Here’s how much it costs to open a Nando’s, KFC, Chicken Licken or Little Chicken franchise in South Africa
- Chicken is one of the most popular fast food dishes in South Africa.
- As a result, outlets that sell chicken in various forms should make a nice profit.
- Opening a new Chicken Licken, Nando’s or KFC in 2021 can easily cost over R5 million.
- But a host of smaller chicken-centric franchises are available for much less.
- For more stories go to www.BusinessInsider.co.za.
On average, South Africans eat up to 33 kg of chicken per person per year, making the country one of the world’s largest consumers of chicken meat.
While much of this consumption occurs in homes, quick-service restaurants like Nando’s, KFC, and Chicken Licken also satisfy those cravings – and chicken counts for it. almost 50% of all the fast foods consumed in this country.
So it stands to reason that if you are looking to open a take out or fast food restaurant in South Africa, chicken has historically been one of the safest bets.
But if swimming upstream against global giant KFC and big players like Nando’s and Chicken Licken as an independent restaurant is too intimidating, it’s possible to buy your own branch of these popular brands – as long as you have enough money. ‘money and find a suitable location. .
If these giants are too expensive for your liking, or have arduous application processes and waiting lists, there are also a host of smaller chicken franchises currently on sale in South Africa. They are often also much cheaper. Companies like Africaz, Barcelos, Bird & Co, Chicken Bar, Honchos, Mochachos and Chicken Xpress are all looking to tap into the chicken fast food market and accept new franchisees.
The prices of many franchises in South Africa have also increased over the past two years – and the chicken industry is no different.
Here’s how much it’ll cost you to open your own chicken restaurant or take-out franchise in 2021.
Chicken Licken has a 40-year history in South Africa and claims to be the world’s largest non-American fried chicken franchise. It has grown considerably since its beginnings in Johannesburg and has developed a kind of cult. The business continued to grow and, after years of dismay, finally offered door-to-door delivery.
Chicken Licken is also looking for franchisees to help grow the business – and they sell full stores and a drive-thru concept. The prices of both options have increased significantly over the past two years.
A full store currently costs R 4.8 million, while a store with a drive-thru option costs R 6.8 million. They also charge an initial franchise fee of Rand 180,000 and charge 12% of franchisees’ turnover, split evenly between royalties and marketing costs.
For this, franchisees receive a comprehensive three-week training for a staff of 14, relevant kitchenware, uniforms, legal assistance, store plans and development supervision. The franchise agreement lasts ten years or as long as the lease of the shopping center.
Nando’s is another popular South African franchise – and one that has grown around the world. There are now around 1,000 Nando’s branches, and franchisees are responsible for much of this growth.
Nando’s admits that most will not go through the full application process – they require applicants to have a solid track record, sufficient funds, and possess “the attributes of a business owner.”
Provided you can go through the application process and find a suitable available location, you will need to pay an initial application fee of R 25,000 – which is refundable without interest if you opt out. Franchisees must then pay a franchise fee of Rand 250,000 to cover duties and other legal issues and other essentials.
Establishing a new Nando then costs about R 3.7 million plus VAT, and the company offers working capital of R 500,000. In total, opening a new Nando franchise in 2021 is likely to cost around R 5.25 million for a regular store and R7.05 million for a drive-thru. Nando’s also charges fees for royalties and marketing, which were previously set at 12% of monthly net sales.
Alternatively, there are currently established Nando’s stores up for sale.
KFC in South Africa has always been a little reluctant to accept new franchisees – while most franchisors are happy to share details of what to buy into the business, emails to the franchise office KFC’s rebounded and its corporate headquarters declined to share the latest details of the franchisee application with Business Insider South Africa.
With some 914 stores located in South Africa, this is not surprising and new franchise applications have been somewhat oversubscribed for several years. Historically, existing KFC franchisees in good standing had priority over new applications, and there was a waiting list for foreigners. But reports say a new KFC franchise in South Africa will cost more than R6 million.
Africaz flame grilled chicken
Africaz Flame Grilled Chicken started in 2017 and currently has 28 branches, mostly in Gauteng and KwaZulu-Natal, with seven more to open soon. The fast-food restaurant sells flame-grilled chicken and burgers, and some branches also serve pizza.
They accept applications from interested franchisees. They currently charge a franchise fee of R175,000 excluding VAT, administrative fees of R5,000 and legal fees of R15,000. This total of R195,000 does not include electrical installations, extraction, gas and several other extras – but the franchise documentation commits that the installation of the store takes place four to six weeks after the payment.
The store also charges a monthly fee of 5% of net sales.
Barcelos started out as a flame-grilled chicken restaurant in 1993 and began franchising its stores five years later. They now have 138 stores in 20 countries, and many local quick-service restaurants in South Africa are owned by franchisees.
A new Barcelos franchise in South Africa requires a membership fee of R 150,000 plus VAT, working capital of approximately R 100,000 and an additional approximately R 100,000 for opening stock. Depending on the size and location of the branch, a new Barcelos branch requires a total investment of between 950,000 and 1.4 million Rand.
Franchisees also pay 8% of net sales in marketing and royalty costs.
Oiseau & Cie
Bird & Co is a chicken and pizza franchise launched in KwaZulu-NAtal in 2017. There are currently six stores in their network, but they are looking for franchisees to help them grow their footprint.
A new Bird & Co franchise requires an initial fee of R100,000 and would cost a total of R1.6 million excluding VAT to set up. The total price of a new franchise is therefore probably in the order of R 2 million. Once established, franchisees are required to pay a total of 5% each month in management fees.
Chicken sea bass
Chicken Bar is a business founded in 2019 in Mthatha that serves grilled chicken dishes. The owners have decided to franchise the business in 2020 and are currently recruiting new franchisees for additional branches.
They sell two chicken franchise options in kiosk or container form, both of which are five-year agreements. The franchise fee for both is R100,000 and requires an 8% monthly fee, exclusive of VAT. In total, the kiosk option will require an investment of 981,000 Rand and the container franchise 1.85 million Rand, both excluding VAT.
Chicken Xpress is another chicken franchise with its roots in KwaZulu-Natal. It started as a single store in Umlazi and has grown to include stores across South Africa and neighboring countries.
Franchises have to pay a membership fee of R125,000, and the estimated setup fee for a new 80 square meter Chicken Xpress store is around R13 million, both excluding VAT. Franchisees must also pay a monthly fee of 6.5% of sales.
Grilled chicken flambéed with honcho
Honchos Flamed Grilled Chicken started in Pietermaritzburg in 2005 and has since grown to 91 outlets across the country.
Establishing a new Honchos store requires an initial cost of Rand 150,000 and working capital of the same amount. They estimate that it will cost 1.35 million Rand to set up a new store, bringing the total investment to around 1.5 million Rand. Franchisees will also pay a monthly fee of 7%.
Pedros is a flame grilled chicken franchise with branches in KwaZulu-Natal, Gauteng and Cape Town. Their goal is to offer chicken sales through multiple touchpoints, including apps and delivery, but with a focus on customer-oriented branches.
They sell freestanding store franchises ranging in size from 100 to 200 square meters, which can cost anywhere from R 1.3 million to R 1.6 million to establish. They also offer a drive-thru option which costs around R 2.5 million.
The franchisee’s membership fee is R100,000 and the monthly royalties represent 5% of net sales.
Tasty Gallos is a chicken-centric franchise with around a dozen stores. They are looking for new franchisees to buy into their business and claim to offer a franchise with low initial, setup and operating costs.
Tasty Gallos requires franchisees to pay an upfront fee of R57,500. The facility fee is likely to be in the range of R500,000-750,000, and the total monthly fee is 9%.