{"id":250849,"date":"2018-06-12T18:00:01","date_gmt":"2018-06-12T16:00:01","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=250849"},"modified":"2018-06-12T17:09:12","modified_gmt":"2018-06-12T15:09:12","slug":"14-food-franchises-that-cost-less-than-r2-million-to-open-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/250849\/14-food-franchises-that-cost-less-than-r2-million-to-open-in-south-africa\/","title":{"rendered":"14 food franchises that cost less than R2 million to open in South Africa"},"content":{"rendered":"

The fast food and quick service restaurant (QSR) sector continues to grow despite tough economic times.<\/p>\n

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.<\/p>\n

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

“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.\u201d<\/p>\n

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.<\/p>\n

BusinessTech looked at 14 of the most well-known ones below.<\/p>\n

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Domino\u2019s Pizza – from R2 million<\/a><\/strong><\/p>\n

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Domino\u2019s pioneered the pizza delivery business, and sells more than one million pizzas daily worldwide.<\/p>\n

It currently has almost 11,000 stores in over 70 markets around the world. In South Africa, that number has grown to 50 in Guateng and the Western Cape.<\/p>\n

This franchise has a caveat as currently Domino\u2019s 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.<\/p>\n

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Wimpy – from R1.9 million<\/a><\/strong><\/p>\n

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New Wimpy Franchisees can expect to pay between\u00a0R1.9 million \u2013 R2.5 million\u00a0<\/strong>and an initial franchisee fee of\u00a0R114,300 (excluding VAT).<\/p>\n

Franchisees are also expected to pay 7% of their turnover in management fees and\u00a05% of their turnover in royalties.<\/p>\n

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Galito\u2019s \u2013\u00a0from R1.75 million<\/a><\/strong><\/p>\n

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Galito\u2019s 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\u00a0a successful application.<\/p>\n

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.<\/p>\n

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).<\/p>\n

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Dulce’ Cafe – from R1.65 milliom<\/a><\/strong><\/p>\n

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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 \u00a0approximately R1.85 million excl vat , and will range between approximately R1.65 million and R2 million (excluding VAT).<\/p>\n

In addition, a cheaper\u00a0‘Dulce\u00a0Grab and Go’ franchise is available for smaller sites and smaller quicker menu, as above , but with a lower set up costing cost.<\/p>\n

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Steers \u2013\u00a0from R1.6 million<\/a><\/strong><\/p>\n

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According to its website, Steers franchisees can expect to pay around R1.6 million when starting a new franchise.<\/p>\n

However this differs greatly depending on the type of Steers you wish to open \u2013 with standard, drive thru and kiosk options available.<\/p>\n

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.<\/p>\n

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Burger Perfect\u00a0<\/strong> – f<\/strong>rom R1.5 million<\/a><\/strong><\/p>\n

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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).<\/p>\n

This includes a\u00a0minimum 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.<\/p>\n

“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.<\/p>\n

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Simply Asia – from R1.1 million<\/a><\/strong><\/p>\n

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Simply Asia said that costs may vary based on the size and design of the store. It adds that, the\u00a0estimated costs include working capital and all other anticipated costs.<\/p>\n