In 2024, Food Concepts Plc, the operators of Chicken Republic, PieXpress, and The Chop Box, posted a net income of N3.3 billion. This represents a 780 per cent year-on-year growth from the N370 million net income recorded in FY 2023.
It also marks the group’s highest after-tax profit since 2021, when it recorded a net income of N3.89 billion.
Over the past decade, the group’s revenue has grown from N3.6 billion in 2014 to N95.3 billion in 2024, representing a compound annual growth rate (CAGR) of 38.6 percent in the same period. The group’s growth rate has significantly outpaced Nigeria’s inflation. In the Nigerian quick service restaurant scene, this is an impressive feat. And it was driven by operational discipline, supply chain ingenuity, and pricing resilience.
In its 2024 Annual Report, Kofi Abunu, the CEO of Food Concepts, identified some of the strategies that produced the significant profit surge for 2024. He noted quite simply, margin protection and cost management. Here is quite a simple breakdown.
Energy cost optimisation
The first he identified was energy cost optimisation. In the face of diesel price hikes, the company turned to a multi-pronged energy strategy. First, they switched to dual-fuel generators that are capable of operating on both gas and diesel. They also switched to gas-powered convection ovens.
As part of its strategic energy transition, the group forged a partnership with Ardova Plc for the supply of diesel and LPG. The total diesel expenditure rose to N8.2 billion from N5.6 billion in 2023 due to broader market inflation. However, when assessed on a per-litre basis, the group’s diesel consumption declined, reflecting improved efficiency and cost optimization efforts.
The switch to gas‑operated multi‑purpose convection ovens also reduced energy consumption. Compared to regular ovens, convections contain built-in fans that circulate hot air around the food, allowing it to cook with faster times at slightly lower temperatures than traditional ovens.
Adapting to market realities with flexible pricing
One significant factor that the CEO identified was pricing and market adaptation. The company adapted to consumer realities by implementing flexible pricing strategies and launching value-based bundle offerings.
In the QSR scene, Chicken Republic has stayed on top of bonus offerings to customers such as “Buy One, Get One Free” which was launched in mid 2023. According to Abunu, Food Concepts had to “introduce targeted value offerings and bundle promotions to maintain affordability”. This move has helped them sustain transaction volumes despite a broad-based decline in consumer disposable income across the QSR sector.
Supply chain optimisation
According to Abunu, the company opted to import critical raw materials like ice cream mix, achieving a 20 percent cost saving versus local sourcing. As part of their supply chain optimisation, they established strategic alliances with leading poultry suppliers to secure a reliable chicken supply and dampen price volatility.
They also simultaneously negotiated long-term agreements with vegetable suppliers to shield against seasonal cost fluctuations. In their 2024 financial statement, the group’s pre-payments rose to N4.4 billion in 2024, as against N1.1 billion in 2023.
The agreement with vegetable suppliers has come in the form of direct partnerships with rural farmers in Nasarawa, Benue, and Plateau states. According to Food Concepts, the partnership has led to immediate gains in farmer incomes while ensuring a steady vegetable supply during traditionally lean periods between May and July.
They also note that they’ve been able to reduce post-harvest losses by nearly 50 percent for these farmers.
Kofi Abunu also noted that their procurement teams also built dual-sourcing models to enhance vendor competitiveness and reduce risk concentration.
Financial performance and strategy
Beyond its operational transformation, Food Concepts Plc financial optimization strategy stands out as a key pillar of its success story. Between 2020 and 2024, the group’s profit before tax rose from N1.63 billion to N5.90 billion, delivering a robust CAGR of 29.3 percent, a testament to strong financial stewardship.
At the heart of this performance is the company’s disciplined approach to capital allocation. Rather than leaning heavily on external debt, Food Concepts has relied on internally generated cash flows to sustain growth. As of 2024, the company maintained a debt ratio of 0.48, reflecting moderate leverage, while its current ratio of 1.13 signals a healthy short-term liquidity position. A cash ratio of 0.14 further underscores prudent cash management and a carefully calibrated liquidity buffer.
In 2024, the group did not take on any new borrowings. Instead, it repaid N835 million in principal and interest. Between 2020 and 2024, Food Concepts drew N7.97 billion in new loans and repaid N4.47 billion within the same period. Notably, the company invested N30.6 billion in capital expenditure over the five years. This reinforces the group’s ability to self-finance its working capital needs without overreliance on external credit.
The expansion from just 32 Chicken Republic outlets in 2015 to 196 stores by the end of 2024 has demanded significant capital investment. (BusinessDay)
