Exit of eateries from the CBD serves lessons on our tastes

Nairobi’s Central Business District. The city centre is running out of space for expansion. [Hillary Orinde, Standard]

Two food outlets outside the University of Nairobi have closed shop and relocated. These are Pizza Hut and Subway.

Not far away, Domino’s, which is known for pizza, and Cold Stone, famous for ice-cream have followed suit.

The outlets could not make enough money in these locations.  They have relocated to malls or other more attractive neighbourhoods.

The beauty of these food outlets is that we saw them come to the central business district (CBD) and we saw them leave.

It was a free experiment. Who were they targeting? Had they done their background checks?

Do they really understand the Kenyan mind like Safaricom? To any businessman, particularly in the food industry, the CBD is a perfect location with heavy human traffic.

We are expected to eat every day. But the investors forgot that this crowd is on transit to other parts of the city.

The CBD is more like an airport with hub-and-spoke. The crowd in the American inner city live there. We prefer to commute to the city from far-flung suburbs where housing is cheaper. 

Further, this crowd does not have the disposable income to buy the exotic foods offered by the mostly American outlets.

The crowd is made up of students, “hustlers” and “sufferers” in Kenyan lingo. The investors did not invest enough time to understand the Kenyan consumer.

Beyond chips, the ordinary consumer has no interest in exploring other tastes. That is why ugali follows us to the US and to other countries.

We are very patriotic to our tastes. Why do you think Java outlets introduced ugali in their menu? Noted how Java has been expanding as other new outlets close shop?

Traditional food

Going back to the basics can make a big difference; Kosewe’s and its traditional food has followed the money to Upper Hill.

In the US, these outlets usually target the low-income earners in the inner city.

They work in low wage industries and have developed tastes over time. Our low wage earners or self-employed, the hustlers and sufferers see these foods as exotic and meant for the rich and affluent.

In Kenya, pizza or hot dogs are not for the poor. Ice cream is not for the Kenyan poor. Its simple maths. Given unga?

The exit of new eateries is more about behavioural economics than location analysis.

Take another example.

The two outlets are outside the University of Nairobi which has a population bigger than many small towns in Kenya. But how many students ate there? If those eateries opened when students had disposable income, called “boom” it would have made a big difference.

Will boom ever come back? How many of these students ate pizza at home? Food tastes are developed over time.

It is not just food outlets that are exiting the CBD, corporations long left the city centre after it lost its allure. Even embassies such as the US used to be in CBD. The businesses have found homes at Upper Hill and more lately Riverside drive.

The CBD has become a very public place. Its key clients are the Government and its institutions. Suppose Parliament, the Supreme Court and the presidency left the CBD?

What if the public universities which have taken over lots of buildings in CBD left?

It’s emerging that the CBD has the numbers but not the money. The eateries learned this the hard way.

Economists say the food has a very low price elasticity of demand. Simply put, it’s a necessity and rise in prices does not lower its demand.

This means that businesses in the CBD dealing with non-necessities should be doing badly. No wonder Nakumatt and Uchumi closed their branches. 

The CBD’s unattractiveness is not just about the masses with no money, but inflexibility too. You can’t change the tall buildings. They are here to stay.

 High-end hotels 

There is no room for expansion except upwards which lead to more congestion.

What is the fate of high-end hotels located in the CBD? Should they downgrade to attract a new set of clients?

Let us be frank, the flight from the CBD will not end. My prediction is that soon it could become like America’s inner city.

It will keep attracting “hustlers” and “sufferers” as the affluent flee to the suburbs. The building of new highways will only help the affluent flee the CBD. I will not be surprised if some of the tall office blocks become apartments. That could lead to vibrant gentrification. Eventually, CBD will become a tourist attraction with its classic buildings and their history, a relic of the good old days.

That might be the easiest way to rediscover the fortunes of the CBD with streets having dual names - current and old. For example, Delamere, Moi or Hardinge, Kenyatta.

And where is Kenya’s famous middle class? Does the exit of these firms confirm Kenya has a “missing middle” with hustlers and sufferers at the bottom and affluent at the top?

-The writer teaches at the University of Nairobi