Fast-food chains in South Africa have grown at an average of 12 units yearly, with four new restaurants opening per year.
This is according to the results of the Standard Bank Franchise Factor survey, conducted by Franchize Directions, sponsored by the bank, to determine the contribution made by the franchise industry to the economy of South Africa.
Focusing specifically on the franchised fast-food and restaurant categories, the results show rapid and buoyant growth.
“Findings reveal a total of 64 fast-food franchised operations and 68 restaurant chains operate in South Africa. These chains are well established, boasting on average 72 business units per franchised brand.
“Restaurant franchisors are bullish about their status and plan to double their unit opening to eight in the year ahead,” says Bendeta Gordon, director of Franchize Directions.
When results of the 2000 Franchise Factor survey were released, Gordan asserted that the market for fast foods was saturated. “Today, however, the fast-food industry reflects recent consumer trends and increased spending on quicker and more readily available food options.
“This demonstrates how the consumer attitude has changed and ensures that growth within the sector continues to yield greater output,” says Gordan.
With vast growth across the majority of franchises, today Gordon anticipates this growth to continue even further to unprecedented highs.
Increased consumer spending has provided the impetus for rapid growth in turnover, which has averaged at 34% for the past two fiscal years. Fast-food turnover growth previously averaged at an annual 16%.
With consumer trends moving towards a healthier lifestyle there is a notable increase in fish restaurateurs, with pub and grill concepts showing a lesser peaked consumer demand.
Gordon revealed that employment levels in the food categories are at the highest levels compared with other franchised businesses due to a strong production element to the business. Fast-food franchised chains employ 62 900 staff and restaurants 51 900 staff. This is a combined 28% percent of the total employment in the franchise industry of 412 000 people.
“Employment numbers of this nature demonstrate how vital the fast-food franchised chains are to creating job opportunities,” said Frank Orchard, head of specialist business units at Standard Bank. “We believe that the small and medium enterprise market — franchising included — plays a critical role in the continued growth of our economy.
“Our involvement in the Standard Bank Franchise Factor survey helps us understand the franchising industry by sector, and enables us to develop solutions specific to sectors.”
The future of the fast-food franchise industry, according to Gordon, will bring growth in the target market. Specific price increases, such as the hikes in meat prices, may dampen demand, but only slightly. Due to evolving social trends that favour out-of-home food consumption, growth will continue — provided consumers receive a value-for-money offering. — I-Net Bridge