Supply hitches curb appetites of global food giants
What you need to know:
- Rise in cash-rich consumers, real estate and infrastructure projects key attractions
- Product traceability, quality and quantity the main challenges facing food giants seeking to set up Kenyan franchises
- McDonalds has declared interest in establishing outlets, but it has not given a date.
The inability of Kenyan farmers to meet stringent demands set by international companies looking to set up food business in the country is preventing them from opening more restaurants.
Attracted by the rise in cash-rich consumers, fast development in real estate and massive investment in infrastructure due to the country’s developing economy number of global food giants are eager to set up business in Kenya.
So far, Kentucky Fried Chicken (KFC), Subway, Ocean Basket, Cold Stone, Domino’s, Naked Pizza and Spurs are the major food firms with outlets in the country.
McDonalds has declared interest in establishing outlets, but it has not given a date.
Other food giants like Pizza Hut, Starbucks, Burger King, Wendy’s and Taco Bell have not talked about entering the local market although they operate in several countries in Asia and South America whose GDPs are lower than Kenya’s.
However, international food chains, most of which are American, insist on product traceability from all their suppliers, according to KFC’s country general manager Justin Melvin.
“Nairobi is ready and it has been for a number of years now,” he said.
“The only problem is the difficulty of tracing the supply chain. This adds to the cost of running a food chain since everyone wants to lower their operation costs as the quality is non-negotiable. This is preventing many franchises from coming in,” he said.
At its restaurant on Limuru Road in Parklands, Paneer Zinger burger is one of the fastest moving vegetarian products for KFC, owing to a high concentration of South Asians in the area.
Introduced to the market in April last year, the food item is made of a double-layered paneer cheese patty, creamy sauce and topped with lettuce before being encased in a sesame bun.
But it has only been available for slightly more than a month, reportedly because there were no local producers who could satisfy the quantities and high quality demanded.
“KFC demands all suppliers to adhere to international standards. The standard, taste and quality of any meal that you eat here is the same one that you will get at a KFC in New York or New Delhi,” says Mr Melvin.
“If the quality of supplies that we need for a particular meal does not meet the standards set by our parent company, we would be forced to import, or to withdraw the meal from our menu for that territory,” he says.
Passed by the US Congress in 2010, the Food and Drug Administration (FDA) Food Safety Modernisation Act requires all players in the country’s food supply chain to be able to quickly trace the origin of a product and its recipient/consumer.
IDENTIFY SOURCE OF DISEASE
The “one-step-forward, one-step-back” traceability requirement is designed to make it easier for FDA to identify the source of an outbreak of food-borne disease, trace its path and swiftly remove it from the food supply,” says the Act.
According to the Act, every batch of a food product from a supplier should be checked by a sensory panel and a score allotted. Only a product with a minimum score is shipped out. Other measures include random checks at food outlets by FDA officials.
Lastly, samples of products are shipped to FDA labs from time to time for evaluation. Contrary to the local hospitality industry’s practise, the supplier’s job does not end with the product leaving its premises but with a customer consuming it. The responsibility of qualitative assurance lies with suppliers.
Another Act, The Bioterrorism Act of 2002, passed as a reaction to the 2001 US terror attack, has similar provisions to prevent and minimise impacts of food poisoning.
Because of this, the Kenyan KFC imports 37 per cent of its food supplies. These include potatoes — pre-blanched from Keizer Potato products in Egypt — and cheese from South Africa. The potatoes are precooked and frozen before shipping.
A similar challenge awaits McDonalds when it brings its world famous Big Mac burgers to Nairobi.
According to several news sources, before opening up its first restaurant in India in 1996, expert teams from the franchise were already in the country as early as 1990 to check the strength of its logistics industry, reliability of the transport sector and resource availability.
In Kenya, cabbage-like iceberg lettuce, a key ingredient of the Big Mac burger that has been the signature meal of the world’s largest food franchise, is not grown on local farms, with the Great Lakes variety of so-called head lettuce being the only one available.
In Spain, the franchise set up the McDonalds Flagship Farms under its Agricultural Assurance Programme in 2009 to train farmers to improve their production standards. Today, iceberg lettuce is one of Spain’s largest agricultural exports.
Mr Stephen Mulinge, logistics chief at local agricultural produce pre-processing plant Panagro, said the problem lies with the notion that farming is for the old as well as with the lack of government investment.
“The value chain system from information dissemination on best farming processes to the production process has stagnated, even as every other sector of the economy is developing,” he said.
“A lot of times we have been forced to train farmers in the basics of what they have been doing for years in order to get correct and consistent quality of produce.”