- South Africa’s biggest supermarkets make a lot of money.
- But running your own isn’t necessarily an easy way to make a personal profit.
- You’ll have to deal with complex logistics and issues like load shedding.
- A solution for some is to leverage established supermarket brands by buying into their franchise arms.
- And no, you still can’t buy your own Woolworths or Checkers franchise.
- Here are some options currently available in South Africa.
South Africa’s supermarkets make a lot of money – the leading groups profit in the billions each year. But that only tells half the story, particularly if you’re looking to buy and run your own store.
Although opening and running a supermarket independent of the big brands is possible, it’s a complex operation – particularly if you’re looking to go bigger than a local corner shop.
But buying a supermarket franchise in South Africa isn’t particularly easy, either.
Many of the country’s leading stores, like Woolworths and Checkers, don’t sell franchises – although the latter does have a lesser-known franchise arm.
And those stores that allow outsiders to buy in, like Pick n Pay, Food Lovers, and Spar, are popular and often oversubscribed in big centres.
Supermarkets are also not cheap franchises to buy – and because the brands have national clout and strong reputations, you’ll likely need extensive retail experience for your application to succeed.
If buying a turnkey supermarket business interests you, here are some options available.
Spar
Spar is a recognised global brand with a strong presence in South Africa. It has over 1,000 stores which see collective profits in the billions. The group also benefits from several store formats that target different markets – from small suburban convenience stores to large bulk retailers.
Their model is also not a franchise model in the truest sense of the word – instead, they allow some freedom and flexibility that other more rigid franchises may not. However, store owners are subject to certain regulations but benefit from group buying power and head office assistance.
There are three ways to join the Spar group: buy an existing store, convert your current shop into a Spar, or build a new one.
Startup costs for buying an existing store vary depending on the format, and 40% of this must be unencumbered. You can expect to pay upwards of R5 million for a KwikSpar, R8 million for a Spar, and R10 million for a SuperSpar.
Spar owners also contribute to the Spar Guild, a non-profit company that assists store owners. The group doesn’t make this figure readily available, but historically it has been in the region of 1% of a store’s average monthly turnover.
Food Lover’s Market
Food Lover’s Market is a specialist fresh product retailer that started in Cape Town in the early 1990s. Since opening up the business with a franchise model in 1996, it’s grown rapidly – and now has more than 320 stores throughout Africa.
There are now several store formats within the Food Lover’s Market Group – Market, Eateries, and Freshstop. They also count brands like Seattle Coffee Company, Market Liquors and Diamond’s Discount Liquors in their portfolio.
With this expansion, the group has also established distribution centres across all South African provinces that aid franchisees in obtaining fresh produce.
They’re open to new franchisees but are interested in those with strong retail experience.
Setting up a new Food Lover’s Market franchise costs between R8 million and R12 million, and owners contribute 50% of this. Food Lover’s also charges a 2% franchise fee and a 0.5 marketing contribution based on turnover.
OK Foods
OK Foods is the only supermarket franchise available from the Shoprite Group. Although Shoprite does not sell franchises to its Shoprite and Checkers stores, OK Foods owners benefit from the supply and logistics established by the country’s biggest supermarket group.
There are also several brands within the OK operation that cater to different markets. These include OK Foods, OK Minimarket, and OK Express.
You’ll find most OK stores in small outlying towns and cities in South Africa, often with long histories in their locations. Although the Shoprite Group does not publicly divulge the cost of building a new franchise or buying an existing one, it does publish a monthly list of OK franchises for sale on its website.
Pick n Pay
Pick n Pay has one of the widest supermarket networks in South Africa, with 1649 stores at last count located throughout the country. Pick n Pay owns and runs 876 of these, with the remaining 773 stores run by franchisees.
Pick n Pay claims to offer one of the country’s most successful and mutually beneficial franchise models, and they have a flexible model that aims to support startup businesses in multiple formats.
Apart from supermarkets, Pick n Pay also sells franchises in its express, clothing and liquor categories.
Pick n Pay does not publicly divulge the cost of establishing a new franchise or buying an existing store – but prospective franchisees can expect to invest upwards of R13 million for a franchise and historically have had to pay 1.25% of turnover. And in 2022, the group’s 876 franchisees collectively contributed an income of R428.3 million in franchise fees.
