A collaborative blog of WSJ analysis related to International Marketing!
Wednesday, December 11, 2013
Burgers Face a Tough Slog in Africa
Johnny Rockets emplyees in Lagos, Nigeria
It's not easy being a hamburger in Africa. Not only do many of the toppings have to imported, Nigerian cattle are "scrawny" and not the ideal bovine for juicy burgers. In addition, because the price of ingredients are so high there, a single patty burger will cost you $14 at Johnny Rockets in Nigeria- as compared to only $5.50 in New Jersey (see pictograph). Johnny Rockets Group Inc opened its first retro diner in Africa this past year. Next year, CKE Restaurants Inc is planning to build Hardee's restaurants throughout Nigera and South Africa. Burger King recently opened the first of over 200 locations it has planned for in South Africa and other African countries. The timing of the burger boom makes sense as Africa's middle class is expanding rapidly. However, the supply chain is strained. Keeping meat patties and topping fresh is a challenge due to a shortage of refrigerated wareshouses and trucks. In addition, the cost of beef is rising because in many places, Africans are consuming beef faster than the cattle ranchers can deliver new cows. Because of these issues, some fast food companies are cautious to enter or expand in Africa. McDonalds, for instance, has 177 locations in South Africa, but has little desire to expand to the rest of the continent. On the other hand, "Africa, it's the last continent," says Geoff Spear, CKE's vice president of international development. "If we don't start today, it'll never happen."