- The South African coffee industry generates millions each year and one way to tap into this is to buy a coffee shop franchise.
- There are several options available that range in price, products, services, and brand recognition.
- Here’s how much it costs to buy your turnkey coffee shop franchise under brands like Vida E Caffè, Mugg and Bean, Bootlegger Coffee, Shift Espresso Bar, Famous Bean, Daily Coffee Café, and Xpresso Café.
The South African coffee industry was worth as much as R4,9 billion last year, and some project it to reach R7.2 billion in the next four years.
One of the ways you can invest in the local coffee industry instead of supporting it with your own caffeine habit, is to buy into an existing franchise brand that offers a turnkey sit-down coffee shop or takeaway business.
South Africa has several strong coffee shop franchise brands still considering new franchisee applications.
Stalwarts like Vida E Caffè, Mugg and Bean, and Bootleggers take up much of the real estate in this space. They offer solid brands and established business models, and are more expensive than smaller or lesser-known franchises.
Rapid risers like Shift, The Daily Coffee Café, Xpresso Café, Famous Bean and The Daily Coffee Café may not yet be as widespread, but they offer alternate pricing.
And as in previous years, favourites Starbucks and Seattle Coffee Company are still not available as franchises in South Africa.
Although setup costs remain similar among most like-for-like stores, key fees differ between franchise options.
Important factors to look out for in the pricing structure are clauses requiring a percentage of build costs for the franchisor and ongoing flat fees for digital displays, point-of-sale devices, and music licenses. Most also require ongoing fees, calculated as a percentage of turnover, that goes towards marketing and royalties.
If you love coffee or simply want to invest in the retail coffee industry in South Africa, this is how much you’ll pay to open a new franchise coffee shop in 2022.
Vida E Caffè
Vida E Caffè is South Africa’s most common speciality coffee franchise. The coffee shop started with a single branch in Cape Town in 2001 and now has 224 South African stores – 160 of which are franchises. Many of these are privately owned franchises feeding off the head office infrastructure. Over the years, the brand has diversified to offer branches in airport terminals, petrol station forecourts, office blocks, malls, and high streets. Despite the brand’s ubiquity, Vida E Caffè is still accepting new franchisee applications.
Vida E Caffè cost: A new Vida E Caffè franchise in South Africa costs R950,000 or R1.4 million, depending on the size, design, layout, and equipment. Some options, like containers and drive-throughs, come at different setup costs. Vida franchisees must also pay a fee of R150,000. Ongoing fees include 10% of net monthly sales, plus R2,387 monthly towards points of sales machines, preventative maintenance, promotional LCD screens, payment apps, and music licenses. A fee of 5% of loyalty turnover also applies.
Mugg & Bean
Mugg & Bean is one of the oldest, best-established coffee shop franchises in South Africa. The first store opened at the V&A Waterfront in 1996, and today it’s owned by the franchising behemoth Famous Brands – with over 200 stores nationwide. Mugg & Bean currently offers two main franchises – a sit-down restaurant and an On the Move store. There’s also an option to buy a limited service On the Move store.
Mugg & Bean cost: A standard sit-down Mugg & Bean restaurant of 280 m2 currently costs R3.695 million. This includes the initial franchise fee but excludes other expenses like design fees and a 4% build cost management fee.
An On the Move Mugg & Bean branch costs R1.345 million, including the franchise fee, and a limited service On the Move costs R1.65 million. On the Move prices also exclude some fees like those for design and 4% of the build costs.
All Mugg & Bean franchisees must also pay ongoing fees of 10% of gross sales, which goes towards royalties and advertising.
Bootlegger Coffee Company
Bootlegger Coffee Company started in Cape Town in 2012 with an initial focus on selling roasted beans at a retail level. The business quickly expanded into a full-service coffee shop with more than 30 branches in Cape Town and Johannesburg. According to the Bootlegger website, they are still accepting applications for new stores in Gauteng and the Western Cape. Franchisees must have at least 50% of the setup costs in unencumbered cash or be willing to partner with other prospective franchisees.
Bootlegger Coffee Company cost: A new Bootlegger coffee shop costs between R2 million and R3 million to set up. Franchisees must pay an upfront fee of R120,000, an ongoing marketing fee of 2%, and a franchise fee of 5%.
The Daily Coffee Café
The Daily Coffee Café is a relatively new South African coffee shop franchise that has been aggressively rolling out new franchises across the country. They currently have 38 branches in six provinces and have, until now, primarily targeted strip and community malls. Daily Coffee offers two franchise models: a sit-down restaurant and a takeaway store.
The Daily Coffee Café cost: A sit-down Daily Coffee franchise costs between R1,68 and R2 million. Franchisees must have R60,000 as working capital and pay an ongoing management fee of 6% of turnover. The express option, suitable for forecourts, costs between R250,000 and R550,000, including a project management fee. Express franchisees must pay a monthly franchise fee of 4% of turnover.
Shift Espresso Bar
Shift Espresso Bar is a family-run business that started in Cape Town in 2014. It focuses on quality coffee and carefully designed stores, and has recently begun a franchising-fuelled expansion process. There are currently nine branches in Cape Town and Stellenbosch, and they are open to applications from prospective businesspeople looking to buy into their turnkey coffee shop operation. They offer two franchise types: an express store and one designed for sit-down service.
Shift Espresso Bar cost: Grab-and-go Shift franchises start at R800,000. Standard sit-down and flagship stores cost approximately R1.9 million. Ongoing royalties are 5% of turnover, and franchisees must pay 1.5% of turnover towards marketing.
Famous Bean started in 2017 and is one of the newer coffee shop franchises available in South Africa. It currently has five branches, giving it one of the smaller franchise networks in the speciality coffee network. However, it claims to be a popular “industry leader” in its respective locations.
Famous Bean cost: Famous Bean offers five different franchise options that vary in footprint and offerings. These include a mobile trailer costing R290,000, a takeaway store at R690,000, and three full-service options costing between R1.2 and R1.8 million. The franchise website does not disclose ongoing franchise fees. It does not publish a head office phone number, and an email request for updated information was returned unanswered.
Source: Business Insider South Africa – www.businessinsider.co.za