SA firm buys 51% of local fast food chain
Staff Writer | Wednesday June 24, 2015 18:04
Retail Group, which is Famous Brands’ local licence partner, runs 28 restaurants in Botswana in a portfolio that includes Wimpy, Debonairs Pizza, Mugg & Bean, Milky Lane and Steers.
In a statement released yesterday, Famous Brands Group Chief Executive, Kevin Hedderwick stated the transaction aligns with their deliberate approach to either acquire or take a controlling stake in businesses that use their licensed brand in neighbouring countries.
“The aim is exercise complete influence over our brands. In addition, we want to test our mettle in company-owned stores in advance of a potential broader foray into that arena.
“Famous Brands continues to set itself ambitious growth targets,” added Hedderwick, “and this strategy affords us a strong new avenue for expansion”.
A consortium of investors currently owns Retail Group, with the majority stake held by Craig Mackenzie, a long-standing business partner of Famous Brands and founder of Debonairs Pizza in 1991.
Established in 2000, Retail Group comprises 19 company-owned restaurants and manages nine franchised restaurants across Botswana.
The transaction is subject to approval from the Competition Authority of Botswana.
Given the South African chain’s critical mass in the region, Famous Brands says opportunities will be investigated to provide the Botswana businesses with in-house logistics and manufacturing services, which are currently outsourced.
In South Africa, Famous Brands has its own manufacturing and logistics arms to support its businesses.
Hedderwick said Retail Group’s management and operational team would be retained.
“This transaction fully aligns Retail Group with Famous Brands, thereby providing the business with more effective access to the extensive resources afforded by Africa’s leading franchise group. We believe that the resulting blend of skills and experience will culminate in strong growth opportunities for the operation in Botswana and beyond,” Mackenzie commented.
Famous Brands said they were attracted by the rapid expansion of the food services sector in Botswana, which has seen a 44 percent increase in franchised food service outlets industry-wide over the last five years.
“The opportunity exists to grow Famous Brands’ share of this market through the existing brand portfolio and additional and/or new brands. While Wimpy is the leading Casual Dining restaurant brand in Botswana, and Debonairs Pizza the entrenched preferred pizza brand. The recently opened maiden Steers and a second Mugg & Bean restaurant in Gaborone have delivered beyond our expectation and illustrate the potential to grow these offerings into other cities and towns,” Hedderwick elaborated.
With a burgeoning middle class supported by a healthy GDP per capita of $16,000 per annum, Botswana and Gaborone in particular has seen a rapid flourishing of shopping malls in recent years.
Two years ago, the influential 2012 AT Kearney Global Retail Development Index (GRDI) ranked Botswana as the best new destination for global retailers in Africa due to the country’s growing consumer spending power, low country risk and an unsaturated market.
Due to the saturation in South Africa, retailers have been aggressively eyeing the sub-Saharan market for expansion leading to the mushrooming of many malls in Gaborone in a short space of time.
In recent years, four malls - Sebele, Rail Park, Northgate and Airport Junction - have opened shop in Gaborone with most tenants being South African retailers.
Gaborone’s biggest mall, Game City is also currently undergoing expansion.