South Africa’s fast food industry is looking very healthy, being one of the market sectors that has experienced strong growth in revenue amid tough economic times in the country.
Not only has the industry experienced growth in the number of franchises opening up over the past year, revenues across major brands are also up, while industry analysts report seeing high demand from those looking for franchising opportunities.
Data published by the Franchise Association of South Africa (FASA) shows that the sector’s performance remains on an upward trend.
In 2017, the sector consisted of 845 franchisors and over 40,000 franchisees. It employed about 343,000 people and generated sales of R587 billion. This equals 13.3% of the country’s GDP, up from the 9.7% recorded in 2014.
One question that prospective franchisees may want answered, however, is how much can a franchise make?
While revenues will depend on many factors – location and market being key influences – many of South Africa’s top fast food franchises are making bank; and when averaged out across operations, revenues look to be well worth the start-up costs.
Research from global analytics group Euromonitor, published by the Financial Mail, shows how revenues across 20 major fast food franchises in South Africa increased between 2016 and 2017 – with big brands like Deboniars and Burger King posting double digit growth, and others like KFC coming close.
The table below outlines the growth in revenue, as reported by Euromonitor, as well as how much money each brand makes per franchise.
Update: Nando’s has requested that its revenue not be made publicly available.
|Brand||Revenue (2017)||Growth (from 2016)||Franchises (2017)||Revenue per outlet|
|McDonalds||R4.34 billion||5.6%||245||R17.7 million|
|Burger King||R623.5 million||28.5%||61||R10.2 million|
|KFC||R8.71 billion||9.4%||879||R9.9 million|
|Fish and Chip Co.||R810.8 million||5.7%||164||R4.9 million|
|Wimpy||R2.02 billion||7.5%||481||R4.2 million|
|Capitan DoRegos||R162.7 million||17.6%||41||R4.0 million|
|Debonairs||R1.49 billion||12.5%||511||R2.9 million|
|Steers||R1.35 billion||8.9%||561||R2.4 million|
|Roman’s Pizza||R474.9 million||8.1%||210||R2.3 million|
|Barcelo’s||R155.5 million||9.6%||68||R2.3 million|
|Hungry Lion||R279.4 million||10.0%||125||R2.2 million|
|Pizza Perfect||R194.5 million||5.2%||101||R1.9 million|
|Sandwich Baron||R94.0 million||7.1%||51||R1.8 million|
|Chicken Licken||R422.0 million||4.2%||240||R1.75 million|
|King Pie||R435.8 million||2.3%||253||R1.7 million|
|Kauai||R226.6 million||8.3%||135||R1.68 million|
|Fishaways||R375.6 million||7.9%||226||R1.66 million|
|Pie City||R176.0 million||2.8%||175||R1.0 million|
|ChesaNyama||R225.5 million||8.8%||269||R838 290|
The cost of opening a franchise
Taking the data above into account, it show why so many consider opening a franchise to be such a good business opportunity, as the potential revenues can certainly make up the costs of opening an outlet.
These are the start-up costs for opening some of the biggest franchises in the country:
- KFC – from R6 million
- Nando’s – from R7 million
- Debonairs – from R2 million
- Steers – from R1.7 million
- McDonald’s – from R4 million
- Chicken Licken – from R4.8 million
- Roman’s Pizza – from R2.4 million
- Fish and Chip Co. – from R850,000
Bear in mind that the start-up costs vary, depending on location and size of the outlet. They are also dependent on the brand owners and demand. For example, KFC is slow to open new franchises because of its large number of outlets already in place.
Other brand owners, exclusively own all franchises, as is the case with Burger King.
Biggest fast food franchises
BusinessTech recently did a count of the biggest fast food franchises in the country. The count reflects reported numbers and physical stores as they stood in July 2018, while Euromonitor’s data above reflects counts as they stood in 2017.
SOURCE: BusinessTech www.businesstech.co.za