Tantalizer Plc has continued to record recurring losses since 2012, an unimpressive result that highlights the woes of Quick Service Restaurant (QSR) in Africa’s largest economy.
Analysts say these recurring loses makes it practically difficult for the company to give back to the owners of the business in form of dividend payments.
For the first nine months through September 2015, Tantalizer, one of the foremost fast food operators in Nigeria posted a loss after tax N462.40 million, narrower than the N784.30 million recorded last year.
Revenues were down by 48 percent to N1.50 billion in the period under review.
Tantalizer’s declining profitability accentuate the woes of fast foods firms as inability to meet customers’ taste, multiple taxation from government agencies and difficulty in finding adequate food processing machine and equipment stunts growth potentials.
Industry analyst and some fast food operators also identified bottle necks such as high cost of power generation, dwindling disposable income among targeted customers and insecurity in the country as crimping the growth of these firms.
To further exacerbate the already anemic position of fast food firms is the slow economy in Africa’s largest oil producer caused by more than 60 percent drop in the price of oil to $40 and rising inflation.
Companies are slashing salaries of staff while others have embarked on massive downsize to cut costs in order to stave off the effects of economic doldrums.
This means more Nigerians are left with less money in their pockets to patronize fast food restaurants.
Economic growth rate slowed to 2.4 percent Q2 of 2015, with a marginal increase to 2.84 percent in Q3 of 2015 compared to nearly 4.0 percent in the first quarter of 2015, and 6.2 percent in the fourth quarter of 2014, according the NBS data.
Unemployment rate already is at 9.9 percent, while inflation rate appeared moved up to 9.4 percent, in the most recent quarter.
However, there are positive prognoses for Tantalizer and its peers as analysts say a rebound in the country’s economy on the back of massive injection of liquidity through infrastructure investments will boost consumer spending.
A pick up economic activities will enable these firms tap into Nigeria’s young population that crave for consumption.
As of 2014 there were over 800 QSR outlets in Nigeria, the vast majority of them branded by about 100 small and medium-sized local companies, according to the Association of Fast Food and Confectioners of Nigeria (AFFCON).
They generated about N200bn ($1.22bn) in revenue and employed more than 500,000 workers, according to AFFCON’s president, Bose Ayeni.
The 800 QSR for a population of 170 million people means the country is under-served and may needs as much as 20,000 QSR for its huge population.
Further analysis of Tantalizer financial statement shows gross profit fell by 51.11 percent to N619.88 million in 2015 from N1.26 billion earlier.
The company has negative working capital in its balance sheet as current liability of N2.17 billion swallows current assets of N335.11 million.
