Every wise man begins a project by taking into account what it will count him from start to finish. This helps him to decide whether to continue, pause or discard the project entirely. This same technique, smart people emulate before investing in the food business in Nigeria.
Nigeria is home to small and medium-scale enterprises. Every day, different entrepreneurs emerge with profitable ideas to start a business in Nigeria. Many of these individuals look into the opportunities in the country to launch their business startups.
One of the common ideas that interest the locals and other nationals in the country is to start a business in the food service industry. Consequently, the food business in Nigeria is highly competitive with various brands.
Overview of Food Business in Nigeria
The Nigerian market is crowded with many vendors in the food business industry. Yet the industry has room to increase. According to Statista, the food business in Nigeria is expected to grow annually by 8.50%.
With the digitization of food packaging and delivery, the numbers are increasing as more food business ideas proliferate the Nigerian market.
From convenience food to fish and seafood. From confectionery to snacks. The food business in Nigeria is categorized into different segments where confectionery and snacks have the largest market in the country with a market volume of US$47.85bn in 2023.
What is the Sustainability of the Food Business in Nigeria?
Food business in Nigeria is profitable yet the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) reported that 80% of food-producing enterprises in Nigeria do not have the management strategies necessary to survive beyond 5 years. This report was revealed in a research report by Victor Ukorebi, Walden University.
According to business experts, there is a need for adequate preparation before business owners embark on small business enterprises. This may not be the reality for some food vendors in the country who literary start the business to make money without any notable preparation to cum the possible challenges in the food service industry.
The sustainability of any business should also be visible to remain successful over time. This starts with identifying the challenges of the business. Challenges in the food business in Nigeria is what this post is about.
What is a Food Business?
A food business is a type of business, franchise, or enterprise that involves the handling of food from preparing, cooking, preserving, packaging, and delivery to end consumers.
Examples of Food Businesses in Nigeria include:
- Cook on demand
- Takeaway store
- Mobile food vehicle
- Food Canteen
- Catering Service
- Kiosk/Mama put
- B & B
- Hotels and motels that provide food to their guests.
- Food sold from a vending machine, etc.
What Are the Challenges of Starting a Food Business?
The food business has seen a major setback during the breakout of the Coronavirus. But the pandemic is behind us now, yet the food business industry still faces a pyramid of issues.
“We continue to face significant challenges as a business and remain in constant crisis management mode to ensure that we are not being adversely affected by the current inflationary environment” – Food Manufacturing Business.
1. Food Safety Culture
The assurance that the food will not harm when taken is the onus of food safety. The World Health Organization reports, reveal that contaminated food is the most widespread health problem facing the contemporary world.
A this day live reports more than 200,000 persons die of food poisoning in Nigeria annually. Hence, food safety is very critical and attention must be given to the handling of food in the various food service corridors in the country.
Food safety is one of the biggest challenges facing the food business in Nigeria. Multiple agencies are involved in the food safety control system in the country. They monitor and oversees the compliance of food safety standard in the country.
But the majority of food vendors in Nigeria are not licensed and this poses a challenge to the safety of consumers who eat from several outlets in different areas of the country.
It is the responsibility of the agencies to control and ensure safety in the confines of the food business in the country. In the bid to observe adequate compliance, food safety acts are shared between the three tiers of government: federal, state, and local government.
The local government for instance is saddled with the role to manage applications, renewals, suspensions, and cancellations of food business licenses.
It is highly recommended that before starting a food business, food safety must be ensured to save the lives of consumers.
2. Food Wastage
As profitable as any business can be when the is not curtailed, the business might end in the shadows. This is the same facing food service operators in the country.
For instance, in the U. S., the total amount of food waste is estimated to be 103 million tons annually according to official reports.
The issues of leftover, delicate ingredients in stock are some of what restaurant and fast food owners go through to stay in business.
Food trends with low shelf life also contribute to food wastage. Other factors responsible for food wastage are overproduction, processing issues, bad weather, and unstable and poor market.
3. The Rise in Food Prices
Inflation is one major challenge every business has to deal with as they operate in the country.
For food operators in the country, the lament is consistent with the upsurge in the prices of food ingredients and commodities. Restaurant owners, bukas, and other food operators are forced to increase the prices of their menus to meet up the actual cost of preparation and their profit.
Meanwhile, food vendors cost their wares according to the market piece which necessarily does not affect their profit but results in low turnout unlike when food prices are affordable.
4. Rising Supply Chain Cost
Managing the food supply chain is yet another hurdle to face for a food business owner. As demand increases, which is expected under normal circumstances, so is the food supply chain cost.
Managing food supply costs include food safety, cost of supplying food, energy and fuel, workforce, and cost of new technology. What about other operating expenses?
The cost of all these expenses to get a suitable business structure as occasion calls for are factors to consider as challenges of the food business in Nigeria.
5. Environmental Outbreaks
Disease outbreaks and environmental impediments can cause temporal or long time close down as experienced in the last pandemic.
Outbreaks usually come unannounced, causing waste of goods brought in stock. Except for food outlets with online platforms, which will be an advantage.
Every business has its challenges. It is left for interested individuals to find suitable ways of overcoming the challenges and use them to go higher.
The above challenges and other possible ones should not stop but help you prepare well to launch your own food business in Nigeria.