New entrants set to heat up SA pizza market

SOUTH AFRICA – The world’s two largest pizza chains are wading into the South African pizza market, with KFC sister brand Pizza Hut re-entering the country on Thursday after a six-year hiatus.

SOUTH AFRICA – The world’s two largest pizza chains are wading into the South African pizza market, with KFC sister brand Pizza Hut re-entering the country on Thursday after a six-year hiatus.

Meanwhile, JSE-listed Taste Holdings plans to introduce Domino’s Pizza into SA by the end of the year, by converting 150 of its Scooters Pizza and St Elmo’s outlets and opening a further 100 Domino’s outlets in the next five years.

Quick service restaurant groups have said pizza is among the fastest growing food categories in SA, largely thanks to its rising popularity in new segments such as townships and less affluent areas.

Pizza Hut, owned by KFC and Taco Bell parent YUM! Brands, opens its Honeydew, Johannesburg, store to the public on Thursday. It plans to follow this up with outlets in Boksburg, Midrand and Soweto.

“Our first priority is that we want to do a great job in Johannesburg and Gauteng. We’re starting in Honeydew, which was a deliberate choice. Pizza Hut is about family and friends and we came to Honeydew which is a great community and neighbourhood,” Pizza Hut’s GM for Africa, Randall Blackford, said on Thursday.

Mr Blackford said Pizza Hut, whose African presence was limited to north Africa, would open a store in Zambia towards the end of the year and Angola in the first half of next year. Pizza Hut would likely enter other South African cities such as Cape Town and Durban next year.

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The chain began a slow withdrawal from SA in the 1990s and closed its last store in 2008. While it was formerly a dine-in restaurant, it has repositioned itself this time as a neighbourhood delivery and takeaway business with smaller outlets.

Mr Blackford said while there was increasing competition in the South African pizza segment, the market was still underserved based on the number of stores per million people in the “consumer class”.

“If you took about half of SA, you could triple or maybe quadruple the number of pizza delivery or carry out units, and that would put you on par with the penetration of a market like Australia, the US or parts of western Europe. So I think there’s a lot of room to grow.”

Vunani Securities analyst Anthony Clark said Pizza Hut was “no stranger to the market place and there is still that brand recognition”. He expected Domino’s to have “a slightly steeper hill to climb” as their brand wasn’t as well known.

“I think what you’re going to be seeing in this market place with Pizza Hut coming in … is a very competitive price environment.”

Mr Clark said this would include marketing and specials — which had helped South African fast-food companies grow earnings despite the weak consumer environment.

September 20, 2014; http://www.bdlive.co.za/business/retail/2014/09/18/new-entrants-set-to-heat-up-sa-pizza-market

 

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