4. 14 food franchises that cost less than R2 million to open in South Africa

  • June 27, 2018 11:50 am
  • News

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The fast food and quick service restaurant (QSR) sector continues to grow despite tough economic times.

This is according to Andre Beck, sector head of Fast Food and Restaurants at FNB Business, who notes that with a contribution in excess of 29%, QSR has by far the biggest share in franchising turnover.

“Industry data shows that South Africa has seen more franchises opening fast food and restaurant outlets in spite of the floundering economy,” he said.

“This clearly paints a picture of a sector that is competitive and lucrative, and more importantly, it shows that the franchising has sustained appetite to grow further in the local economy.”

While a number of franchises still require significant start-up capital to open, there are a number of options for those looking to buy for less than R2 million.

BusinessTech looked at 14 of the most well-known ones below.

Domino’s Pizza – from R2 million

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Domino’s pioneered the pizza delivery business, and sells more than one million pizzas daily worldwide.

It currently has almost 11,000 stores in over 70 markets around the world. In South Africa, that number has grown to 50 in Gauteng and the Western Cape.

This franchise has a caveat as currently Domino’s Pizza in South Africa is primarily an internally-based franchise organisation. This means that those interested in franchising should contact the Franchise Development Team, who will contact you if an opportunity becomes available.

Wimpy – from R1.9 million

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New Wimpy Franchisees can expect to pay between R1.9 million – R2.5 million and an initial franchisee fee of R114,300 (excluding VAT).

Franchisees are also expected to pay 7% of their turnover in management fees and 5% of their turnover in royalties.

Galito’s – from R1.75 million

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Galito’s financial model recommends a maximum business gearing of 50%. This means that a potential applicant must have at least R1 million in unencumbered funds (deposit) plus R300,000 working capital, for a total of R1,300,000 (cash not borrowed from a bank or lending institution) to invest in the initial set-up costs and to ensure a successful application.

The cost of opening a standard 180m2 outlet is in the region of R1,750,000 (excl vat). This cost may vary depending on the location, size and initial condition of the premises.

This includes all development costs from project initiation (store design & staff training), to store launch promotions. This cost also includes a franchise joining fee of R110,000 (ex vat).

Dulce’ Cafe – from R1.65 milliom

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According to its website, your potential total investment for a Dulce Continental Cafe, including rental deposit, first month rental, stock etc ( every cost or cash outlay ) to 1 month after opening is  approximately R1.85 million excl vat , and will range between approximately R1.65 million and R2 million (excluding VAT).

In addition, a cheaper ‘Dulce Grab and Go’ franchise is available for smaller sites and smaller quicker menu, as above , but with a lower set up costing cost.

Steers – from R1.6 million

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According to its website, Steers franchisees can expect to pay around R1.6 million when starting a new franchise.

However this differs greatly depending on the type of Steers you wish to open – with standard, drive thru and kiosk options available.

The approximate set up cost for a standard Steers is R1.65 million excluding VAT, joining fee and contingency. Set up cost includes equipment, shopfitting, wet works, furniture and fixtures.

Burger Perfect  – from R1.5 million

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According to its website, average set up costs for a Burger Perfect are approximately circa R1,450,000 excluding VAT (depending on extent of works to be undertaken and size of tenancy).

This includes a minimum 50% of set up costs in unencumbered capital with balance financed through financial institution in form of a loan or a lease on movable assets.

“The set up costs will vary depending from site to site, on the size of the outlet, the product combination, the extent of the building works required to set up the outlet, costs and market conditions. The set up costs reflected is thus a ball park figure and not a guaranteed amount,” it states.

Simply Asia – from R1.1 million

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Simply Asia said that costs may vary based on the size and design of the store. It adds that, the estimated costs include working capital and all other anticipated costs.

  • Sit-down Restaurant: R1,500,000 (excluding VAT)
  • Express Stores: R1,100,000 (excluding VAT)

Anat – from R950,000

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According to its franchise documentation, Anat’s setup costs are from R950,000 (excluding VAT).

This is for a turnkey project and will include:

  • Training for initial staff compliment
  • Support – before, during and after store setup
  • Equipment and smalls
  • Shop fitting and furniture
  • Joining fee (R100,000 incl. Vat)
  • Legal and administration fees
  • Initial marketing
  • Opening stock

Pizza Perfect – from R950,000

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According to its website, average set up costs for a Pizza Perfect are approximately circa R950,000 excluding VAT.

As with it sister store Burger Perfect, this includes a minimum 50% of set up costs in unencumbered capital with balance financed through financial institution in form of a loan or a lease on movable assets.

Something Fishy – from R900,000

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While franchising costs are not available on Something Fishy’s website, opening a new franchise will set you back around R900,000 according to SA Franchise Warehouse.

This includes an approximate setup cost of R850,000 (excluding VAT), and an initial franchise fee of R55,000 (also excluding VAT).

Fish and Chip Co – from R850,000

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The average set up cost for a Fish and Chip Co franchise is R699,000 and, you can expect to pay an initial joining and set up fee of R140,000.

All franchisees are required to complete a five-day training program that covers day-to-day operations, staffing, stock control, marketing, and management skills.

Kauai – from R500,000 

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Kauai states that you can expect set up costs of approximately R2 million (capital costs of setting a store up), excluding VAT for a retail store.

However for a smaller ‘in motion’ store, you can expect to pay set up costs of approximately R500,000 to R800,000 set up costs (excluding VAT).

King Pie – from R100,268

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Costs to become a franchisee for King Pie are the following:

  • King Pie Store – R445,575.53
  • King Pie Express Unit – R287,051.553
  • King Pie Kiosk – R177,464.69
  • King Pie Trailer – R179,342.05
  • King Pie Tuc Tuc – R100,268.10

Chip n Dip – from R47,880

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Costs for a Chip n Dip vary greatly depending on what type of Chip n Dip you wish to open.

The cheapest ‘Gazebo” option includes equipment, opening stock, signage and a once-off joining fee for R47,880. In comparison, you can get a mobile Chip n Dip station for R171,000.

Source: www.businesstech.co.za

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