Example One

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

  • 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 

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 LicenseThis 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

Average sales – 5 sacks daily

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.
                                                         Chips.jpeg
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.



                                                               Chips.jpeg
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
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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