The increasing geographic availability of take-away food has fuelled sales by satisfying consumer needs for time saving and convenience.
Written by Stuart Graham
Simone Falconer, a new-product development manager at food services group Foodcorp, says the increasing geographic availability of take-away food has fuelled sales by satisfying consumer needs for time saving and convenience.
“The eating dynamic in South Africa is similar to that in the United States. When money is tight, people trade down to less-expensive price points,” she says.
South Africa, Falconer says, has not been a high priority in the global expansion planning of the powerhouse QSR companies as it is seen as a “small” market.
Nevertheless, global and US chains are present in the country, including KFC, McDonald’s and Burger King.
McDonald’s operates more than 200 restaurants in the country and claims to have employed over 10,000 South African franchises, restaurant managers and crew since it launched in the country in 1995.
Burger King, which opened its first restaurant in Cape Town in 2013, says it has “aggressive” growth plans and expects to create “a significant number of jobs” in South Africa in the next five years.
Despite the popularity of QSRs, only around 50 chain brands are active in South Africa. The absence of diversity is remarkable, says Falconer.
Chicken, pizza, seafood and coffee represent almost half of the concepts.
The balance are primarily steak, sandwich or juice bars. Asian and Mediterranean-themed chains play only very small role, while Latin and Hispanic food is almost non-existent.
South Africa’s key markets – Johannesburg, Pretoria, Cape Town and Durban – are “reasonably saturated” with QSR stores.
Johannesburg-based BMI Research estimates that there may already be between 8 300 and 8 500 QSR outlets in South Africa.
Falconer believes that growth for the country's fast-food chains can come from greater penetration in secondary and even tertiary cities and towns, but this will be a balancing act between local consumers’ discretionary income and the availability of a supply chain to meet the stores’ needs.
With limited investment by global QSRs in South Africa, the market void has been filled by local companies like Famous Brands, which operates Steers, Wimpy, Debonair’s Pizza, Fishaways and Mugg & Bean.
Few, though, can match Nando's, the spicy chicken franchise founded by Robbie Brozin and Fernando Duarte in Johannesburg in 1987.
The company has captured the world’s imagination with its spicy chicken and quirky marketing campaigns, and is used as a case study on how to build a successful global brand.
Nando’s has around 1100 stores in 22 countries, but it it was a long hard road. The company was for a time listed on the Johannesburg Stock Exchange, but the demands of shareholders frustrated the founders’ creative spirit.
It was only after a cash injection from billionaire insurance entrepreneur Dick Enthoven that it took off.
Through its unique piri piri chicken, humorous marketing such as its recent “finger selfies” campaign, in which customers take Nando's-themed photographs of their fingers, its use of social media, and public-spirited acts such granting the armed forces, health service workers, police and fire-fighters a 20% discount, the brand has won a loyal worldwide following.
Online research company eDigitalResearch’s Food and Beverage Social Media Benchmark report, released last November, shows that Nando’s has more than 3 million Facebook followers, ahead of second-placed TGI Friday's with 1.6 million.
The franchise even counts British prime minister David Cameron and US president Barack Obama as fans.
Cameron told a youth radio station in January that he’d like to take world leaders to lunch at Nando’s; on another occasion he took a selfie with a customer in a UK Nando’s.
Speaking at the University of Cape Town in 2013, Obama raised laughter after he told students, “In America, we see the reach of your culture... we’ve got a Nando’s a couple of blocks from the White House.”
Like McDonalds and Burger King, Nando’s specialises in opening its outlets at prime, high-pedestrian-traffic locations. In the UK there is a hardly a suburb or a new building that does not have a Nando’s.
“They’ve become the anchor site for new developments,” Peter Backman, managing director of London-based food service consultancy Horizons, told Bloomberg.
“Nando’s is the must-have brand to be in there.”