Visual: The Nando's Quarter Chicken Index
Benchmarking the cost of fast food in various countries as Zimbabwe introduces a fast-food tax.
Zimbabwe just introduced a fast-food tax of 0.5% of sales value. Using a Nando’s Quarter Chicken Index, we can compare the cost of fast food in Zimbabwe to that of other countries.
In theory, you could use any fast-food chain for this, but Nando’s seems to have a more standardised menu across countries, which allows for better comparison.
Based on the index, Zimbabwe is among Africa's top two most expensive countries, where Nando’s is sold only behind Mauritius.
Mauritius is expected to be more expensive than most places in Africa, partly due to the higher logistics cost to bring supplies to the island, which is 2,000 kilometres from the coast of Africa. Mauritius also has higher labour costs, with a minimum wage of $355 per month compared to $150 in Zimbabwe.
Perhaps the best country to compare with Zimbabwe is Zambia, which has a similar GDP per capita ($1,380 compared to $1,350) and income profile. With this comparison, there still is a substantial difference in prices.
This seems to suggest that Zimbabwe's pricing allows healthier margins in fast food. This may also explain why, in 2023, Simbisa Brands, which operates 601 Quick Service Restaurants across Africa, closed eight outlets in Zambia while opening eighteen more outlets (net) in Zimbabwe.
So, there is money in fast food in Zimbabwe, and where there is money, the taxman is sure to follow.
Where’s the Money, What’s the Move?
Fast food still seems like a good business, at least in Zimbabwe. There is also a significant bias towards chicken-based outlets. Here is another data point from an earlier visual, looking at South Africa and Zimbabwe's most popular fast-food brands. In both cases, Chicken “rules the roost”.
Another interesting fact about fast food in Zimbabwe is that it still commands a large percentage of sales in USD compared to local currency. For whatever reason, people are willing to spend USD on fast food but not on groceries.
The biggest grocery retailers in Zimbabwe, OK and TM Pick n Pay, make 20%—30% of sales in USD, while Simbisa Brands (Chicken Inn, Nando’s, Pizza Inn, etc.) make about 80%.
If you are looking for an industry to bet on, fast food has good growth prospects and will be pretty resilient as long as the multicurrency regime continues in Zimbabwe.
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If you found this insightful, you should probably consider reading the following posts from the archives as well:
Simbisa Brands Financial Results: "Be Greedy When Others Are Fearful"