Silver lining for SMEs as cost of living shoots up


Small food joints are attracting more customers as restaurant hotel prices remain out of reach for a rising number of people thanks to increased cost of living. PHOTO | LABAN WALLOGA

Mama Omollo’s eatery, popularly known as ‘kibandaski’, situated near Prestige Plaza, Ngong Road, is a buzz of activity as consumers flock the food stall for lunch.

She has witnessed an increase in the number of customers this year as people seek to save an extra penny in the hard economic times, when the prices of commodities and food have been shooting through the roof.

Next to the food stall are the popular fast food franchises such as Debonairs, Chicken Inn and Pizza Inn. But the traffic to Ms Omollo’s eatery is comparatively high, underlining the changing consumer trends.

Customers are increasingly shying away from high-end restaurants because of high prices and small eateries such as that of Ms Omollo can only happily receive them.

“We have had to increase our daily stock in order to accommodate the growing customer base. Our maize flour usage that was initially 12kg has increased by approximately four kilos. Our daily wheat flour usage has increased to nine packets from an initial six packets and 1.5 litres of cooking oil increasing to 2.5 litres. We have also had to recruit an extra employee,” said Mama Omollo.

The effects of hard economic times are widespread. The latest records from the Kenya National Bureau of Statistics, show that the average rent price of a one-room house in October this year has increased from Sh4,187 to Sh4,415 in the same period last year. Matatu, a major means of transport for most Kenyans, recently increased fares in most Nairobi and upcountry routes.

Kenya’s economy slowed down at the beginning of the year, a situation blamed largely on the extended electioneering period last year and the uncertainty surrounding the polls.

Although the economy has made some good progress since, it is yet to fire from all cylinders, with some sectors still reporting muted business.

Also, with earnings adversely affected by the sluggish growth, consumer behaviour is changing accordingly, as illustrated by the increasing preference of roadside food stalls.

In a 2017 research by Philip Gitonga from The University of Nairobi (UoN) on the factors that influence consumption patterns in fast food restaurants in Nairobi, showed that the economic situation has a great impact on purchasing behaviour.

A consumer with low income, the study said, will purchase less expensive products and will adjust accordingly in case their income decreases or rises.

“Our food prices are reasonable. A mixture of beans stew and rice or with two chapatis goes for Sh70 while chicken stew and rice being the highest priced combination going for Sh150,” said Mama Omollo. This is in stark contrast to the other upmarket restaurants where meal prices begin at Sh200 for a piece of chicken and chips.

In Kenya, food retailing and services account for at least one-third of informal and semi-formal retail activity. The majority of Nairobi’s food purchases are from informal food vendors, according to a 2017 UoN report on the urban food system of Nairobi.

The eateries are almost open-air spaces with thin corrugated iron sheet roofing. Inside are slim wooden seats with no backrest that provides just enough comfort to be able to eat.

The eating place, while not providing the best of customer experience, people flock to them nonetheless so long as the food is delicious and affordable.

Perhaps something else that attract customers in droves to Mama Omollo’s food stall is that regular customers can eat on credit. This has helped her foster customer loyalty and retention. In this hard economic times, who would not want to be loyal to an eatery that gives you meals on credit?

“All the stock we purchase from the market on a specific day is used up on the same day and any leftovers are trashed as we do not have refrigeration. Thus we are careful to prepare just enough to cater to the demand. This, we normally estimate from previous orders or patterns from the previous week,” said Mama Omollo.

- African Laughter