Eat’N’Go Limited is the Nigerian Premiere Quick Service Restaurant company behind some of the biggest names in the quick-service food business in Nigeria including Domino’s Pizza, Cold Stone Creamery and now Pinkberry.
The Eat’N’Go Nigerian story started in 2012 with the opening of its first Domino’s and Cold Stone outlet which has grown into 70 stores with over 2,000 indigenous team members spread across the country. The company recently expanded its network of outlets with the opening of a food-court style megastore in Ikoyi, Lagos. In this interview, CEO Patrick McMichael who has been in the industry for 28 years to discuss how a company full of treats is taking their business to another level.
Conquering the Nigerian market for 6 years is no small feat. How do you guys do it?
Patrick McMichael: You made a comment that doing business in Africa is difficult and Nigeria is another step and if you want to succeed in Nigeria you have to be really good at what you do. I think that’s a really fair and true statement. You have to understand the market you’re in to do business, then you can go about setting your business up to succeed.
I’ve been in Domino’s for 28 years around the world so I know how Domino’s operates all around the world. This would be the most intensive infrastructure to sell a pizza on the planet. If Lagos should stop working, our pizza store will still run and that’s very rare. It’s fully self-sufficient. You learn as you build up from that very first shop. You start, you fall and you pick yourself back up. As you build a second shop, you get a bit smarter and by the seventh shop you know exactly how much generator power you need, how much water filtration and store treatment you need. All these things fall into place, but you have to fall over to do it. If Lagos should stop working, our pizza store will still run and that’s very rare. It’s fully self-sufficient.
We noticed you’ve been gearing up on expansion. How do you decide where to expand to?
Patrick McMichael: When the company first came in in 2012, it was expanding to areas where people know Domino’s or Cold Stone, but as the business keeps growing, more people know about the businesses so you don’t have to concentrate on upper incomes. You can go straight on to all the demographics because the brand name is out there. But if in the first instance, you went into lower demographics, they probably have never heard of those so there’s no point in going there because the brand will fail. Coming into VI and Lekki, there’s a lot of expats who know Domino’s, Cold Stone, or Pinkberry Yogurt, so it makes sense to go to those areas first, build a reputation and then start to take the brand out into the other suburbs.
What was the idea behind adding Pinkberry to the franchise?
Patrick McMichael: The Cold Stone franchise that we’ve got here is the number one in the world. It’s the highest volume ice cream sales. Obviously, Nigerians like cold sweet drinks and so we thought Pinkberry would be a good addition as a desert. It also has a different clientele. Amalia tells me that on a regular basis that the Pinkberry customer is looking for a different style of the treat. They’re leaning more onto the healthy side and less on the indulging side, and are focused on fresher fruit toppings than chocolate so we thought it would be a good business. It’s still a very immature business but it’s getting the traction. As in any business, it takes a little while to build up.
Most of your products are sourced locally, right?
Patrick McMichael: When the business started here one of the core facts of the business was to try and source as much as possible locally. At this particular stage, we have about 65-70 per cent of our products sourced locally, so we are a little bit sheltered from fluctuations in currency from overseas and that’s one of the reasons our brand has succeeded through the good and challenging times. From the very beginning, we were really conscious of the need to buy Nigerian and spend the money in Nigeria, and that’s something that we’re continuously doing. I’m constantly challenging our purchasing team and our product team to look for ways to reproduce and work with trade partners to get a manufacturing plant up and running in Nigeria. The less we import the more successful we would be.
So, you’re here for the long haul?
Patrick McMichael: The company was started by shareholders who have been involved in Nigeria for 20+ years and have no desire to take the business outside. Our goal in Nigeria is to grow this business and employ Nigerians to run this business. We have almost 2000 staff now, our plan is for 8000 staff in five years. We have a very strong policy, that we only promote from within. So once you join the company, you have the opportunity to grow within the company. That’s one of our core strengths and in addition to paying 30 per cent more than we need to, it’s one of the reasons why our team is motivated and happy in the business.
The welcome reception by Domino’s/Cold Stone employees is infectious and can change your mood when you walk in. How do you maintain that energy?
Patrick McMichael: A lot of that is in the selection process; we take the selecting team very seriously. It’s really important for us to select the right team as we grow the company. We then go through a really strong training process to induct the team members into our business. You can hire anybody with a pulse and say look here’s how we scoop ice cream and then off you go, thank you very much. But we actually put them through Cold Stone university and the Domino’s Training Centre where we teach them about the company because that’s also one of our core philosophies of the company: Educate and Pay People Properly. As they learn and get more interested in our business and they see it as a career path for themselves, it’s a happy place to be.
Research around QSRs in the world show innovation drives growth. Do you have plans for a very flexible menu for instance?
Patrick McMichael: Right now, you can create your own pizza. It’s one of the biggest sellers on our menu. 40 per cent of our customers choose their own pizzas. You can choose your own Cold Stone and Pinkberry as well. We will absolutely continue with innovations in flavour, one of which are lined up as we run into Christmas and Valentine. Customers will always have the choice to select, mix and match whatever they like. As a customer, we want you to tell us what you want. That’s the freedom that customers like.
Global outlook for QSRs is a CAGR of 4.16 per cent over the next four years but for Eat ‘n’ Go the rate of growth in Nigeria looks like it may trump that. What is responsible for that?
Patrick McMichael: We have 70 outlets in a population of almost 200 million so we are a drop in the ocean of what Nigeria’s potential is. We’ll continue to expand but right now we’re currently building a megastore, and also a manufacturing facility in Port Harcourt. We are building more stores in Abuja, as well as a second manufacturing facility in Lagos that will service all the outlier stores outside Lagos. There’s a lot of growth opportunities across Nigeria and one of the things necessary for our business is to have the infrastructure in place to allow the growth. We’ve reached a certain scale now where we can afford to put in bigger infrastructure.
Do you build or lease stores?
Patrick McMichael: My preference is to try and lease a building that’s already constructed because that allows us to use our funds more wisely to build more stores, however, there isn’t always the opportunity to do that, so from time to time we have to build from the ground up. That is quite a process as every shop has to be fully self-contained and can’t rely on anything to keep us running.
How do you maintain quality control and uniformity across stores?
Patrick McMichael: We have strict systems across the business so all the supplies that we buy, a team continuously monitors and inspects those supplies. As it comes into our warehouses and manufacturing facilities, we have audits on a regular basis to make sure supply chain quality is always in place. As the product gets manufactured and goes out to our stores, we monitor the transport and product to make sure the cold chain is never broken. The stores receive a full audit which is everything from production through storage, the making, the image of the store, the professionalism of the staff. We have checklists upon checklists and really, that is how a business becomes strong. You always measure what you want to achieve and the end goal for us is happy customers. You don’t get happy customers if you don’t start right back at the beginning of the chain and monitor everything all the way through.
Pricing is a big factor for businesses in Nigeria. How do you balance pricing and quality?
Patrick McMichael: It’s a really big balance because we have to be affordable in any market we operate in. It’s really easy to sacrifice a little quality for profit but people wouldn’t keep coming back because they don’t believe in what you’re doing, so we’re always working with suppliers on improving our product. One of our key values is to be the best quality producers at the lowest cost and that’s something that we share with our suppliers. We’re always challenging them to give us better prices and the real win for us is that the bigger we get, the more scale we have, and the better we’re able to negotiate because we’re buying more from suppliers which allows us to then provide better pricing to our customers.
Do you think Africa is a market that more franchisers should look to expand into?
Patrick McMichael: We are a franchise business, a franchisee. We own all or stores in Nigeria and that’s something we’ll continue. We’re not going to franchise because the business is strong enough for us to own. A lot of market franchise because the person who bought the business from the main franchisor doesn’t know how to run, they just know how to sell businesses.
Other franchise systems should look at Africa/Nigeria specifically, but everyone is scared to do it because it’s hard, it’s not easy. You’ve got to be flexible, tough, understanding, sensitive to the culture, and understand the country. There are a lot of franchise systems who just want to come in and say, ‘well it worked in America, it should work in Nigeria’, it doesn’t work like that. You have to take into account the cultural sensitivities of any market and the cultural tastes and challenges and you’ve got to make it work for the customer first. And that’s the challenge: first of all, think like the customer and work yourself backwards. A lot of businesses think of the business first and that’s where they fall apart and they don’t end up lasting very long.
Would we be seeing more of the Domino’s/Cold Stone/Pinkberry combinations at other locations?
Patrick McMichael: We would choose locations. Pinkberry is a new brand but it’s growing very quickly. We have five stores now, by the end of the year, we’ll have eight and next year, we’re gonna double down and grow a bit more. Pinkberry is in that stage where we’re choosing which demographics to put it in. As it becomes more widely known we can start to fan out across all demographics but in the first instance, you build your reputation in the demographics who are going to be your customers at that point and then everybody starts to become a customer as reputation grows.
What should we expect in the future for Eat’N’Go?
Patrick McMichael: We’re developing systems where we talk to our customers in specials that they’re interested in and not waste their time. So if you’re a vegetarian, you’re not interested in us bringing out a Meat Lovers pizza to you so we’re working on those systems now. Amalia and her team will have the ability to know you as a customer from database, purchase frequency, average spend and they’ll be able to offer you new products that fit within your profile so that you feel closer to us as a brand and we know you and talk to you about things you like as well. So these systems are being developed now and you’ll see those in 2019.