Kentucky Fried Chicken (KFC), one of the global leaders in the fast food service industry, opened its first outlet at the City mall in Onikan, Lagos on Monday, December 14.
The Lagos State Commissioner for Commerce and Industry, Adeniyi Oyemade, performed the formal opening ceremony on behalf of the Lagos State Governor, Babatunde Fashola.
The brand was brought to Nigeria, via Devyan International Nig Ltd (formed from a joint venture between RJ Corp of India and Chellarams Plc) and an agreement with Yum Restaurants International (YRI), who are the franchise owners of the KFC brand.
Marc Schreuder, the chief executive officer of Devyan International said the tripartite partnership, was born out of the recognition of Nigerians' crave for excellent and quick service along with quality foods without leaving the country shores. Bruce Layzell, the business development manager of Yum Brands added that the quality of service from KFC outlets in other parts of the world is what they will offer in Nigeria.
The new fast-food spot would open seven days of the week from 9 a.m. to 9 p.m..
Harland Sanders founded Kentucky Fried Chicken in 1952 at Louisville, Kentucky, United States. KFC has been operating under Yum Brands since 1997, when the company spun off from Pepsi-co as Trico Global restaurant Inc.
i'm pretty sure were still going to use our own chickens
ReplyDeleteAs always, our regulators are asleep at the wheels, while things are passing us by. They think this is a great deal for Nigerians. Nonsense! We have our own home grown fast food restaurants and we should do everything to protect them. Instead, we are leaving the doors wide open for the Indians and everyone else to come in and compete and kill our own home grown industry. We don't need more fast food places. We can provide them ourselves. Soon they will be rolling out more outlets all across the country. Can our Fast food companies compete against deep pockets like Yum Restaurants and Devyan International (aka RJ Corp)? The answer is No. What our country needs is technology transfer in areas that we are lacking. This should be the basis for any foreign direct investment. If we can do it, we don’t need them. I equate this deal to opening up our banking industry to foreign takeover.
ReplyDeleteAlso, this deal should never have taking place if our regulators knew what they were doing. Devyan International Nig Ltd is an Indian Company known as RJ Corp of India and owned by Jaipuria Group (http://www.jaipuria-group.com). They operate a joint venture partnership in India with Yum Restaurants of the United States. Yum Restaurants owns Kentucky Fried Chicken, Pizza Hut, Taco Bell, and long John Silver. RJ Corp in partnership with Yum operates about 70 or so Kentucky Fried Chicken and Pizza Hut restaurants in India. Because their market is reaching near saturation, they link up with their brothers in Nigeria (Challerams Plc) to bring Kentucky Fried Chicken here.
If this venture had to be approved, it should have been between a wholly owned Nigerian company and Yum Restaurants of the United States, not Challerams plc, which may be in Nigeria, but is Indian owned, or Devyan International Nig, which was set up to circumvent our system. So you have one Indian company trading with another Indian firm, while Nigerians are the consumers. What problem do I have with this deal? There is no wealth creation for Nigerians. Challerams and Devyan International are Indian companies circumventing our laws to exploit our markets. At the end of the day, they take the money back to India. If I went to India and said that I wanted to set up a joint venture with a foreign company, they will pass me over for an Indian firm. All we get from this deal are low paying waiter/waitress and cashier jobs. That is not what we need, especially if we can do it ourselves.
Thank you o jare, i am probably the most anti-protectionist you would find but there are some things worth protecting in Nigeria like our 'light' industries like the textile industry, agriculture and fast food industry.
ReplyDeleteMehn, to everybody that has commented, I'm sorry but, Tastee, Mr. Biggs and what have you, have absolutely nothing on KFC.
ReplyDeleteThe only reason why I admire out homegrown fast food restaurants is because they offer indiginous Nigerian dishes too. Let's see if this KFC emulates.
I think this is good, because the pressure is on for Nigerian fast food companies to step up their game....
Totally agree with Pusoro.Are the others saying because they are non Nigerians they should not be allowed to operate establishments in Nigeria.If so how would you feel if all our Nigerian establishments and food outlets abroad are to be shut down because they are non-indegines of that country.Its all about the quality of what you provide, and only time will tell if KFC can live up to the hype and stick it out with the comptition or fizzle away.
ReplyDeleteStop whipping up nationalistic setiments and focus on what the watchword should be for this industry type -quality and excellent customer service.As a Nigerian i hate it when issues are reduced to tribalistic or nationalistic context when there is really no basis for that.Focus on what is the issue and address the case as it presents itself.
For your information, the retail sector in India is largely closed to foreign investment. In January 2006, the Indian government began
ReplyDeleteallowing Foreign Direct Investment in single-brand retail stores, subject to a foreign equity cap of 51 percent and government
approval and 100 percent in cash and carry (wholesale). Foreign Direct Investment in multi-brand retail outlets is not permitted.
While we are rolling out the red carpet for them here, their market is closed to us.
It is good that atleast KFC has opened in Lagos. It is not about American rather it is about growing your country to a level where international people would like to visit. If you see any country which has grown bigger they want other countries people to visit there's. Tourist attractions should be more to bring country to be known(first step). Then you have to think globally and not locally.
ReplyDeleteI don't have issues with American businesses operating in Nigeria or KFC per se. In America, foreign companies can set up shop or retail outlets in as many locations as they wish and retain all revenues and profits. All they ask is that you employ some Americans and pay taxes, etc.
ReplyDeleteWhere I have issue is with India. They don’t play by the same rules. Though they’ve relaxed some rules recently of foreign ownership of their retail industry, I still feel it falls far short.
In the past (2006), foreign ownership of single-brand retail outlet in India was subject to 51% percent cap. So essentially, if you were a Nigerian company trying to open a Tantalizer in India, you needed an Indian partner to operate. You keep 51%, and they keep 49%. If you are not making enough in one location and wanted to expand to other cities to take advantage of economies of scale, sorry you are out of luck. Foreign ownership of multi-brand retail location was not allowed. In situations like this, what happens is that the foreign firm, end up selling their ownership stake (51%) back to their Indian partners and leave? I think it happened to the owners of Shoprite of South Africa. However, India does allow you to operate and own a wholesale firm 100%.
After years of pressure from foreign governments for India to open up its retail industry, I think they are beginning to crack. Some changes were made recently, however; it still falls far short of what I consider adequate. Here is what they did:
They passed new laws allowing foreign ownership of multi-brand retail outlets at 51% cap and 100% ownership of single-brand retail. They essentially re-shuffled the deck of cards. Not much changed. To explain this in simpler terms, if you, a Nigerian businessman decided to open one retail location of Mr. Big’s Restaurant in India, you will be allowed to keep 100% of your earnings. Wonderful! This should have happened a long time. However, if you decided to open multiple locations, this is where it gets tricky. You can only have 51% ownership of a multi-brand outlet. In addition, there are certain restrictions. You have to invest at a minimum, $100 million over five years and must commit to purchase at least 30% of your stock from local Indian firms. Moreover, you can only locate your stores in 53 Indian cities with a population of over 1 million people each. So unless you are a big player and have lots of cash, the market still remains closed. Who are they kidding?
What I would like to see India do is for the government to provide unfettered access to foreign firms wishing to open retail outlets. Enough of the cash requirements and city and town limits, etc. Just do what other countries do and drop all the restrictions. Play by the same rules and quit the cat and mouse game.
It's being nearly one year since we started this thread. KFC is doing well in Nigeria. They had one store a year ago. I hear they may have nearly 20 stores now. Not a bad investment! I just wish India would create the same environment for foreign firms. Do unto others as you would want others to do onto you!!
ReplyDeleteJust when I thought India was going to open up it's retail market to foreign direct investment (FDI), they've reversed course and slammed the doors shut. Recently coming under pressure from trade groups, the Indian government has reversed course and will not allow FDI in their retail industry. The reason they gave was that allowing the likes of Walmart and Tesco to set up shop will kill their local small scale retail industry. So what do this people know that we Nigerians don't? They close their own market to foreign direct investment but they come to Nigeria to do the same thing they've denied others in their country. I found some video clips and articles about this subject on the internet to emphasize my point.
ReplyDeletehttp://bbc.in/s6YbYE
http://bbc.in/tJ9svA
http://bbc.in/u8n9fc
How ironic! I even heard that Challerams plc is in talks with Woolworth, a South African Retail chain to open up three or more mega stores in Nigeria - http://bit.ly/sSsk5v. What about our textile industry? Who is at the wheels here?
KFC is so delicious!
ReplyDeleteLove your blog^^ I really enjoyed that. Thanks for your article, quite useful piece of writing.
ReplyDeleteIt has been almost two years since my last update.
ReplyDeleteRegrettably, I am here to report that not much has changed with regards to India and their lack of willingness to open up their retail market to foreign direct investment (FDI).
I reported in December 2011 that India tried to open up its retail market to Foreign Direct Investment (FDI) with strict restrictions, which even the biggest retailers in the world like Walmart and Tesco found unfavorable.
If you remember, I mentioned that the government of India set out restrictions to protect its local market. The requirements were as follows:
a) To open a multi-brand retail outlet, you must have an Indian partner who will share ownership with you with a 51% to 49% stake in favor of the foreign investor.
b) The foreign retailer must invest at a minimum, $100 million over five years.
c) The foreign retailer must commit to purchase at least 30% of their stock from local Indian firms.
d) The foreign retailer can only locate their stores in 53 Indian cities with a population of over 1 million people each.
With this type of restrictive policy, no foreign retailer entered the Indian retail market.
So this past August 2013, the Indian government relaxed the rules a little bit. What did they do?
1) The new rules still require that foreign retailers purchase at least 30% of their stock from local Indian firms. However, foreign firms will be given five years in which to reach that target, giving them the option of importing goods from overseas initially. Who are they kidding?
2) Foreign retailers will now be allowed to set up shop in cities with a population of less than one million, which they had been barred from earlier.
Those meager changes weren’t enough to dissuade Walmart to part ways with its Indian franchise partner, The Bharti Group, which operates 200 superstores in India in October 2013.
Please see story here (http://www.bbc.co.uk/news/business-24455582 or http://www.businessweek.com/articles/2013-10-10/india-reforms-suffer-with-wal-marts-retreat).
With these meager changes, we are basically back where we started. The Indian government is paying lip service to the idea of foreign direct investment. They are basically playing a cat-and-mouse game. They believe they are smarter than everyone else. They continue to protect their own market, while they go into foreign markets unchallenged.
PART 2
ReplyDeleteIn Nigeria, Indian businesses are doing very well. They are opening up multi-brand retail outlets all over Nigeria and no one is stopping them.
Since 2011, the Artee Group of Nigeria, which is an Indian firm, has opened a “Spars Supermarket” in two locations in Nigeria (Victoria Island & Lekki), plus their existing locations of Park 'n' Shop electronic stores in Lagos, Abuja and Port Harcourt with more stores on the way. There are more companies like the Artee group operating in Nigeria. I should mention that there are no restrictions on where they have to source their inventories from or how much to invest in any given year.
My question to the folks at the Ministry of Trade and Investment in Abuja is as follows:
I understand that trade and Foreign Direct Investment (FDI) is good for our economy, but what are we really getting out of these investments? Okay, they pay taxes to the state and Federal Government; they employ our people in retailing and pay them meager salaries you normally find in retailing. But are we going as far as they are doing in such places as India in requiring them to source a percentage of their inventory from local sources or are will simply allowing them bring in their own goods to sell, which eventually will drive our small scale retailers out of business? Are we requiring them to partner with our people to own some of these businesses? I believe some of this wealth needs to be in the hands of our people. If we just allow them to come and sell their wares and cart away all the profits, the Naira will continue to struggle against foreign currencies. We simply don’t sell enough overseas.
As I stated earlier, I am not against Foreign Direct Investment (FDI). I believe that our government should continue to encourage them. However, I feel that we need to take a closer look at who is coming, what they plan to do, and structure these agreements so that our people are not at a complete loss, especially with countries like India that does not have a favorable investment climate to foreigners.
PART 3
ReplyDeleteI also don’t think we should be allowing foreign international traders to come to our country to set up shop and start importing goods to sell. That is not Foreign Direct Investment. That is just peddling goods on our streets and driving out our small scale traders out of business. And you wonder why there is high unemployment and crime.
I was reading a Nigerian blog today and saw yet another Indian firm peddling women’s pads. They were using one of our actresses (Stephanie Linus-Okereke) as a spokesperson for their product. While this may look nice on the surface and obviously a big deal for the actress, it is nothing more than a bunch of traders from India who are in Nigeria to peddle a product that is manufactured outside of Nigeria. See the story and pictures here (http://www.bellanaija.com/2013/10/11/bn-exclusive-nollywood-star-stephanie-linus-is-the-brand-ambassador-for-diva-pads-press-conference-photos-photoshoot-video/ or http://www.stelladimokokorkus.com/2013/10/stephanie-linus-unveiled-as-face-of.html). I won’t have an issue with this if it was manufactured in Nigeria. There are companies that manufacture pads in Nigeria (e.g. PZ Cussons, Niger Sanitary industry, etc). These companies have invested in our own people and set up manufacturing operations.
Allowing the likes of Diva Pads to operate unhindered will only spell doom for the employees and company that actually create wealth for our people. It will make it harder for them to sell their products and ultimately lead to lay-offs or worse, close shop.
These types of businesses (Diva Pads) should not be allowed to operate in our country unless they are willing to invest in a manufacturing plant and make the product in Nigeria. They do not create wealth for us but only enrich the Indian trader and transfer the profits back to their home country. They see Nigeria as an easy place to come and make money. The preserve of trading should be reserved only for Nigerians. You cannot have a foreigner be the manufacturer, wholesaler, and retailer all at the same time. I hope you get my drift.