How much it now costs to
buy a KFC, Nando's, and Chicken Licken - or some cheaper takeaway options
Business Insider | 03 Jan 2023
- Chicken
is one of South Africa's most popular takeaway items, and most
leading brands also sell franchises you can buy and run.
- The
big players like Nando's, Chicken Licken, and KFC charge in the millions
for a new store.
- But
several smaller or newer franchises offer cheaper, if lesser-known,
options.
- Here's
how much it costs to open a takeaway chicken restaurant franchise in South
Africa.
Chicken franchises are
among the most popular - and expensive - takeaway businesses to buy in South
Africa.
Much of this has to do with
demand - South Africans collectively eat around
1.92 million tonnes of poultry, or up to 16 birds each, per year.
And several brands, like
KFC, Nando's, and Chicken Licken, have made a good business of getting South
Africans to buy even more in ready-to-eat formats.
The country's top takeaway
chicken spots pull crowds with familiar branding, strong marketing campaigns,
and popular recipes and preparation methods. Many of these branches are
franchisee-owned and run - and even the leading brands still have some
locations available to buy.
Their streamlined systems
and strong branding come at a premium to franchisees, though - and may be too
rich for first-time chicken shop operators. This is why many smaller, newer
franchises are looking to cash in on this chicken love affair.
Here's how much it now
costs to buy a Nando's, KFC, Chicken Licken - plus a few other lesser-known but
cheaper chicken franchise businesses.
Nando's
It's not easy to become a
Nando's franchisee in South Africa - the first thing South Africa's leading
homegrown chicken franchise says in its prospectus is that most don't make it
through the application process. They don't only require a pretty hefty payment
- but also want people who possess "the attributes of a business owner to
successfully fulfil your role as a Nando's franchisee". They require
franchisees to get involved with the business and only accept those who will be
owner-operators.
As part of the turnkey
business you're buying, Nando's commits to handling premises selection,
interior design, site development, and project management. There's also a
non-negotiable two-month training period.
Cost of buying a Nando's
branch: Nando's charges a
R35,000 application fee followed by a R250,000 franchise fee payable upfront.
Establishing a new Nando's branch costs about R3.7 million. Franchisees also
need at least R415,000 in working capital. In total, if you're deemed worthy, a
new Nando's franchise will cost between R5.25 million and R7.05 million,
depending on store format.
Nando's no longer
stipulates fees for royalties and marketing, but these have previously been set
at 12% of net monthly sales.
Alternatively, Nando's
posts established franchises for sale on a
dedicated website.
Chicken Licken
Chicken Licken has a long
history in South Africa - its first branch opened in the Johannesburg suburb of
Ridgeway in 1981. Despite this, it's a chicken fast food chain that's somewhat
flown below the radar compared to the likes of Nando's, instead earning a cult
status among fans. There are, however, hundreds of stores around the country,
many of which are franchises.
Chicken Licken says its
franchise model with "tightly controlled internal cost structures"
has proven successful across the continent. They're looking for franchisees who
are financially stable "with business acumen, living close to the proposed
site and prepared to become fully involved in the running of the
business".
Cost of buying a Chicken
Licken branch: Chicken
Licken charges an upfront franchise fee of R180,000. Depending on the store's
size, type, and location, the total investment amount is estimated to be at
least R4 million - or about R3 million more if you want to build a
drive-through option. They also charge ongoing fees for advertising, marketing,
and royalties, which total 12%.
KFC
KFC is the global leader in
fried chicken sales, and it’s no different in South Africa. The store has a
dominant position for its target market here, and as such new franchises are
hard - if not impossible - to come by. If you're desperate to own a KFC store
over any other chicken franchise, your best bet will likely be the purchase of
an existing KFC an old franchisee may no longer want or be able to keep.
Although this may raise
some concerns about the historical success of the branch, KFC says they
are “constantly on the lookout for potential franchisees to purchase existing
KFC businesses that may become available from time to time”. They’re looking
for operators with proven track records in the industry and “the financial
muscle to grow the KFC brand in your chosen geography”.
Cost of buying a KFC branch: KFC does not stipulate the cost of
purchasing a new KFC franchise in South Africa, if available, nor did it
respond to Business Insider’s request for information.
Historically KFC in South Africa has given the first bite of new franchises to
existing owners with good track records, and prices for these started at about
R6 million.
Galito's
Galito's started as early
competition to the rise of Nando's, and in many ways, follows a similar
approach in recipe and marketing. The business began with a single store in
Mbombela but has grown to 183 in 16 countries.
Cost of buying a Galito's
franchise: Galito's
charges an initial joining fee of R130,000. Store setup costs roughly R2
million, depending on size and format. Franchisors also charge a monthly fee of
9% of turnover, which goes towards marketing and management.
Bird & Co
Bird & Co is a
fast-food franchise that focuses on chicken and pizza. On the chicken side,
they offer items like burgers, wraps, and wings. It's a comparatively small
franchise, with just 11 branches mainly focused around the Durban area. This
means they are relatively competitively priced compared to some of the more
prominent names in the industry.
Cost of buying a Bird &
Co franchise: Bird
& Co charges an R80,000 upfront fee. They estimate that opening a new
branch will cost in the region of R1.75 million. They charge a 5% ongoing
management fee.
Chicken Bar
Chicken Bar started in
September 2019, intending to become "the new home of African grilled
chicken dishes". The business is still small, with only one branch listed
on their website, but costs are comparatively low, with minimal working capital
required, compared to more established franchises. They offer a kiosk or
container option to prospective franchisees.
Cost of buying a Chicken
Bar franchise: Chicken Bar charges an upfront fee of R100,000 and estimates the total
investment amount to be R981,000. They charge an ongoing fee of 8% for
marketing, advertising, and management.
Chicken Xpress
Chicken Xpress started as a
single store in 2011 and expanded using a franchise model. They now have more
than 20 stores, with several located in Botswana and Uganda. They sell fried
chicken in burger, pieces, and wings formats at competitive prices.
Cost of buying a Chicken
Xpress franchise: Chicken Xpress charges an upfront fee of R125,000, and estimates the
total investment amount to be R1.54 million. They charge 6.5% fees allocated
towards advertising, marketing, and management.
Honchos
Honchos is a chicken
franchise started in Pietermaritzburg in 2005. They focus more on the
flame-grilled side of the industry and offer items like burgers and shawarmas.
They now have 98 stores, including some in Botswana, eSwatini, and Lesotho.
They have two store formats available for purchase which differ in size and
cost.
Cost of buying a Honchos
franchise: Honchos charges an
upfront fee of R150,000 and estimate the total investment amount to be between
R1.8 million and R2 million. They recommend a working capital of R150,000 and
charge 7% ongoing fees for management and marketing.
Pedros
Pedros is a flame-grilled
chicken business that has tried hard to take on Nando's in both recipe and
advertising. They've grown rapidly in recent years and now have over 100
stores. They offer both standalone and drive-through options. These cost less
than many of their big-name competitors but more than many of the smaller
operators in this sector.
Cost of buying a Pedros
franchise: Pedros
charges a R125,000 joining fee. They estimate a standard store will cost
between R1.7 million and R2.8 million, while drive-throughs will likely cost
between R2.5 million and R3.5 million. They charge an ongoing fee of 7%, which
goes towards royalties and marketing.
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