KFC (Pty) Ltd, a subsidiary of Yum! Brands, Inc is a well-known international quick-service restaurant brand that offers delicious chicken in many different international markets. Colonel Harland Sanders, a single chef, was the inspiration for the recipe’s 11 herbs and spices, which he developed more than 75 years ago. KFC has more than 20 500 restaurants worldwide and is available in more than 125 nations and territories. KFC has been operating in South Africa for more than 48 years, and there are slightly under 900 KFC locations there. In addition to 160 KFC outlets in 15 nations outside of South Africa, the first KFC restaurant opened in Orange Grove, Johannesburg, in 1971.
These countries include those in Sub-Saharan Africa such as Ghana, Kenya, Uganda, and Zambia. KFC has been the most popular fast food brand for the past 18 years and was named Top Brand in the Sunday Times Top Brands Awards last year. One entrepreneur that started their business later in life and had a highly inspiring life is the creator of KFC. Colonel Harland Sanders created KFC when he was 62 years old, around the time that most people start thinking about retirement.
His father passed away when he was five years old. He was in charge of providing food for his family. At the young age of seven, his mother started teaching him how to cook. He so took on a number of little jobs to support himself. However, he managed a restaurant in Kentucky when he was about forty. People adored the unusual homemade fried chicken dish he had. He aimed to popularize the recipe on a global scale.
At 62 years old, he finally set out on his journey with very little cash. He would deliver his chicken recipe to people’s doors. Before receiving his first franchise, he was turned down multiple times. So, this is Harland Sanders’ modest journey toward the well-known franchise KFC.
How Much Does it Cost to Buy a KFC Franchise?
The minimum cost is R6,8 million, depending on the landlord’s contributions, the store you choose to open, and the type of business that would thrive in the area. There is an upfront franchise cost of R180,000.. In most cases, the cost does go up if one buys an existing KFC. This is so because a number of factors can affect the cost of an existing KFC franchise. Some of these aspects include:
- Customer Base: The experience and perception of that branch’s present customer base are crucial factors in determining the selling price if you are purchasing an existing KFC. You as the new owner will have to put in a lot of effort to restore the reputation of the client base that has traditionally had negative experiences with that particular establishment. On the other hand, the cost can go up if you choose to buy a branch with a stellar reputation.
- Location: Particularly when considering a fast-food franchise like a KFC, the location of a business is crucial. In order to draw in as many onlookers as possible, a franchise is often located near a highway or on a major route. The price increases with location quality.
- Existing Cash Flow: The present cash flow of a franchise is sold along with it when you buy or sell an existing one. Unless the company is already on the verge of going out of business, this will definitely drive up the price.
What is the annual revenue of a KFC franchise in South Africa?
As a single entity, KFC generates about R942,000 R1,000,000 annually. Yum! Although Brands doesn’t officially reveal the earnings of its franchise owners, it may be assumed that owners make roughly R120,000 per year based on national statistics for food franchise owners.
KFC Franchise
In South Africa, there are many different types of franchises. The three biggest types are fast food and restaurants (26% of the market), retailing (18%), and building, office, and home services (10%). If released, as is the case with listed companies, the public information that may be used to evaluate the top franchises in the nation mostly comes down to group sales and the number of locations.
With more than 960 locations, KFC is the biggest franchised company in South Africa. Since the 1970s, the brand has been available in South Africa, where it is still a consumer favorite. At the FNB Franchise Summit in March 2020, Burt Gunning, a multi-unit franchisee in South Africa, provided some statistics illustrating the size of the organization globally.
- It is the world’s second-largest restaurant chain (as measured by sales) with over 23,000 locations globally in 142 countries
- Roughly 10% of outlets are company-owned, and 90% are franchise owned
- The average KFC store in SA serves 5,000 customers a week (in one store)
- The number of chips (3,5 tons of chips) sold in one store over a month would fill a room
- The amount of chicken sold over a month in one store is 9 tons which is the equivalent of 9 x 1 ton bakkie loads.
How Many Franchises Does Kfc Have In South Africa?
KFC was the largest fast food chain in South Africa as of 2021 with 960 locations there. The corporation owns a 10% franchise for KFC.
Minimum Requirements to purchase KFC franchise
- Prospective franchisees need to show that they have the required funds to fund up to 5 or more KFC stores. One store costs in the region R6 million.
- Prospective franchisees must be prepared to undertake a training programme that can last up to 6 months and self-fund themselves through this. This may include visiting an overseas training facility. You require a 100% pass rate to move on to the next stage.
- Prospective franchisees must have a detailed CV and excellent employment records.
- Prospective franchisees must be able to demonstrate excellent customer service experience and skills.
- Prospective franchisees must be able to demonstrate high business acumen (a professional tertiary education will be beneficial).
- Prospective franchisees must show leadership and demonstrate being capable of managing multi-stores.
- Prospective franchisees must be hands on in the business and so anyone looking for an investment opportunity will be rejected.
- Previous experience in the food industry or quick service restaurant industry is essential.
- Prospective franchisees cannot have an interest in any other food business.
- Prospective franchisees must be proposed to commit 100% of their working hours to the day-to-day operation of their KFC business. Applicants need to disclose any other business interests.
- Applicants must be substantially Broad Based BEE compliant with significant direct BEE ownership.
- Prospective franchisees may have to wait for a considerable time until the right opportunity arises. They also may need to relocate.
- As mentioned, no opportunities with KFC are guaranteed and KFC will not be held responsible for approved franchise owners that do not open a restaurant for whatsoever reason.
- Prospective franchisees must pay a non-refundable admin fee of R5 000.00 when they submit their form. Should more detailed background checks be required the cost thereof will be borne by the applicant.
What are the advantages of a franchise?
It’s safe to claim that franchises frequently achieve great success. The reason is that consumers already fully trust and respect them. As an illustration, if a customer wants to book a vacation, they normally do it through a reputable travel agency. Similarly to that, when someone wants to sell their house, they typically choose a well-known estate brand.
Brand recognition
The recognition of a franchise’s brand is a huge benefit. Nearly everyone is familiar with the brand and what it offers. Franchised enterprises don’t need to start from zero when creating a brand or clientele. Instantaneously, customers are aware of what to expect and what the company offers. Franchisees frequently flourish thanks to brand recognition. The rationale is that a logo may be used to instantly recognize a brand. Without having to research it, they instantaneously know everything they need to know.
Free training
A person won’t get any training if they launch their own firm. Fortunately, franchisees offer excellent training to both employers and employees. This training frequently covers topics including system training, customer interactions, and more. When starting a business, having the right training is crucial. The most well-known franchises in South Africa require this of every employee. Employers are thus aware of how to conduct business successfully.
Business assistance and support
The franchisor offers business support to franchisees. This covers marketing strategies, furnishings, store design ideas, and products. The franchisor will also provide assistance in developing a comprehensive plan to run the firm successfully. Mentorship is another form of business support, which is a major benefit. The franchisor imparts his or her expertise, advice, and suggestions regarding how to run the company. Those who have never ran a business before can benefit greatly from this advice.
Less likely to fail
Given that they are provided counsel and support, franchises have a reduced failure rate. Compared to a one-person shop, franchise closures are less frequent. When one invests in a franchise, they are joining a profitable and flourishing business. The franchisor will often pay attention if the franchise isn’t operating smoothly. Then they will intervene and offer the franchisee all the guidance they can to avoid failure. Additionally, they will assess the problem and offer assistance in resolving it.
Purchasing power
A person would need to locate suppliers if they were to launch their own firm. Compared to franchises, these suppliers could charge them more for the same goods. This is due to the fact that franchises run on a bigger scale. Franchisees can also access a bigger network of suppliers thanks to their buying power. These providers are also reliable and produce high-quality goods.
Profits
As we’ve already established, devoted clients only purchase from well-known brands. Profits are therefore typically far higher than those of independent enterprises. Despite the higher initial investment, franchises are more likely to produce a profit.
ALSO READ :How much is a private Jet in South Africa
