Considering a food service business in Africa? You’re absolutely thinking right!
Food is one of the most basic human needs. Everyone, including the rich and poor, must eat to survive.
As more Africans (especially those living in cities) cannot find the time, convenience or skill to cook for themselves, eating at fast food and casual dining restaurants is on a rapid rise.
The demand for prepared foods in many African towns and cities is massive and no one restaurant or fast food chain may be able to satisfy the market.
The African restaurant and fast food market is estimated to be worth more than $100 billion every year.
In this article, we’ll explore the interesting business opportunities in this market and how you can start a viable business that will exploit them for good profits…
Why is the demand for restaurants and food service business in Africa growing?
City lifestyle is one the key drivers of demand for food service businesses like fast food outlets and dine-in restaurants in Africa.
Because of the demands on their time, people living in cities and towns are increasingly unlikely to cook their own meals. They would prefer to have a decent meal without the hassle of going to the market to buy food stuff, cook or wash dishes.
Due to reasons of convenience (and maybe low cost), eating out has become a growing and popular trend in many African cities and towns. (photo credits: akinbami.blogspot.com)
This trend is still in its early stages and is bound to explode. A recent study by McKinsey & Co., the global consulting giant, reveals that up to 40 percent of Africa’s population now lives in cities. Africa as a continent is more urbanized than India (30 percent) and nearly as urbanized as China (45 percent).
Currently, 52 African cities have a population of more than one million people. By 2016, over 500 million Africans will live in cities and the number of cities with more than one million people will reach 65.
As the size of African cities and towns continues to expand, the demand for more convenient eating options is bound to go through the roof.
Seeing this opportunity, many homegrown and international restaurant chains are already entering the African market and are fast becoming popular destinations in many of Africa’s major cities.
Aside from the demand for basic meals, a growing number of Africans have developed a taste for, and can now afford, fine, foreign and upscale delicacies.
In addition to the higher earning power of Africa’s middle class, rapid economic growth has attracted a lot of foreigners to the continent. As a result, ethnic and specialized restaurants like Chinese, Italian, Thai and Indian cuisine have become a common feature in many African cities.
However, the tastes and demands of the African market are very diverse. This makes it very difficult for any one restaurant type or business to dominate the food service market in Africa. We shall now look at the different options in this market and how you can target particular consumer segments to succeed in this business.
Top Considerations – Types of restaurants and food service business in Africa
(1) Fast food and Quick Service restaurants
These are basically the most common type of restaurants in Africa right now. While many of them are corner booths and stalls that cater to the common man on the street, upscale versions like Kentucky Fried Chicken (KFC) and MacDonald’s cater to higher-income segments of the market.
A fast food restaurant, sometimes known as a quick service restaurant or QSR, usually features a very limited menu. The food is normally cooked in bulk and in advance and is kept warm (or hot) throughout the day.
In QSRs, customers are very likely to give their orders at a counter where the food can be eaten within the restaurant or is packaged and taken away. Some other fast food outlets sell only snacks like hamburgers, pizza, barbecues and a variety of other quick snacks and foods.
Many of the existing fast food restaurants operating in Africa are owned by small businesses and individuals. Most of the upscale ones are part of a restaurant chain or franchise operation like KFC which provide standardized ingredients to each of its restaurants through controlled supply channels.
A modified version of the fast food restaurants are casual restaurants and mobile food centres.
Casual restaurants have higher sit-in ratios, and customers can sit and have their orders brought to them. Mobile food services (like food trucks) often park outside worksites and are popular with factory and construction workers.
(2) Casual dining restaurants
Just a step above fast food restaurants are casual dining outlets where customers get to choose meals from a flexible menu and table service is provided. The atmosphere here is much more relaxed as clients who patronize this type of restaurant expect to spend some time enjoying their food and are likely to eat their meals within the location rather than take it away.
(3) Fine dining restaurants
Fine dining restaurants are the top range of the restaurant business and are targeted at the elite and people who do not mind paying for a superior dining experience with expensive meals.
They are full service restaurants that offer the finest in food, service and atmosphere.
They are also the highest priced type of restaurant you can operate and can be very capital intensive to set up. They usually have specific and dedicated meal courses and the waiters and staff are absolutely professional and very well trained.
With fine dining restaurants, a lot of attention must be given to detail. The atmosphere of these restaurants usually feature very elaborate and exquisite furniture, lighting, layouts and tableware. (photo credis: wongeats.com)
Desmond Mabuza is the first black man to own and operate fine dining restaurants in South Africa. His restaurants, Signature and Wall Street, are situated in Johannesburg, Africa’s richest and most economically active city.
You should read Desmond’s full success story here.
Desmond Mabuza’s Signature restaurant situated in upscale Johannesburg, South Africa.
(4) Ethnic Restaurants
This type of restaurant serves food from specific cultures, countries, or regions. As more Africans develop foreign tastes and more foreigners visit Africa for business and leisure, the number and popularity of these restaurants are on the rise.
The most popular ones on the continent are: Chinese, Italian, Mexican, Thai, Caribbean, French, German, Indian, Japanese, Korean, Mediterranean, Thai and Vietnamese.
How to start your own food service business in Africa – 4 Quick steps
Depending on your budget and location, there are a variety of opportunities to exploit in Africa’s growing restaurant market. Before you start, there are a number of things you should consider as you take the huge step of converting this great idea into a brilliant business.
Step 1: Choose a unique concept…
This is the very first step in giving life to your restaurant idea. As we explored in the last section, there are different types of restaurants and food services.
Would you like a fast food (quick service) type of restaurant? You could start this type of food service with small capital. It could be a small corner booth down the road or you could operate it around your home.
On the other hand, you could buy into one of the popular fast food franchises, which is likely to require a huge capital investment. (photo credit: tripadvisor.com)
At the other end of the scale are the fine dining and ethnic restaurants. If you’d like to start an ethnic restaurant, you will have to spend a good amount of money to get a professional chef who specializes in Chinese, Italian, Thai or whatever type of ethnic food you choose.
If you’d like to start a fine dining restaurant, you should know that it would cost you a lot to start up and you may have to invest some capital in hiring very professional and experienced staff.
A good way to decide on the type of restaurant to start is to examine your location and the kind of people you will be targeting. Are they high-income or low-income earners.
Will they be able to afford an ethnic or fine dining restaurant?
Are they family-type or busy people on the move who just want to grab a quick lunch and walk away?
Are they the kind of people who would take their time to have a proper meal?
Are they working people, students, labourers or older people?
Understanding your market will help you determine the type of restaurant you should start. Although capital and proper planning are important, it would be disastrous to start a food business nobody’s interested in.
Step 2: Select a good and proper location
Location is the single most important factor that can make or break your restaurant dream.
Is your site located close to and around the type of people your restaurant concept is targeting?
If you’re interested in a fine dining restaurant, your site should be located in an upscale commercial or residential part of town where the kind of people who will patronize you live or work.
Will your restaurant in a place that is easily accessible?
Does it have sufficient parking space?
Is it large enough to accommodate the volume of customers you are planning for?
Is the location visible or tucked away in a hard to reach part of town?
Again, you must be sure that the area is crime free and the rent you pay for the location will allow you to turn a profit from your food business.
Step 3: Prepare a business plan
You need to confirm if you need any permits or licenses to operate a food business in the location you have chosen. These requirements differ from city to city. In addition to this, your business plan needs to be in place and doesn’t have to be complex or too elaborate.
Even if you don’t intend to source any capital from banks or investors, it is important that you organize your thoughts on paper. This allows you to see the big picture and easily identify all the obstacles and other things you may not have considered.
In your plan, you will have to consider the layout of the restaurant, the seating capacity and arrangement. You need to design a menu and decide on the best places and suppliers for your ingredients/food stuff. It’s also wise to invest in the right equipment (refrigerators, kitchen and tableware).
The number and type of staff you need should also be a key element of your planning.
You must also think about the competition. How many are they? How will your restaurant survive with the competition? Will you have better-tasting food, great customer service, a friendly and clean atmosphere or higher quality food at a bargain price? If you don’t have a plan to set yourself apart from the competition, you may have a big problem.
Need a sample business plan you can work with? Check out this detailed business plan: Fast Food Restaurant Business Plan
Step 4: Execute your plan and open for business
If you have properly thought through your restaurant business, and set up shop where your market can find you, it should only be a matter of time before your business starts to make good money.
However, there are a couple of success tips you should have in mind. We cover these in the section below.
Success tips for winning in the food service business in Africa
The restaurant and food service business can be very competitive. To increase the chances of success, the following tips will surely help entrepreneurs and startups who are considering this business idea.
(a) Never compromise hygiene, food and service quality
No matter the concept or type of restaurant you decide to start, quality and hygiene must remain top on your agenda. Hygiene is great for your customers and keeps you on the good side of government health and sanitation inspectors.
The quality of your food and service is the cheapest way to gain an advantage over your competition. Understanding the tastes of your market is the starting point in delivering quality to your clients. Quality keeps your customers loyal and encourages them to spread the word about your services.
(b) Work on creating a loyal customer base
Because people must eat every day, repeat business is the easiest way for restaurants to succeed. It’s much easier and cheaper to keep your existing customers satisfied and coming back than always trying to get new customers. Think of exciting ways to thrill and excite your customers.
Loyalty programs and discounts for your frequent customers are some great ways to engage customers and keep them coming back! Check out this article for more interesting ways to attract and keep customers: 10 Interesting Ways To Attract and Keep New Customers
(c) Patience, Hardwork and Perseverance
While the whole restaurant business may sound like a walk in the park, it isn’t. This business can be very tough in the early days and a lot of hardwork will be required. If you do not feel up to it, it’s usually best to hire someone who’s qualified and very experienced in running a food service business.
Especially in the early years, the business will need to be nurtured and any profits made should be reinvested to increase its capacity and improve the customer experience.
In the course of our research for this article, we came across a number of interesting resources that will provide you with further detailed information about starting a restaurant.
The Start Your Own Restaurant and more manual (book image below) is a great resource.
Allfoodbusiness.com is also another good website with a free step-by-step guide for anyone who wants to start a restaurant.
If you believe this type of business will work for you, start working on a business plan and take action as soon as possible. You could also choose from many other amazing business ideas in the Business ideas section of this website.
We would love to hear from you about your successes, challenges, advice and questions. Do not forget to leave a comment in the section below and share this opportunity with your friends using the Facebook, Twitter and Google+ buttons below.
To your business success!