Full-Service Restaurants in Nigeria

PROSPECTS

A growing economy to drive good performance

After seeing weak growth since 2016, Nigeria’s economy is expected to improve over the forecast period with attendant increase in disposable income and the middle-/upper-income population helping to spur growth for full-service restaurants. Patronage of full-service restaurants is historically weak in Nigeria and restricted to the middle- and upper-income groups partly due to relatively higher prices compared to other categories.

Full-service restaurants with scope to grow as eating-out culture develops

Nigeria’s large and fast-growing young population would help to drive an increase in demand for full-service restaurants over the forecast period, particularly as members of this population are more amenable to eating out than the older generation. Traditionally, families that could afford to eat out were able to afford domestic staff that helped with cooking and so did not see the need to eat out.

Asian full-service restaurants expected to drive growth

While other full-service restaurants - which consist of restaurants serving indigenous Nigerian meals - is the largest subcategory (in value sales) within full-service restaurants, it is expected to grow slowest as most Nigerians increasingly prefer limited-service options for indigenous foods. Instead full-service restaurants offer an opportunity to fully try out diverse cuisines from different countries.

COMPETITIVE LANDSCAPE

Full-service restaurants is fragmented category

Full-service restaurants is very fragmented in Nigeria as operators operate only a small number of outlets each (often only one) due to the high cost of establishing and running chains while overall low patronage of full-service restaurants in Nigeria also limits sales and profit potential.

Potential for chained development and greater competition

As the Nigerian economy expands over the forecast period and patronage increases, it is likely that some international brands will expand their presence to develop chains and increase competition. For example, North American full-service restaurant brands such as Johnny Rockets and Spur are present in Nigeria, although with only two and four outlets, respectively, in 2018 (up from one outlet each in 2017), and are likely to continue to expand as the growing middle-/upper-income population helps to drive improved sales performance.

Hotels are key locations for full-service restaurants

Leading full-service restaurant brands in Nigeria belong to prominent hotel chains such as Sheraton Hotels and Resorts. They primarily serve the affluent consumer segments, including expatriates, as these restaurants are expensive.

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