From N20,000 to N5 billion, how Sooyah Bistro scaled despite rising costs

In 2018, Sooyah Bistro began as a modest venture in Nigeria where suya, a beloved street food, was primarily found in informal, fragmented settings dominated by roadside vendors. Commencing with an initial investment of N20,000, the company has since expanded to become a business estimated at over N5 billion, with a significant presence of more than 10 branches across the bustling cities of Lagos and Ibadan.

Despite this remarkable growth, the journey has been fraught with challenges such as increasing food costs, devaluation of the currency, operational inefficiencies, and the daunting task of expanding profitability without sacrificing quality. In an exclusive interview with Nairametrics, Sooyah Bistro's founder, Olamidun Ogundoyin, reveals how the company formalized an unstructured food market, leveraged reinvested profits for expansion, adapted to varying consumer spending patterns in Lagos and Ibadan, and established robust operational systems to support its expansion.

Ogundoyin sheds light on the formidable structural challenges currently confronting Nigerian quick service restaurants (QSRs), highlighting unstable power supply, inadequate cold chain logistics, high staff turnover, and fragmented supply chains. Instead of relying on external assistance, he emphasizes that resilient brands must internally fortify their operations.

To protect profits against spoilage, they establish private cold chains using vacuum packaging and decentralised freezing techniques. To mitigate the issue of high staff turnover and ensure consistent quality, they standardize recipes and workflows, thus removing reliance on any single cook's memory. Additionally, deploying automated point-of-sale systems that automatically adjust raw ingredient levels in real-time helps curb internal leakage, thereby enhancing profitability.

Ogundoyin's journey from a N20,000 startup to a valued enterprise exceeding N5 billion was propelled by four pivotal operational transformations. Initially, he transitioned from home-based pop-ups to a dedicated container outlet, validating that consumers were eager for an elevated suya experience. Next, he set up a central commissary for butchery, spice blending, and vacuum packaging, which eliminated recipe inconsistencies and wastage across all branches.

To achieve high volume without the substantial capital outlay required for expansive dining rooms, Sooyah Bistro established partnerships with third-party delivery services and developed proprietary digital ordering platforms. Crucially, the company transitioned from founder-led operations to a seasoned executive leadership team overseeing supply chain, finance, and quality control, thereby providing the necessary governance for sustained scalability.

To fund its expansion without delegating control, Ogundoyin adhered fervently to strict cash-flow discipline. Early profits were predominantly reinvested into the company to secure essential kitchen machinery, bolster central production capabilities, and facilitate the opening of new locations. Additionally, he pioneered the concept of modular outlets using customised shipping containers and express pickup counters instead of committing to costly traditional brick-and-mortar constructions, which significantly reduced the payback period for investments to between 12 to 18 months.

For entrepreneurs contemplating the expansion of their QSR ventures, Ogundoyin underscores the importance of understanding specific financial metrics before opening additional locations. He stresses that store-level EBITDA should confirm profitability after accounting for all expenses, including rent, power, spoilage, and labour.

The payback period on fit-out costs should not extend beyond 24 months based on actual operating cash flow. Prime costs, which encompass combined food and direct labour expenses, must remain below 60% of revenue to prevent the scaling of losses. Lastly, expansion should be accompanied by a dedicated operating reserve of four to six months to ensure that the new location does not undermine the performance of the existing site during its ramp-up phase.