Effects Of Road Construction On Business Performance Among Restaurant Enterprises In Nairobi County, Kenya

ABSTRACT

Infrastructure development is critical for the economic growth of any country, more so as a supplyside growth catalyst. However, comparative reports by development partners indicate that Kenya, among other sub-Sahara African countries, has insufficient infrastructure relative to the rest of the world. As the continent embarks on major infrastructure projects to bridge this insufficiency, affected businesses are bound to experience varied effects on their performance. This study focused on road infrastructure and sought to determine its effects on business performance indicators using sales turnover as the key unit of analysis. Additional performance metrics, namely operational costs, profitability levels, variations in staff numbers and customer retention were also measured. This was against the key independent variable, namely road construction. Specifically, the study focused on four recently constructed road networks in Nairobi county namely Thika super highway, Southern bypass, Northern bypass and Eastern bypass. The business performance metrics were measured among restaurant enterprises using a sample of restaurant establishments along the four roads. The study adopted a cross-sectional survey design to gather data from restaurant owners and managers using a structured questionnaire. Both descriptive and inferential data analysis techniques were applied to achieve the objectives of the study. Findings reveal that most restaurant owners chose to establish their businesses close to major highways so as to capitalise on better access for their customers and as a link to faster and easier supply of inputs. In particular, restaurants operating along Thika highway and Northern bypass reported the highest improvement in customer growth, sales turnover and profits whereas those operating along Thika highway and Eastern bypass led in growth of employee establishment. However, market share had similar patterns of distribution regardless of business location of restaurants. Restaurants reported that the primary reason for setting up at their current location were proximity to target customers due to good road networks. The study established that there were a high proportion of new restaurants located along the bypasses and the highwaysthat could be directly attributed to the development of the road networks. However, some restaurants experienced lower performance as was evidenced along the Southern bypass where exits were rerouted following construction. This study would help restaurant owners to make better business decisions on setting up their new businesses. Also, the study confirms that good road infrastructure is a catalyst to economic growth in Kenya’s economy.