SOUTH AFRICA – Famous Brands, the owner of brands such as Debonairs and Steers, has ambitious expansion plans for oil-rich African countries such as Nigeria, Ghana and Angola.
Consumer industries are increasingly targeting the continent’s fast-growing cities for long-term growth. The cities are characterised by growing middle classes and large expatriate communities.
The Economist Intelligence Unit predicts that by 2030, Africa’s top 18 cities could have a combined spending power of $1.3-trillion.
With a R10.9bn market capitalisation, Famous Brands is the big daddy of SA franchising and wants to replicate its local success in the rest of Africa.
The company aims to have 400 restaurants outside SA by 2016.
“We are about to open our first Debonairs Pizza in Angola in six weeks’ time,” CEO Kevin Hedderwick said last week. “Once that is open there are probably three or four in the pipeline.”
Famous Brands trades in 16 countries outside its home market through 344 outlets. Sales in the group’s Africa division rose 15.5%, or 8.9% on a like-on-like basis, in the half-year ended August. New restaurants were opened across the group’s mainstream brand portfolio, with Debonairs Pizza setting the pace.
“Pizza is a family-sharing value-type meal,” Mr Hedderwick said. “We see in SA as well as across the African landscape that more and more black consumers have a growing affinity for pizza.”
The group planned to open about 32 new stores outside SA in the remaining part of this year.
It had made progress at the recently acquired Mr Bigg’s business in Nigeria, with the implementation of best-operating practices and key business processes that will ensure improved fiscal discipline.
Mr Hedderwick said a range of opportunities had also been identified to enhance efficiencies and upgrade skills sets that would deliver good gains in the near future.
To take advantage of growing demand for fast food in the populous country, the deal with Lagos-based UAC Restaurants, which owns Mr Bigg’s, was signed in September last year.
Mr Bigg’s is the largest home-grown African food franchise brand north of SA.
Nigeria has seen an influx of international brands including Domino’s Pizza, KFC and Cold Stone Creamery opening over the past few years.
Sasfin senior retail analyst Alec Abraham said Famous Brands’ Africa division still had scope for growth. “From a profit point of view for 2014, the contribution of its African operations was only 4% — so very, very small. (But) we’re (seeing) higher like-for-like sales growth out of Africa than from SA.”
Meanwhile Spur Corporation is also growing its presence outside SA. Hotel, supermarket and retail development has been one of the major factors driving expansion, according to CE Pierre van Tonder.
He said this had resulted in opportunities for casual dining and fast-food quick-service restaurants to open. Spur, which owns Panarottis, trades through 36 stores in the rest of Africa and plans to open more in several countries on the continent.