Ayo Alonge
The quest to stand out among Nigeria’s numerous food vendors may have prompted the Chief Executive Officer of Rubels & Angels Foodcourt, Odira Okwuagwu, to start up a buffet restaurant in Lagos. Expressing that it is the first of its kind in restaurant business in Nigeria, Okwuagwu hinges her business strategy on “affordability with class”, in what she confesses has been largely beneficial to the company.
Speaking with Daily Sun, Okwuagwu said the challenges confronting her startup range from multiple taxation to recent border closure by the Federal Government. She however, charges government on the way forward for Small and Medium-scale Enterprises (SMEs) of her ilk.
Background
We opened a new restaurant in Surulere which is different from every other one you know. I am sure you know a lot of restaurants like Sweet Sensation, Tastee, The place and so on. They are all into the same thing. So, what we did was to think of how we can do something different. We then decided to bring out a portion of a five-star hotel which is the buffet and we made it so cheap. It is just N2,500 and you get to keep on eating and eating. There is no stopping. When you are full, then you can go. It is open Monday through Sunday. We didn’t think of joining the regular kind of restaurants because it is a saturated market. The Place is the market leader now in the industry. For us, we are not interested in challenging any market leader. There was a time it was Mr Biggs which had the monopoly of market leadership. We don’t want to challenge any leader. We are the first to make buffet affordable in a restaurant and we give people the opportunity to choose whatever they want to eat. It is a self-serviced restaurant and it is a niche we are trying to create. Elsewhere, they portion the food for you but we are not into that. People like to start new things in Nigeria but for food, we hardly do. So, we want to start a new thing of such nature. There are over 20 different meals for breakfast and over 25 meals for lunch. You can mix and you can match. Breakfast is actually cheaper and it is just N1,000. If you have to go to a five-star hotel, you know it is not that cheap. You pay more than that. All we are doing is to match affordability with class and be sure the environment is good for pictures, as if you are in a five-star hotel.
Patronage
When we came out, we came out in full force. It’s been good but because of the little downfall in the economy, it has been quite challenging somehow. It has been good because nobody is competing with us. We are in our own world. I think I can confidently say that we have been accepted by Surulere.
Challenges
In Surulere here, the major challenge we face is parking. Ogunlana Drive is one of those areas you consider as a high brow. So, no customer wants to come and eat for N2,500 and pay a fine of N15,000 because he/she didn’t park well. There is also the challenge of multiple taxation. The tax we pay as a company is almost up to what we sell. There is consumption tax, there is VAT, there is LAASRA fee, there is LAWMA fee, there is so much to pay. There was a month we actually paid almost N2million. Survival of an SME in Lagos is almost difficult. Most of the taxes are basically every month. Another challenge now is the closure of borders which is a big issue for most restaurants because we buy frozen foods, rice, vegetable oil and the rest. They are now so expensive and our margin has been cut off drastically. I learnt a bag of rice is now over N20,000 and we used to buy it for less than N12,000. Those are the limitations.
Maximising profit
This is a startup. I have been doing business for some time before growing to this level. We already know that such startups take about three to four years to break even. The cost are overtaking the revenue due to border closure. You are not in control of the border and cutting down taxes. We have not been totally accepted because we are new but we have so many products and services to offer. We have a product called lovers’ night. We have made it so cheap for couples to come for a buffet for N2,000 each and get a wine, all on a couple’s dinning and a live band. It is between 6:30 between to 11pm on the last Friday of every month. But I must confess that the rain hasn’t been helping matters. Nobody likes to go out when it is raining so we are doing a lot to increase sales.
Business model
This is a UK-styled restaurant because I have lived in the UK for some time. I got the inspiration from Nandos, Kungfu and another Chinese restaurant entirely. If you like at the framework of these restaurants, it is these three restaurants that we have merged into one here. Over there, they don’t have the issue of multiple taxation. Let me also assure you that we run on diesel almost every day because in this rea, we hardly have light. So, diesel costs us N420,000 every two weeks. That means that in a month, we pay N840,000 on diesel. If you pay that tax in the UK or America where I have also lived, you don’t take care of your infrastructure. The only tax you pay takes care of your infrastructure but here, you pay tax and still take care of your infrastructure.
Government intervention
The issue of the tax system on startups is what the government needs to address. We can streamline taxes to maybe one or two. We pay a lot. The local government takes, state government takes and the federal government takes too, all from a startup. That’s a whole lot. As for the issue of parking, that is a challenge in the UK too but people invest in parking lots. The local government can invest in that and make people pay about N100 for an hour. The way Surulere is constructed, you can only have two to three cars parking in front of you. It is not like that on the Island though. So, the government has to invest in general parking lots.
Business expansion
We just want to be present in few places. We don’t want to be everywhere but just in four to five places around the world. One more on the Mainland, one on the Island and about two in countries like the UK and US. We want to be about five, maximum. We want to be able to deliver value and we don’t intend to do franchising because we don’t want to lose control.
Long term goals
We want to be seen as the leader in restaurant business. I believe a lot will still come into the business. Good things attract new entrants but we want to take the lead just like what First Bank is in the banking sector. Our niche is to have a luxurious dinning on a very cheap budget.
Prospect and profitability
It is a good business but you have to be focused. I was doing this on a personal basis before it became a company. With the advent of social media, you don’t even need to have an office to start. When you can drive traffic online, people will start to order. If you are a new entrant, because there is always capital limitation, you require at least N20 million to start on a corporate level but you can start small with just N500,000. You will soon find out that you earn more than a banker. There are usually events every day that require people to eat.
There is a lot in the business to go around. Even if we all have our offices on the same street, we can still make the profit. A budding entrepreneur doesn’t need to do something big like this. The equipment are now expensive because you buy a lot of things. You must also bear in mind that you pay heavy for overheads like power. Here, they only give us light when we have closed for the day and take it when we are about to open. So, you run virtually on diesel.