{"id":315146,"date":"2019-05-11T07:00:51","date_gmt":"2019-05-11T05:00:51","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=315146"},"modified":"2019-05-10T15:04:19","modified_gmt":"2019-05-10T13:04:19","slug":"how-much-it-costs-to-open-a-top-fast-food-franchise-in-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/315146\/how-much-it-costs-to-open-a-top-fast-food-franchise-in-south-africa-2\/","title":{"rendered":"How much it costs to open a top fast food franchise in South Africa"},"content":{"rendered":"

Despite a flat economy, South Africa’s fast food franchises sector has shown strong growth in revenue over the past couple of years.<\/p>\n

The franchising sector as a whole, contributed an estimated 15% to the country\u2019s GDP, according to the Franchising Association South Africa 2018 survey.<\/p>\n

A 2018 report<\/a> <\/strong>by global analytics group Euromonitor showed that revenue across 20 major fast food franchises in South Africa increased between 2016 and 2017 \u2013 with brands like KFC and Steers showing impressive growth.<\/p>\n

The table below outlines the growth in revenue, as reported by Euromonitor, as well as how much money each brand makes per franchise.<\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Brand<\/th>\nRevenue (2017)<\/th>\nGrowth (from 2016)<\/th>\nFranchises (2017)<\/th>\nRevenue per outlet<\/th>\n<\/tr>\n
McDonald’s<\/td>\nR4.34 billion<\/td>\n5.6%<\/td>\n245<\/td>\nR17.7 million<\/td>\n<\/tr>\n
Burger King<\/td>\nR623.5 million<\/td>\n28.5%<\/td>\n61<\/td>\nR10.2 million<\/td>\n<\/tr>\n
KFC<\/td>\nR8.71 billion<\/td>\n9.4%<\/td>\n879<\/td>\nR9.9 million<\/td>\n<\/tr>\n
Nandos<\/td>\n–<\/td>\n7.1%<\/td>\n303<\/td>\n–<\/td>\n<\/tr>\n
Fish and Chip Co.<\/td>\nR810.8 million<\/td>\n5.7%<\/td>\n164<\/td>\nR4.9 million<\/td>\n<\/tr>\n
Wimpy<\/td>\nR2.02 billion<\/td>\n7.5%<\/td>\n481<\/td>\nR4.2 million<\/td>\n<\/tr>\n
Capitan DoRegos<\/td>\nR162.7 million<\/td>\n17.6%<\/td>\n41<\/td>\nR4.0 million<\/td>\n<\/tr>\n
Debonairs<\/td>\nR1.49 billion<\/td>\n12.5%<\/td>\n511<\/td>\nR2.9 million<\/td>\n<\/tr>\n
Steers<\/td>\nR1.35 billion<\/td>\n8.9%<\/td>\n561<\/td>\nR2.4 million<\/td>\n<\/tr>\n
Roman’s Pizza<\/td>\nR474.9 million<\/td>\n8.1%<\/td>\n210<\/td>\nR2.3 million<\/td>\n<\/tr>\n
Barcelo’s<\/td>\nR155.5 million<\/td>\n9.6%<\/td>\n68<\/td>\nR2.3 million<\/td>\n<\/tr>\n
Hungry Lion<\/td>\nR279.4 million<\/td>\n10.0%<\/td>\n125<\/td>\nR2.2 million<\/td>\n<\/tr>\n
Pizza Perfect<\/td>\nR194.5 million<\/td>\n5.2%<\/td>\n101<\/td>\nR1.9 million<\/td>\n<\/tr>\n
Sandwich Baron<\/td>\nR94.0 million<\/td>\n7.1%<\/td>\n51<\/td>\nR1.8 million<\/td>\n<\/tr>\n
Chicken Licken<\/td>\nR422.0 million<\/td>\n4.2%<\/td>\n240<\/td>\nR1.75 million<\/td>\n<\/tr>\n
King Pie<\/td>\nR435.8 million<\/td>\n2.3%<\/td>\n253<\/td>\nR1.7 million<\/td>\n<\/tr>\n
Kauai<\/td>\nR226.6 million<\/td>\n8.3%<\/td>\n135<\/td>\nR1.68 million<\/td>\n<\/tr>\n
Fishaways<\/td>\nR375.6 million<\/td>\n7.9%<\/td>\n226<\/td>\nR1.66 million<\/td>\n<\/tr>\n
Pie City<\/td>\nR176.0 million<\/td>\n2.8%<\/td>\n175<\/td>\nR1.0 million<\/td>\n<\/tr>\n
ChesaNyama<\/td>\nR225.5 million<\/td>\n8.8%<\/td>\n269<\/td>\nR838 290<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

Taking the data above into account, its understandable 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.<\/p>\n

However, not all of these franchises are open to public applications, with some requiring interested franchisees to make first contact before releasing financial information.<\/p>\n

Other restaurants – such as KFC<\/a> <\/strong>– do not currently accept applications at all.<\/p>\n

Below BusinessTech looked at the costs of opening some of the most popular fast food franchises in South Africa.<\/p>\n

McDonald’s<\/strong><\/p>\n

\"\"<\/a><\/p>\n

McDonald’s said that the cost of a franchise<\/a> <\/strong>varies, and that actual costs are only determined when an individual franchise is offered to an applicant.<\/p>\n

“The size of the restaurant, location, pre-opening expenses, inventory, selection of equipment, signage, seating and style of decor and landscaping will affect cost,” it said.<\/p>\n

The estimated cost can be somewhere from R4 million – R6 million<\/strong>, depending on the type of restaurant and other factors.<\/p>\n

“An applicant must have a minimum of 35% of the purchase price of a restaurant in unencumbered, non-borrowed cash.<\/p>\n

“Institutional finance through e.g. banks can be used to fund the balance (McDonald\u2019s does not provide financing or loan guarantees nor does it permit any form of borrowing from any third parties for purposes of financing the franchisee\u2019s initial 35% contribution).”<\/p>\n

Nando’s<\/strong><\/p>\n

\"\"<\/a><\/p>\n

Nando\u2019s charges a\u00a0franchise application<\/a><\/strong>\u00a0fee of\u00a0R25,000 (VAT inclusive) and a\u00a0franchise fee of\u00a0R230,000<\/strong>.<\/p>\n

This fee includes:<\/p>\n