consumption patterns, where to source cheaply, how to avoid
cash leakages, product wastages, how to improve quality and so forth .
Initially these challenges will frustrate and slow your growth. Don’t give up
yet. Don’t act in panic. Just keep your eyes and mind open. Learn and seek improvement.
There is no exact way to predict or advise on
such factors, a lot you will learn on the job depending on your location,
employees, management skills and target customers. Still we will touch a little
of this in subsequent sections.
Operations
The main menu
items in the kind of fast food covered in this guide are chips and chicken. Of
these two chips is the main item, the highest selling in volume and turnover
and the most labor intensive.
The main
process of preparing chips is sourcing potatoes, peeling, cutting into chips,
deep frying process and then selling.
Sourcing
First you
need to know that not all potato varieties are ideal for chips. Factors that eventually affect the quality of
chips and how much profits that you make are dry matter, eye depth, size and
shape.
Potatoes with
high dry matter are best because they are more edible, delicious and do not
absorb a lot of oil during frying.
Potatoes with
deep eye depth will lead to wastage. You
will have to remove the eye otherwise the chips will have black tough spots.
Large and oval shape potatoes are easier to peel and more important produce
long chips pieces which are aesthetically appealing to consumers. Just compare
chips at Galitos, KFC and the chain of cafes in Nairobi CBDs and those of some
downtown fast foods where the chips look almost mashed.
There are
over 20 varieties of potatoes and more keep coming up from research
laboratories. Presently Zangi, Ndogo are the most preferred for chips. Others
are Tigoni, Asante and Furaha. Nyayo is also used but it bruises easily and is
a bit soft, so at times becomes soggy when deep fried.
Relatively
high end fast foods like KFC, Subway and Galitos import processed frozen potato
chips. KFC imports processed potatoes from Egypt. The major reason being that
the potatoes available locally do not meet quality standards in terms of taste,
aesthetics and traceability. Others import from Europe and South Africa.
If possible
have among your staff a person with experience in cooking chips, identifying
potato varieties and purchasing from the market. If you are purchasing from
major market and are not keen you can be sold a sack with half of the potatoes
spoilt or of mixed variety. Eventually though you build a relationship with one
or a number of potato dealers or brokers who will be sourcing and delivering to
your hotel.
Where and how
you source your potatoes will affect your profits. Source as efficiently as
possible keeping costs low and quality high. Quantities you purchase will
depend on how busy your outlet is. About 70% of small and medium sized chips
outlets in Nairobi source from Wakulima market, the rest source from other
markets in the city and also from brokers, farmers and markets outside
Nairobi. Most purchase on a daily basis.
This is because of challenges of storing large quantities of potatoes, price
fluctuations, space limitations or low capital.
When starting
you need to focus more on the day to day running of the business and not be
distracted by the hustle of sourcing very far from your cafe. Although at time
you can save some cash by purchasing from potato growing areas it’s not as easy
as walking to a market; there are brokers and other gatekeepers not to mention
tricks and unforeseen circumstances. Before you learn the ropes the hustle and
hassle can consume much of your time and money without making any significant
savings.
If possible
in the first few weeks you should personally be present at your café to keep an
eye on employees, monitor demand and set standards. Source locally at the most
competitive prices available. Monitor the sales to know the quantities you
require on a daily basis. Potatoes spoil fast if stored in wet or dump
conditions. If you don’t have enough room for dry storage then purchase on a
daily basis.
To insist
bulk purchases lead to savings but consider these in terms of storage space,
working capital and sales.
A Note on Frozen Chips
From our
research about 80% of all fast food cafeterias in Nairobi purchase and process
potatoes to chips on their own. However there are a few who purchase frozen
potatoes. The frozen potatoes dealers purchase potatoes in bulk, peel, cut into
chips and store in frozen conditions for sale.
Their edge is the savings in labor, quality of
chips and at times cost. Storing chips under frozen conditions is a specialized
skill, though with practice anyone can learn. You need to know the exact
temperatures under which to store the uncooked chips otherwise they will turn
black when you deep fry them. Sometimes you need to add some chemicals and so
forth.
We are
carrying out more research on these both for purposes of this guide and to
gauge the feasibility of the frozen potato business on its own. In Europe,
Egypt and South Africa this is a big business. In Kenya a few companies are
trying to get into the business in a significant way but there is nothing
substantial yet.
Part of the
plan of some of the entrepreneurs seeking to get into the business is to sell
frozen chips through supermarkets where consumers can purchase in packets of
different sizes for preparation in their homes. Others want to supply to the
major hotels who are presently importing while others are looking at the export
market.
Peeling
You can
assign your employees to peel the potatoes or use a potato peeler. Most average
size cafes use employees. A potato peeler can save time but its effectiveness
will be determined by type and quality of potatoes will determine how effective
it is.
Slicing
Potatoes have
to be sliced to chips. This as we have noted can be done manually or semi
automatically using a slicing machine.
Frying
Despite the
general method of preparing chips being standard you find that they taste
different depending on where you have purchased them. The difference in taste
is because of the skill (or lack of) in preparation.
Among the
basics that influence the taste of the final product include
o
Choice
of potatoes – as
noted above some kinds of potatoes absorb oil and become soggy when they are
deep fried. Some also taste odd when deep fried as opposed to when cooked in
other ways.
o
Choice
of cooking oil -
Some brand of cooking oils which when used to prepare chips leave an after
taste in the mouth or make the chips taste ‘funny’. There are many cooking oils
in the market some even without brand names. Rina, Mallo are some of the
commonly used by fast foods.
It will be more economical to purchase the
cooking oil in wholesale from wholesalers or supermarkets which stock.
Established wholesalers are aware and many of them honest about which is the
preferred cooking oil by chips cafes. Bad tasting oil will simply drive
customers away; after all there is so much choice. You don’t want to be
cafeteria known for zile chips za mafuta.
The
oil that you use and how often you use it before changing to new oil will have
an influence on taste. You could have heard the many stories regarding the oil
used to cook chips in city cafeterias. Tales of transformer oil, some other
recycled oil from industrial area and so forth. The oils are said to be
cheaper, can be used for longer since they evaporate more sales. All this helps
to cut costs and raise profits.
Some
of the stories are true. But is it worth the risk? You don’t want to risk using
something you are unsure of. Then even if you wanted to you might lack
connections to source from such black market suppliers. It’s then wise to start with the normal
branded oil. When purchasing consider taste and the evaporation rate.
How
long you use the oil before changing will also affect the taste and quality of
your chips. Every time oil is used for deep frying it gets ‘infected’ with
debris and carbon. So every time you reuse the oil the carbon levels increase,
this eventually leads to ‘smoke’ or sour tasting food . As much as there is the
temptation to keep reusing the oil over and over again be cautious not to overdo
it.
Preparation process – Even with the right oil and
potatoes, the exact preparation process will affect the quality of chips.
There are
several tricks used to make the chips tastier. The most common, which is also
used by the high end hotels, is blanching. This involves putting the chips in
boiling water, then removing and deeping in cold water. The process removes the
starchy taste of potatoes, improves the texture, appearance and overall taste.
Before you start blanching make sure you try it on a small scale and acquire
some expertise. Better still have a staff member who is skilled in the
blanching.
Many of the
small and medium sized fast foods neither blanching or de-oil. They deep fry
and ‘dry’. The results are not necessarily bad but then if you want to have
tasty addictive chips then it pays to experiment with simple, cost effective
preparation methods. In downtown cafeterias consumes are not expecting the very
highest quality of chips, still they expect decent quality. Quality chips are
more a matter of skill and standards rather than cost. In the end it pays to
have high quality chips than low quality ones.
Chicken
There are
several sources of chicken. First are the independent farmers and brokers.
There are also companies like Kenchic and Sigma Feeds.
You can
purchase from Kenchic in Tigoni or their trucks which visit various towns and
parts of the city. Sigma feeds also distribute in major towns. See appendix for
the contacts of the two companies and they will advise where you can make
purchases depending on your locations.
Brokers and
farmers can either approach you directly or you can get them in particular
markets for instance in Nairobi you can find them at the City Stadium Market
along Jogoo Road or City Market along Muindi Mbingu Street.
At the City
Stadium market there is a flourishing market especially of low priced ex
layers. These are chicken which are past their egg laying stage and owners
through brokers want to dispose them. Remember when it comes to the actual
sales in a café it’s the volume rather than weight which matters. A ‘quarter’
is not necessarily 250 grams. The chicken is divided in 5-6 pieces, and each is
what makes a quarter.
There is no
special skill required to prepare chicken. For the chicken make sure it does
not overcook in the rotisserie and the deep fryer such that it becomes tough or
very dark. It should have the appeal and flavor of chicken meat.
Sodas
Coca-Cola has
distributors in almost all parts of the city and the country. And so does major
juice manufacturers. There are no formalities and it’s basically a walk in walk
out affair. Apply for a refrigerator as soon.
Other Items
For the other
items the preparation method is quite clear, and does not involve a lengthy
process. But again choose your cooking oil smartly even for items like Smokies,
Sausages and Samosas, and be careful not to leave them dripping with oil as
this is one of the biggest complaints by customers.
Work
Schedule
Have a clear
work schedule where each and every of the workers knows their roles. This will
avoid confusion and delays. Communicate clearly to the workers what they need
to do and when.
Revenue
Average
Mark Up ( Chips)
|
24 %
|
Mark
Up Range
|
15 % to 60%. The mark
up will depend on supplier, price and location
|
Average
Mark Up Chicken
|
40 %
Mark up Range – 35 to
70 % largely depending on sources and the definition of ‘quarter’
|
Average
Mark Up Sausages
|
60%
|
Average
Mark Up Soda
|
75%.
|
Average
Spend Per Customer
|
Kshs. 90
|
The above are
gross mark ups, based on buying and selling prices. Please note that the mark
up figures will reduce if factors such labor, electricity and rent are
included. When planning work with lesser margin this is because it might take
some time before you are able to achieve full efficiency and thus high margins.
As we look at
revenue here is some data from a number of chips and chicken cafes:
Case Study One
Location:
Nairobi CBD.
Hours of
Operation : 24 Hours
Prices:
Chips 80/=
Bhajia 100/=
¼
chicken 125/=
Soda
50/=
Source of chicken : City Market. Average price –
Kshs. 350 . Exact depends on the weight of the chicken.
Average chicken sales – 90 pieces. Can go as high as
120
Source of potatoes – Wakulima market
Price ( April 2017) – Kshs. 2800 – Kshs. 3200.
Offseason prices can peak to Kshs.6000
Average number of plates per sack – 150
Rent - Kshs.
260,000
Manpower – 21 employees (Average salary – Kshs.14,
000)
Case
Study 2
Location: Nairobi Estate
Hours of Operation – 7am -10.30pm
Retail prices:
Chips 70
¼ Chicken 125
Bhajia. 100
Chicken Source – Kiserian Slaughters. Average price
– Kshs. 350
Average chicken sales – 30 pieces
Source of potatoes – Wakulima market.
Average price – Kshs. 1800for 75 kg sack
Average sales – 3 sacks
Rent – Kshs. 30,000
(See another case study in
the appendix)
A Casual Look at Revenue
The very
crude way to look at Revenue is to calculate this way: Say you are selling a
plate of chips at Kshs. 50. And you bought a sack at Kshs. 3500, and then you
need at least to sell 70 plates and a few more to get a return. 70 plates @
Kshs. 50 will give Kshs. 3500 but there are overheads in terms of oil,
electricity and so forth. So 30 more plates to cover the overheads. This is a
very hypothetical case which assumes you are only selling chips and have no
other related costs. Nevertheless it should give you a clue about revenue
projections and calculations.
Number of Plates from A Sack
In most fast
foods the standard unit of quantifying chips is the 20kg fat plastic tin /
bucket, you know like the one for Mallo or Tily cooking fat. The plates of
chips that can be gotten from the 20kg bucket varies between 18 and 30
depending on the quantity of chips that you serve in a plate, the quality of
the potatoes and your efficiency. The average is about 24 plates.
The number of
buckets that you can make from a sack of potatoes varies with how the potatoes
are packaged. The standard weight of a sack of potatoes, as defined by the law,
should be 110kg. However due to the influence of brokers potatoes are packaged
in bags as low as 90kg to as high as 200kg. This means that the number of
plates that can be gotten from a sack can range from as low as 100 to as high
as 150. Still the average is about 150 plates for a standard gunia and average
serving.
And the gross
profits from a gunia can range from Kshs. 3000 to as high as Kshs.8000. Looks
attractive? Yes. But this is the gross profits; also depending on your location
you may not necessarily sell a whole gunia in a day.
Abnormal
sales figures are recorded in Nairobi CBD. Outside Nairobi CBD, in the estates
some cafeterias struggle to even sell 100 plates. When planning work with lower figures. The average sales in Nairobi estates are 120
plates.
The
cafeterias which sell over 500 plates in a day are in the very busy streets
between Moi Avenue and Tom Mboya. Locating in Nairobi CBD will also not
necessarily transform to higher sales; it depends on what exact section of the
city you are located. For instance in the section of Kirinyaga Road towards
Racecourse a number two fast food cafeterias have closed in the last two years
. This is because of the labor intensive work of most consumers around who will
not be ‘satisfied' by chips ‘. Also there are many ugali matumbo, ugali
karanga, ugali sukuma cafes prices their items almost the same as the chips.
In estates
with many alternatives for quality ‘non junk ‘food, sales will be lower. There is perception among some consumers that
chips is a meal you consume when in ‘town ‘. Once you are back to the estate
you either cook or look for ‘real’ food. In low income estates the biggest
competition comes from the roadside chips traders.
If you are
located in the estates you have to do more to raise the profile of your café
especially in terms of quality. Let the café be known for superior chips, great
and large chicken or even you can chose an unrelated item like meat roll or
chapati roll.
Invest in
cleanliness, good service, an attractive exterior and more important something
to differentiate and brand you. ile hoteli ya samosa kubwa.. Or something like
that. It doesn’t matter whether you are enjoying a monopoly at the moment. The
barriers to entry in the business are low, and as happens if you are doing
well, you attract more people to the business. But do this with a very clear
understanding of who your target market is, and the kind of alternatives they
have presently.
As the
supermarkets located in middle income areas venture into food preparation the
competition in the fast food business will become intense. Some of the
supermarkets are investing in superior preparation methods both in terms of
equipment and skill resulting in relatively higher quality chips and chicken. A
big portion of consumers tend to trust the supermarkets in terms of hygiene and
quality than they do the neighborhood cafes. What with the supermarkets open
kitchens and cooks dressed like professional chefs.
Profits from Chicken
Though chips
are the main items, the profits and consumption of chicken are significant and
can’t be downplayed. A number of cafes in Nairobi CBD have noted an increasing
trend where some consumers just purchase and consume chicken alone without
accompanying with chips as is the norm.
Again as
observed the definition of quarter in the fast food business is based not on
weight and more on volume. Thus a 1 kilogram chicken could give even 5 (or even
3) ‘quarters’. Consumers have in their
minds an idea of what a quarter should be. If you try to squeeze so many
quarters from a standard chicken then it will negatively affect the perception
of your café. A coupon weighing between 1.4 and 1. 6 kilograms can give 5 to 6
quarters. Thus a margin of between 40% and 60 %
Revenue is influenced by:
Pricing
The
relatively high gross margin in chips means that there is much room to play
around with price. In Nairobi CBD for instance prices ranges from as low as
Kshs. 40 for a plate of chips to Kshs. 100 for standard fast food cafes. Common
price points are Kshs.50, Kshs. 60 and Kshs. 70. Others are Kshs. 55 and Kshs.
65. A popular chain of fast foods in Nairobi CBD was selling chips at Kshs. 80
in May 2017.
An interesting case is the John and Jos café
which is located along Harambee Avenue. It’s a purely standing café which sells
a plate of chips at Kshs.120. The chips
are of relatively high quality and also there is no fast food competition in the
section of the street. This is one of the oldest cafes in Nairobi CBD and has
worked to maintain the same look over the years.
Other
interesting cases are Jack City Fries and Q-Fries near Odeon Cinema along
Latema Road. Both sell a plate of chips at Kshs. 50 per plate, a slight rise
from the Kshs. 30 they used to sell for over 3 years.
Jack City
about 15 feet by 10 feet is has a downstairs without seats and an upstairs with
not more than 10 bar stools. It competes on price selling chips at Kshs.50 a as
compared to the average of Kshs.70 in most cafeterias. All day long the
cafeteria is filled to the brim and it’s not unusual during the peak hours to
see an almost 15 meters queue of customers. Most customers consume chips though
they also serve chicken bhajia, sausages and samosas.
Q fries is in
a much bigger space though with the same downstairs upstairs setting. Around
June 2013 Q fries displaced a cyber café so as to acquire more space to host
its customers. Our research didn’t
identify any exceptional trick used by the businesses. Jack City for instance
sources potatoes from Wakulima Market on a daily basis, averaging 10 sacks every
day. They use normal cooking oil which
they purchase and bulk. There are 7
employees at any one time and the owner manages the business full time. Theirs is a formula of keeping costs at the
minimal, low margins and high volumes.
Price based
competition is common in the chips business. Lower prices are used as a way of
penetrating the market or winning customers.
For instance in Nairobi within a radius of about 30 meters from the same
Odeon there are price ranges of between Kshs. 50 and Kshs. 80. Between Q Fries
and Jack City is another clean; bar stool fast food selling a plate of chips at
Kshs. 60 and it too has its considerable number of customers. Of note is that
this particular café started as a Kshs.30 per plate, then upgraded to the
Kshs.60 cafeteria.
In estates
and smaller towns the price ranges is not as big. This is because incomes and
tastes in estates tend not to be so different.
The
effectiveness of price based competition will depend on the location. In places
with above average incomes experience and quality are the major considerations
when purchasing rather than price. That explains the price diversity around
Odeon cinema. Also it explains the relatively high prices at Ken chic.
Price is
based on source of supplies, competition, location, target market and of course
your costs. If you are paying more in rent, more in salaries, incurring extra
costs say in the process of preparing your chips then of course you will charge
more. Same if your products are of higher quality, you operate from a point
where there is not much competition, or if your target market has relatively
high income.
Location
Chips and
Chicken is a high traffic business. You can survive without high numbers but to
grow and remain in the business in the long term you need the foot traffic.
If you are in
a strategic high traffic location, and the traffic is also the right kind -
seeking chips and at the price you have set - then you will eventually earn
more revenue that is keeping everything constant.
High traffic
locations increase the chances of getting a big threshold of the right kind of
customers. That’s why cafeterias in urban centers say like Nairobi CBD have
higher chances of success more than those located in a high traffic location
within an estate. As noted consumption patterns in estates tend to be more
conservative as compared to urban areas where people are out of their own
spaces.
Nairobi CBD
is the most attractive location for the chips business. The numbers and
diversity of consumers is a half way road to success. But although Nairobi CBD
is an attractive location, it’s not the only great location. Some high
populated or not so highly populated areas but with the right mix of the
population provide quite good opportunity.
There are
estates and towns with significant student and relatively young working
population that could do with a quick chips café. Towns coming to mind
immediately are Kiambu, Machakos and Embu. Though a little peri urban and with one
or so decent fast food outlets, and other traditional hotels serving chips
there is opportunity for the classical independent chicken and chips café. A
real clean specialized chips and chicken fast food serving the urban population
in such areas.
Best
locations for a chips and chicken are urban, with middle income populations,
single households and student populations. The more urbanized and bigger a town
is the better. Bigger towns have diversity in terms of population and income
that provide enough foot traffic and ability to operate profitably at different
levels of price and facilities.
If you wish
to set up in Nairobi CBD, the biggest challenge will be getting a great
location. Space could be available especially in new or renovated buildings
coming up downtown; however goodwill figures for cafeteria at times tend to be
exaggerated. Though we have noted goodwill of Kshs. 200,000 there are locations
where reportedly owners paid 5 million.
Despite that you can look for locations with
affordable rent and reasonable goodwill. Rent for chips outlets in the CBD
ranges from shillings 20,000 to as high as Kshs. 300,000. That should not
discourage you but it is something to think about when weighing your capital,
and where to locate your business. In Nairobi estates rent for chips outlet
range from as low as Kshs. 5000 to Kshs.40, 000.
One of the
biggest advantages of a visible location is that it reduces the cost of
acquiring customers; it also provides you with a flow of customers to help the
business survive and break even. A good location however doesn’t guarantee you
repeat customers; the people who make the business grow. These are a function of service, quality and
right pricing.
Get the best
location but also be real to the fact that a good location is not the only
recipe for success in the business. Quality, service, costs and management will
determine the eventual success of the business.
Costs
The costs
incur will determine your profits.
Major Variable Costs
-
Cooking
Oil
-
Electricity
-
Sauces/
Chilies
-
Transport
-
Wrapping
Papers
-
Water
-
Soap
-
Salt
Major Fixed Costs
-
Rent
-
Labor
The cost of potatoes and chicken as noted will
depend on where you source from, prevailing seasonal market price, quantities
and qualities that you purchase and how far you are from the source of
supplies.
Like we mentioned in the ‘Operations’ section
you should aim to source as intelligently as possible without straining
yourself and the business. There will always be the temptation to purchase
potatoes in bulk for future use when prices are low but then consider that in
terms of storage and your cash flow.
When you can,
purchase items like cooking oil, sauces in reasonable bulk to enjoy discounts.
Lower quality potatoes will be cheaper at point of purchase but might turn out
to be expensive if you consider how much you will waste, or the quality of
chips that you serve your customers.
On average 10
to 15 kilograms of oil are needed to prepare chips worth 1 sack. This is the
average the exact amount will depend on how often you change the oil, quality
of the oil, skills of the cook and the quality of chips that you want to
attain.
Instill in
your workers a responsible culture of saving without necessarily affecting
their morale or the business. This is especially so for items like electricity
and water. Electricity if uncontrolled will eat quite a big chunk of your
profits. For fast food in Nairobi CBD electricity takes an average of 11% of
the total gross revenue.
Even for
items like salt, wrapping papers and sauces whose cost might seem a small
negligible proportion when compared to the rest of items, try to minimize, not
by curtailing them from customers but by sourcing in bulk and cheaply. For
example the price of wrapping papers between the different suppliers is
significant, and taking a short time to shop around for the cheapest will lead
to significant savings in the long run.
Also have a
clear contract with your landlord to avoid arbitrary increases in rent. Seek to
have a very clear system and goals as far as costs are concerned.
Variety of Related Items
If you are
able to offer more of related items then you will not necessarily reduce the
consumption of chips rather you will encourage consumers to spend more. Sodas
are a must. Fresh juice, such as passion juice, moves fast. Bhajias, sausages,
samosas, kebabs, smokies, are a good addition. Keep to the fast food menu. You
can introduce products gradually as your business grows. Variety will make
customers spend more thus increasing your revenue.
Management
One of the
biggest complaints among fast food owners is revenue leakages by crooked
employees. It happens all the time. For instance there is a cafeteria along
Ronald Ngara Street which is notorious for side deals; with Kshs.30 or even
less you can get a plate of chips, or have an extra amount added to what you
have paid for legally. Officially a plate of chips costs Kshs. 60 at the
cafeteria.
Workers at
another cafeteria along Moi Avenue will give you a quarter of chicken at
between Kshs. 70 and Ksjs.100 instead of Kshs. 125 that you would have paid at
the counter. They pocket the money. Some
of these thefts are not entirely possible to erase if you are not managing the
business personally or if you don’t have a trusted manager or employees. Still
depending on your setting you can find ways to seal the loopholes.
Management is
also about organizing your workforce and other resources so that they are
efficiently employed in a way that cuts costs and boosts profits. This includes
sourcing efficiently, managing cash, motivating employees, service and all else
you do as the owner of the business.
Operating Hours
There are
Chips and Chicken Cafes in Nairobi which operate for 24 hours. Others are open
as early as 6 AM and close at 11 PM. The extended hours of operation lead to
increased revenue. However before you decide to operate for extra hours look
consider your location in terms of the possibilities of getting late night
customers and also security. You might also need to pay workers who work at
night extra if not have more of them so that they can work in shifts. If you
are in a location without much nocturnal activity then it will be of no value
to open for 24 hours. Still whatever your opening hours are consistent. Let
consumers know that if they walk to your cafeteria today at 11 PM they will find
you open, and tomorrow the same thing.
Critical Success Factors
For you to
succeed in the business you need to get this right:
Location
A good
location, as mentioned, is one with enough foot traffic and the right mix of
consumers. A good location is visible secure and easy to access both by
suppliers and consumers. A poor location will make you take longer to break
even or even suffer losses. You must get the location right and if you can’t
get an ideal location then compensate with quality, marketing, service or even
price.
Quality
In most
locations there are alternatives to chips. The alternatives are other chips and
chicken cafes and hotels serving other kinds of food. This means that if
consumers don’t like the quality of your chips more often than not they will
get a substitute.
Quality is
about how the chips taste, the oil you use, how crispy they are, whether they
are well cooked, how dry they are and other such factors. Consistencies in
quality generate word of mouth, repeat customers and help you loosely build a
brand.
Service
Again with
choice consumers will always walk away if the service they receive is not to
their expectation. This includes common courtesy, efficiency and responsiveness
of staff, packaging, availability of things like water, sink, clean drinking
water, glasses and depending on the setting the cleanliness. Service is also
about not creating an unnecessary fuss when given a customer gives a big value
note.
Service is
about giving consumers a superior experience, the kind that they expect in a
cafeteria of your status.
Management
Basically
management is about making sure all is running well towards the profitability
of the business. Good management involves sourcing efficiently, managing costs,
and preventing revenue leakages, marketing for growth, managing and motivating
staff.
Poor
management has led to the collapse of many chips and chicken cafes. Revenue leakages by conniving staff and a
careless revenue and cost management system have led to the collapse of many
chips and chicken.
A Note on Competition
Competition
in the fast food business in Nairobi has been increasing in the last 3 years.
This is driven by the increased demand for fast foods as noted in the
introductory section. Also the
attractive margins are pulling more into the business. The barriers to entry
are relatively low, at least outside Nairobi CBD. Within the CBD the biggest
barrier is finding a good location, and the high rent and goodwill associated
with it. Competition in the business will continue to increase, however the
urban market is yet to be saturated and there are opportunities in the business.
On What Is Competition Based On?
We have
covered in detail above most of the below factors on which competition is based
on. So here we note them and make some few additions as need be:
Capital
If an
entrepreneur has higher capital or access to short or medium term capital then
he is able to have more leeway in what he can do. For instance he can have
bigger billboards, he can purchase in bulk and thus end up with higher margins,
he can offer more variety, he can absorb losses till breakeven point, he can
purchase better equipment, he can hire more skilled employees, and he can hire
more employees to make the service efficient. Capital will also enable the
entrepreneur to set his fast food cafeteria to target the most profitable of
consumers. For instance by having stools if need be, expanding the menu, having
music and so forth.
Though a
large amount of capital will not necessarily lead to success of the business,
it helps cushion the business and make it more resilient.
Location
This as noted
in the preceding sections. Investors in the business try to get an edge by
positioning themselves in the most strategic of locations. In Nairobi a few of
the established owners try to fence competition by using money, connections and
their experience in the business to snatch any strategic location that is
available. A strategic location gives a fast food edge over the others in terms
of traffic and diversity of customers.
Others
attributes on which competition is based and which we have covered above are:
Price
Service
Quality
Variety
Operating
Hours
Some Extra Observations:
In order of priority fast food
restaurants in Nairobi seem more focused on:
-
Expanding
market share
-
Survival
in the market
-
Profitability
-
Market
differentiation
Among strategies used by the fast
foods include to achieve the above include:
-
Increasing
number of outlets
-
Choosing
secure friendly locations... like well lit areas where consumers are not afraid
to venture whatever the time
-
Convenient
and easily accessible locations
-
Attractive
interior design
-
Consistency
-
General
cleanliness
-
Power
back up so that they continue operating even when there are power black outs
To differentiate fast foods in Nairobi
CBD use:
-
Customer
service
-
Advertisement
-
New
products
-
Branding
-
Strategic
location
-
Longer
opening hours
Among the common challenges are:
-
Increased
competition
-
Cash
Flow problems
-
Poor
management skills of the owner / manager
-
Poorly
trained staff
-
Marketing
-
Power
blackouts and occasional water shortages
-
Substitutes
– You know the restaurants offering African dishes and other ‘real’ foods at
affordable prices and ‘health’ marketing.
-
Changing
consumer tastes and preferences
Management
Once you
start the business you will get into a cycle where you worry about supplies,
workers, customers, cleanliness, cash and so many other things about
operations. If you are not careful you won’t get time to reflect and look at
your business since you will be so busy working IN the business and not get
time to work ON it.
Thus you
forever remained trap in the cycle and although you could be making money you
might just remain small or lose track of what is happening in the market. You
will not have time to work on improvements, make more money, expand etc.
Eventually though you will be having a successful business by some standards
you start getting bored, disillusioned and feeling not fully satisfied.
Take time
every week to objectively look at your business. To strategize and think of
ways of improving. There will always be something you can do better. There will
be unexpected hiccups and you need to find the best ways to deal with
them. Try making as many good decisions
as possible when starting. You have a great location; follow that with the
right branding, staff, suppliers and management. You can’t get everything right
at the start but the more items you get correct the easier your business ride
will be.
Also manage
your business so that there are no cash flow problems. Never get to a point
where you can’t pay your rent or workers. And build the kind of relationships
with banks etc that give you access to short term cash.
Manpower
Fast food
restaurants workers are some of the most unhappy and demoralized lot. They work
for long hours, their pay is not equivalent to the work they do and at times
bosses tend to treat them rather dismissively. A large number of them will say
‘wanashikilia tu’ meaning if they get a better option they will quickly shift.
This attitude is sometimes reflected in service and levels of honesty.
Keep your workers happy and motivated. This is
not necessarily by offering high salaries but by showing you care about them.
Talk to them, ask their opinions etc. Do it in a way that you make them happy
without losing your authority. If you lose your authority they will take you
for granted. And if they do they ‘legea’ at work.
Start with
some experienced workers at least in the kitchen. This way you will be more
efficient. The cashier should be ‘ chap chap’ to avoid long queues during the
peak hours. And he should be calm and polite even during the rush hours. A lot
of cashiers lose it when under pressure and it’s the customer who gets the
heat.
There is a
lot of worker poaching in the business. If you have spotted a good worker in
another café make them a reasonable to make them defect to your cafeteria.
Marketing
Brand with an
easy to remember and pronounce name. A neutral English English name works best.
Also have clear signboards. Have a billboard that one can see from far and
across the road. (Memphis, Tennessee, Arizona, Rangers style) and another one
hanging at the door so that those on the street can see it. Don’t bet on just
being discovered, pull in customers.
The
advertising will cost you extra in terms of licenses and purchase but it is
worth it. During the festive season the management of the Memphis and the
related cafes has mascots standing on the street giving sweets and encouraging
consumers to get into the restaurant. This underscores the importance of
pulling in customers despite a good location.
Promotion
packs work well. You know those Chips+ Soda + Quarter @ 230 or any other of
that format. This is actually one of the most used promotion methods in the
Nairobi fast food market. Others had occasional price discounts. This had a
short term positive packs and customers didn’t always respond to it.
Other
marketing methods used include giving free kachumbari. You sell tomato source
but offer free kachumbari. This has a very big impact on loyalty, of course
keeping everything else (like price, service etc) constant. You must not
necessarily provide the kachumbari the whole day. You could have some bowls
during the peak hours only. And if it’s during periods when tomato prices are
rock bottom then you could have tomato laded kachumabri throughout the day.
Consider the cost of the kachumbari versus the customers who are coming in and
how much you are making from them.
Consistency
Be consistent
is quality and quantity. This way customers will identify you with something
(could be chips mingi, kuku kubwa, chips tamu etc). Lack of consistency makes
you just another fast food and if the customer has option she will go where she
is very sure what to get.
Costs
Manage your
costs in the best way possible. Initially you will have wastages as you figure
out the optimal quantities. Try keeping these at the minimum. Like I mentioned
before manage your costs without compromising the customer experience. Don’t be
mean to your business or customers but remember every shilling counts. Source intelligently for everything.
Oil will be a
major cost. Eventually as the business expands you could do with an cooking oil
filter. (See the attached write up based on short feasibility study we did)
Suppliers
Build good
relationships with suppliers. Bad suppliers can mess you up. Make sure you work
with reliable suppliers .Both you and the supplier are in business so it’s
always possible to get into mutual agreement regarding payment and so forth.
Don’t be blindly faithful to one supplier; be on the lookout for something better.
And make the transition from one supplier to another smooth.
Appendix
Sample Daily Revenue from
A Small Cafeteria in Nairobi CBD
Chips
1 Sack
Potatoes – Kshs. 3300
Cooking Oil
for 1 Sack – Kshs. 1500
No of chips
plates – 160
Price of a
plate – Kshs. 60
Plates sold
in a day – 417
Total
Expenses - Kshs. 12000
Total Revenue
(Chips) - Kshs. 25020
Gross Revenue
– Kshs. 25020 – Kshs 12,000 = Kshs. 13020
Chicken
1 Coupon–
Kshs. 420
Quarter –
Kshs. 120
Total sales 1
Coupon – Kshs.600
Chicken sold
– 27
Gross Revenue
Chicken –
Kshs.16200 –
Kshs.11340 = Kshs. 4860
Other Sales
Sausages – 33 (x Kshs.40)
Gross = Kshs.
495
Samosas – 63 x (Kshs.30) –
Gross – Kshs.
1197
Sodas – 186 x Kshs.35
Gross – Kshs. 2046
Expenses:
Staff – 5 – Kshs. 42,000
Electricity – Kshs. 67,000
Rent – Kshs. 55,000
Miscellaneous – Kshs. 140,000
Total - Kshs. 304,000
Some Equipment Suppliers
Nairobi
Kitchen Care
|
Main Branch
Main Mombasa Road, Allbid House. Opp ASL
Town Branch
Luthuli Avenue
|
P.O.BOX 49938, 00100 NRB
Kenya Ph. (+254) (0) 706 991 469 Mob. 254(0)727 246 209 |
||
Kitchen Professionals Limited
|
Airport South Rd, Near TNT, Nairobi
|
P.O.Box: 66609-00800 Westlands, Nairobi
Tel: +254-202100662
Mobile: +254-717445591, +254-735445599,
+254-724445599+254-202667449
|
||
Sheffield Steel Systems
Ltd
|
Kenbelt Industrial Park, off
Mombasa Rd, Nairobi
|
P.O.Box: 29-00606 Sarit Centre
Tel: +254-202095883
|
||
Meaf
Consultants
|
Sameer Business Park,
Block D1, 2nd Floor
Off Mombasa Road, Along Enterprise Road |
254 20 357 9028, 254
737 117 257, +254 734 688 983
www.meafconsultants.co.ke
|
||
Cute Kitchen
|
Tom Mboya Street , opp
fire station , next to Family bank
|
0711 850 850
|
||
Kitchen Appliances Ltd
|
Commonwealth house,
Ground Floor, Moi Avenue
|
0726 949449
|
||
Kitchen Pride
|
Bombay House, Tom
Mboya Street
|
|||
Wlibhai Karim and co
|
Kathlawa Hse, Ground
Floor – Biashara street
|
020 2222808
|
Kenchic Contacts
Tel: 020
2301518 / 020 2013313 / 0722 202 373
Sigma Supplies Contacts
0723 004 289
www.sigma.co.ke
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Dear sir,
ReplyDeleteGreetings!
Send me the guide for Chips and Chicken cafe business.
I will tell me friend in Kenya to pay you.
Regards,
Suresh Bhad
India
good one
ReplyDelete