How Much It Costs To Open A Top Fast-Food Franchise In 2024 – Including KFC And McDonalds

The success and popularity of fast food franchises in South Africa are well known, but to take advantage of South Africa’s love of fast food will require millions of rands to join the industry giants.

While fast food chains have experienced the challenges faced by many other businesses in South Africa – such as load shedding and inflation – they continue to grow due to their convenience and increasing demand.

According to a study by Eighty20, while restaurants and coffee shops have battled since COVID-19 and are still around 22% below 2019 revenue, the takeaway and fast-food category recovered quickly after the pandemic and is now 41% above 2019 levels.

The fast-food category was a third of the size of the restaurant category pre-Covid, but now it is more than two-thirds the size – showing just how much consumers’ purchasing behaviour has changed, it added.

According to the study, The top 10 most popular fast food outlets are KFC, Chicken Licken, Debonairs, McDonald’s, Hungry Lion, Spur, Nando’s, Burger King, Steers, and Wimpy.

The fried chicken giant is also the most popular fast-food brand in the country, with 10 million South Africans eating there at least once in the past four weeks (as of the study). Interestingly, only 49 are directly owned by the company, and the other 1,003 are franchisee-owned.

The company has grown by 44 stores in the past year.

According to an Allied Market Research report, South Africa’s fast food market is expected to grow by 7.9% annually and reach a valuation of $4.9 billion (R85 billion) by 2026.

Fast food is very profitable, but it requires a hefty investment to get started.

How much it costs to own a franchise

To estimate the costs involved in owning some of the most popular fast-food franchises in South Africa, BusinessTech compared the fee requirements of various franchises.

The franchises listed in this article are those that had the relevant information available and include KFC, McDonald’s, Anat, Debonairs Pizza, Steers, Nando’s, RocoMamas, Chicken Licken, Mochachos, Simply Asia, and Roman’s Pizza.

As part of the franchising process, many popular brands require potential franchisees to complete a training program that lasts anywhere from six weeks to a year (as is the case with McDonald’s).

Additionally, these brands require a percentage of unencumbered cash, which is cash that is readily available and not obtained through loans or bonds that would increase debt.

Below is a list of these brands and their respective financial requirements for owning and operating a franchise.

Note: where updated capital requirements to open a franchise were unavailable on the respective company’s website, estimates were taken from whichfranchise.co.za – as indicated under the relevant brand name.

Whichfranchise.co.za is among the leading websites for franchise information, advice, and opportunities in South Africa, and hence, it is one of the top franchisee recruitment websites.

KFC is undeniably the most popular fast-food franchise in South Africa. However, it’s important to note that KFC South Africa’s brand owner, Yum! Brands International has asserted that they are not actively seeking new franchiseee.

However, it is possible to become a new KFC franchisee by purchasing an existing KFC business, as existing franchisees may choose to sell their businesses.

According to the latest franchise data available from KFC, new franchise owners could expect to pay around R6 million for a new franchise.

This number would also vary depending on location, size, and operation requirements.

 

McDonald’s doesn’t present updated franchising costs, and one would have to apply to get an accurate idea of the total investment requirement for 2024.

However, it was last reported in 2023 that the ballpark figures include:

• Average investment required – between R4 million and R6 million.
• 35% unencumbered cash contribution – between R1.4 million and R2.1 million.

 

The total investment again depends on location, size, styling, and varying pre-operation expenses.

According to whichfranchise.co.za latest data, the investment required to open up an Anat – a chain that specialises in Middle Eastern cuisine – in South Africa includes:

• Average investment required – R1.7 million
• 60% unencumbered cash contribution – R1.02 million
• Monthly royalties:
  • Franchise royalty – 5% of monthly Net Sales
  • Marketing royalty – 3% of monthly Net sales

 

Although their website doesn’t outline the costs of opening a franchise, Famous Brands’ most recent market research report highlighted the investment cost and royalties that can be expected:

• Average investment required – R1.7 million
• Monthly royalties – 12% of monthly Net Sales.

 

Steers franchising fees include:

• Franchise fee – Drive-Thru: R75,000 | Inline: R68,000
• Average investment required – Drive-Thru: R3.75 million | Inline: R1.97 million
• Monthly royalties – 11% of monthly Net Sales.

 

According to Nando’s latest estimates, the total investment to own a branch includes the following:

• Application fee – R37,500
• Franchise fee – R250,000
• Average investment required – Drive-Thru: R6.69 million | Inline: R5.47 million
• 50% unencumbered cash contribution – Drive-Thru: R3.5 million | Inline: R2.8 million

 

RocoMamas has 88 restaurants nationwide and 17 international restaurants.

The total investment to own a branch includes the following:

• Average investment required – over R4 million (including upfront fee and working capital)
• 60% unencumbered cash contribution – approx. R2.4 million
• Monthly royalties:
• Franchise royalty – 5% of monthly Net Sales
• Marketing royalty – 2% of monthly Net sales

 

According to Chicken Licken’s latest estimates, the total investment to own a branch includes the following:

• Franchise fee – R180,000
• Average investment required – Fly-Thru: R6.8 million | Inline: R4.8 million
• 50% unencumbered cash contribution – Drive-Thru: R3.4 million | Inline: R2.4 million
• Monthly royalties:
  • Franchise royalty – 6% of monthly Net Sales
  • Marketing royalty – 6% of monthly Net sales

 

According to whichfranchise.co.za latest data, the investment required to open up a Mochachos – a chain that specialises in Mexican cuisine – in South Africa includes:

• Franchise fee – R199,000
• Average investment required – Between R1.9 million and R2.9 million
• 60% unencumbered cash contribution – Between R1.14 million and R1.74 million
• Monthly royalties:
  • Franchise royalty – 8% of monthly Net Sales
  • Marketing royalty – 2% of monthly Net sales

Mochachos noted the investment required for a franchise will vary, depending on the size and condition of the premises available for rental. A sales representative would be able to give interested parties a cost breakdown based on average store costing, but an accurate assessment would only be available once a specialised in-house development team has conducted a site inspection.

 

According to Simply Asia’s latest estimates, the total investment to own a branch includes the following:

• Commitment fee – R20,000. This will be utilised for any costs associated with the application process regarding assessments, interviews and tests.
• Franchise fee –R100,000.
• Joining fee – R100,000. This includes the right to use and operate under the nam, trainingg, lease negotiation,s and initial pre-opening launch.
• Average investment required – Sit-down: R1.5 million | Express: R1.1 million
• 50% unencumbered cash contribution – Sit-down: R750,000 | Express: R550,000.
• Monthly royalties:
  • Franchise Fee – 7% of monthly Net Sales
  • Marketing royalty – 3% of monthly Net sales

 

According to Roman’s latest estimates, the total investment to own a branch includes the following:

• Franchise fee – R90,000
• Average investment required – R2.85 million (including R100,000 working capital).
• Unencumbered cash contribution – Minimum of R1.6 million.
• Monthly royalties:
  • Franchise Fee – 4% of monthly Net Sales
  • Marketing royalty – 4% of monthly Net sales

 

Source: BusinessTech – https://businesstech.co.za/