How much it costs to buy a coffee franchise like Bootlegger, Vida E, Mugg & Bean, or Daily Coffee

• The South African coffee industry generates millions each year and one way to tap into this is to buy a coffee shop franchise.
• There are several options available that range in price, products, services, and brand recognition.
• Here's how much it costs to buy your turnkey coffee shop franchise under brands like Vida E Caffè, Mugg and Bean, Bootlegger Coffee, Shift Espresso Bar, Famous Bean, Daily Coffee Café, and Xpresso Café.

The South African coffee industry was worth as much as R4,9 billion last year, and some project it to reach R7.2 billion in the next four years. 

One of the ways you can invest in the local coffee industry instead of supporting it with your own caffeine habit, is to buy into an existing franchise brand that offers a turnkey sit-down coffee shop or takeaway business.

South Africa has several strong coffee shop franchise brands still considering new franchisee applications.

Stalwarts like Vida E Caffè, Mugg and Bean, and Bootleggers take up much of the real estate in this space. They offer solid brands and established business models, and are more expensive than smaller or lesser-known franchises.

Rapid risers like Shift, The Daily Coffee Café, Xpresso Café, Famous Bean and The Daily Coffee Café may not yet be as widespread, but they offer alternate pricing. 

And as in previous years, favourites Starbucks and Seattle Coffee Company are still not available as franchises in South Africa.

Although setup costs remain similar among most like-for-like stores, key fees differ between franchise options. 

Important factors to look out for in the pricing structure are clauses requiring a percentage of build costs for the franchisor and ongoing flat fees for digital displays, point-of-sale devices, and music licenses. Most also require ongoing fees, calculated as a percentage of turnover, that goes towards marketing and royalties.

If you love coffee or simply want to invest in the retail coffee industry in South Africa, this is how much you'll pay to open a new franchise coffee shop in 2022.

Vida E Caffè

Vida E Caffè is South Africa's most common speciality coffee franchise. The coffee shop started with a single branch in Cape Town in 2001 and now has 224 South African stores – 160 of which are franchises. Many of these are privately owned franchises feeding off the head office infrastructure. Over the years, the brand has diversified to offer branches in airport terminals, petrol station forecourts, office blocks, malls, and high streets. Despite the brand's ubiquity, Vida E Caffè is still accepting new franchisee applications.

Vida E Caffè cost: A new Vida E Caffè franchise in South Africa costs R950,000 or R1.4 million, depending on the size, design, layout, and equipment. Some options, like containers and drive-throughs, come at different setup costs. Vida franchisees must also pay a fee of R150,000. Ongoing fees include 10% of net monthly sales, plus R2,387 monthly towards points of sales machines, preventative maintenance, promotional LCD screens, payment apps, and music licenses. A fee of 5% of loyalty turnover also applies. 

Mugg & Bean

Mugg & Bean is one of the oldest, best-established coffee shop franchises in South Africa. The first store opened at the V&A Waterfront in 1996, and today it's owned by the franchising behemoth Famous Brands – with over 200 stores nationwide. Mugg & Bean currently offers two main franchises – a sit-down restaurant and an On the Move store. There's also an option to buy a limited service On the Move store.

Mugg & Bean cost: A standard sit-down Mugg & Bean restaurant of 280 m2 currently costs R3.695 million. This includes the initial franchise fee but excludes other expenses like design fees and a 4% build cost management fee. 

An On the Move Mugg & Bean branch costs R1.345 million, including the franchise fee, and a limited service On the Move costs R1.65 million. On the Move prices also exclude some fees like those for design and 4% of the build costs.

All Mugg & Bean franchisees must also pay ongoing fees of 10% of gross sales, which goes towards royalties and advertising.

Bootlegger Coffee Company

Bootlegger Coffee Company started in Cape Town in 2012 with an initial focus on selling roasted beans at a retail level. The business quickly expanded into a full-service coffee shop with more than 30 branches in Cape Town and Johannesburg. According to the Bootlegger website, they are still accepting applications for new stores in Gauteng and the Western Cape. Franchisees must have at least 50% of the setup costs in unencumbered cash or be willing to partner with other prospective franchisees.

Bootlegger Coffee Company cost: A new Bootlegger coffee shop costs between R2 million and R3 million to set up. Franchisees must pay an upfront fee of R120,000, an ongoing marketing fee of 2%, and a franchise fee of 5%.

The Daily Coffee Café

The Daily Coffee Café is a relatively new South African coffee shop franchise that has been aggressively rolling out new franchises across the country. They currently have 38 branches in six provinces and have, until now, primarily targeted strip and community malls. Daily Coffee offers two franchise models: a sit-down restaurant and a takeaway store.

The Daily Coffee Café cost: A sit-down Daily Coffee franchise costs between R1,68 and R2 million. Franchisees must have R60,000 as working capital and pay an ongoing management fee of 6% of turnover. The express option, suitable for forecourts, costs between R250,000 and R550,000, including a project management fee. Express franchisees must pay a monthly franchise fee of 4% of turnover.

Shift Espresso Bar

Shift Espresso Bar is a family-run business that started in Cape Town in 2014. It focuses on quality coffee and carefully designed stores, and has recently begun a franchising-fuelled expansion process. There are currently nine branches in Cape Town and Stellenbosch, and they are open to applications from prospective businesspeople looking to buy into their turnkey coffee shop operation. They offer two franchise types: an express store and one designed for sit-down service.

Shift Espresso Bar cost: Grab-and-go Shift franchises start at R800,000. Standard sit-down and flagship stores cost approximately R1.9 million. Ongoing royalties are 5% of turnover, and franchisees must pay 1.5% of turnover towards marketing.

Famous Bean

Famous Bean started in 2017 and is one of the newer coffee shop franchises available in South Africa. It currently has five branches, giving it one of the smaller franchise networks in the speciality coffee network. However, it claims to be a popular "industry leader" in its respective locations. 

Famous Bean cost: Famous Bean offers five different franchise options that vary in footprint and offerings. These include a mobile trailer costing R290,000, a takeaway store at R690,000, and three full-service options costing between R1.2 and R1.8 million. The franchise website does not disclose ongoing franchise fees. It does not publish a head office phone number, and an email request for updated information was returned unanswered.

Xpresso Café

Xpresso Café has made a name for itself by selling everything for R12, including all coffees, hot drinks, and several snack options. It currently has 30 branches located around South Africa, but plans to open more than 100 in the next five years.

Xpresso Café cost: An Xpresso Café franchise costs R950,000, which includes setup, royalty fee, and training. They also require R150,000 in working capital.

Massive tourism revenue leakages in Africa

On average, of each US$100 spent on a vacation tour by a tourist from a developed country, only around $5 actually stays in a developing-country destination's economy.

This was highlighted by Elcia Grandcourt, Director, UNWTO Regional Department for Africa, speaking at the Africa Tourism Leadership Forum (ATLF) 2022 in Gaborone, Botswana, this week.

She noted that tourism was one of the fastest-growing and most resilient socio-economic sectors, accounting for 7% of global trade.

“Tourism could be a feasible option for cushioning the local communities through the creation of direct and indirect employment or encouraging environmental protection and conservation in areas where local communities have low incomes.

Nevertheless, tourism has many hidden costs, which can have unfavourable economic effects on the host community,” said Grandcourt.

She pointed out that, while the least-developed countries had the most urgent need for income, employment and a general rise in the standard of living by means of tourism, they were, unfortunately, least able to realise these benefits.

“Among the reasons for this are large-scale transfer of tourism revenues out of the host country and exclusion of local businesses and products,” she said.

Leakages in tourism

Grandcourt explained that the direct income for an area was the amount of tourist expenditure that remained locally after taxes, profits and wages were paid outside the area and after imports were purchased. These subtracted amounts are called leakages.

According to her, leakages in tourism result when revenues obtained from tourism economic activities in host countries are not available for circulation or consumption of goods and services in the same countries.

“There is growing evidence that most of the tourism receipts in developing countries have no impact on local economies because they are spent on imports or earned by foreign workers or businesses, resulting in high leakages,” said Grandcourt.

She noted that, with the majority of all-inclusive package tours, about 80% of travellers' expenditures went to the airlines, hotels and other international companies – who often had their headquarters in the travellers' home countries – and not to local businesses or workers.

“The average import-related leakage for most developing countries today is between 40% and 50% of gross tourism earnings for small economies and between 10% and 20% for most advanced and diversified economies,” said Grandcourt.

“Leakages in tourism deeply affect African countries’ economies across the continent, with severe and negative impacts on local communities’ livelihoods by fostering inequalities and producing cultural erosion.”

Mitigate effects of leakages

For the tourism industry to mitigate the negative effects of leakages in Africa’s tourism they can do the following:

• Encourage guests to embrace local culture by eating at local restaurants, buying local products and selecting locally owned boutique accommodation or resorts, as this allows international tourists to better connect with the destination they are visiting and to live real and authentic tourism experiences that prevent excess leakage;
• Create strong sustainable linkages by providing locals with more opportunities to offer their products and services to the tourism industry using the skills and systems that are already established in their country;
• Support governments in implementing capacity-building programmes to train high-level tourism professionals locally without having to rely on external knowledge and expertise;
• Engage with and involve local communities as a way to retain much of the revenue from tourism activities and for them to help the sustainable use of natural resources, especially forestry and wildlife.
• Leverage product diversification and digital transformation of tourism to maximise economic benefits derived from the sector and reduce leakages and increase linkages.

UNWTO initiatives

To this end, UNWTO has put in place two initiatives that contribute to showcasing Africa’s uniqueness and diversity.

The first is the publication of a book, ‘A Tour of African Gastronomy’ which promotes local gastronomy as the core component of African intangible heritage and showcases top chefs from the continent, the recipes and the wide variety that the cuisine of all the countries across the continent can offer.

Secondly, the ‘Best Tourism Villages by UNWTO’ initiative looks for the best examples of rural villages worldwide, harnessing the power of tourism to provide opportunities and safeguard their communities, local traditions and heritage.

The challenge aims to identify villages taking innovative and transformative approaches to tourism in rural areas in line with the Sustainable Development Goals and to maximise the contribution of the sector to reducing regional inequalities and fighting against rural depopulation.

A foreign couple worth R49 million can finally retire in SA – despite home affairs and FNB

Compiled by Phillip de Wet, Business Insider SA.

07 Nov 2022

• In theory, South Africa welcomes foreigners worth at least R12 million who want to settle locally.
• A couple in their seventies from Singapore – worth R49 million – found it a little hard to take advantage of that welcome.
• First National Bank said, incorrectly, that they had submitted a fraudulent account statement.
• Even after that mistake was corrected, the department of home affairs refused to grant them residency, up to fighting them in court.
• The DHA has now been ordered to issue their permits, and cover their legal costs.

A wealthy couple from Singapore should finally receive permanent residency in South Africa towards the end of this month, after a three-and-a-half-year fight to take advantage of immigration provisions designed to attract wealthy people and their money.

And the department of home affairs (DHA) will have to settle their legal bill.

On Friday, the Western Cape High Court gave the director-general of home affairs and its minister 20 days to issue residence permits to Yew Teck Ling and See Hie Chua, a married couple of Singaporean nationals in their early 70s.

They have a net worth of at least R49 million, well above the threshold of R12 million used in South Africa to determine if people are rich enough for special treatment.

But that made no difference when things went horribly wrong after they submitted their application for permanent residency in January 2019.

The couple submitted nine statements from three different banks, to show how much cash they had. As would emerge later, the DHA took almost exactly two years to ask one of those banks, First National Bank, to verify some of those statements. FNB's specialist bank statement verification unit immediately came back with an answer: at least one statement "appears to be fraudulent as the transactions reflected thereon does [sic] not correspond with the transactions on the Bank's systems."

It took another eight months, to September 2021, for DHA to convey that news to the couple, telling them that their attempt at fraud makes them people "not of good and sound character", and so not welcome in South Africa. 

DHA did not tell them which bank statement had been deemed a fake, not when they asked in October, not when they asked in November, and not when they asked in December.

Only this year, in the face of legal action, did their lawyers first obtain the record of the decision, and then an admission that crying fraud had been "an error".

Armed with that, their lawyers went back to home affairs in May, to suggest that it stop fighting their court application for their permits.

DHA refused. The couple, it said, had now overstayed their previous permits. They would first have to fill out the correct forms to explain why they had not renewed their temporary visas. Having so sought to legalise their stay, they could either apply for permanent residency again from scratch, or could try for an appeal against the previous decision, having first asked for condonation for filing that appeal late.

Either way, they would not get "the opportunity to submit the correct and verified bank statements with proof thereof."

This, the DHA's lawyers told their lawyers, would be a "practical and pragmatic solution going forward."

In fact, there was absolutely no other way to deal with the case, home affairs director general Livhuwani Makhode told the court. His decision to deny the application had been correct, he said; the fact that he had done so based on a mistake by someone else made his call neither wrong nor unreasonable.

And now, Makhode said, it was utterly impossible to reconsider the matter. As the file on the application had been closed, any further action on it – such as correcting FNB's mistake – would undermine departmental procedure from which there can be no deviation.

He did not say how exactly the couple could reapply in the face of an uncorrected finding that they had committed fraud, nor how long their new application might take.

But considering South Africa's approach to attracting rich foreigners – at least in theory – there is no reason to put the couple through the uncertainty of another application, ruled judge Judith Cloete. Instead, DHA should simply issue their permits.

And, so as to not "make a mockery of their duty to be accountable", the home affairs DG and minister can pay their legal costs too, in their official capacities.

SA Tourism in ‘high spirits’ ahead of summer

03 November 2023 – Tourism update

South African Tourism has weighed in on the country’s latest tourism stats, underlining that the improving numbers show the sector is in a good position heading into the peak summer season. 

Year-to-date, South Africa has received a total of 3.3 million international arrivals, signalling a 165% increase compared with the same period in 2021.

“Our tourism numbers continue to show a steady upward trajectory. We’re excited to head into summer, which is our peak season, with such great performance and in high spirits as a sector. This is also a good indication that the work that our teams have been doing in the various markets has been effective and is paying off,” said Themba Khumalo, SA Tourism’s Acting CEO.

International arrivals into South Africa were over half a million (555 832) in August 2022, a 199% increase when compared with August 2021. Month-to-month, there was a 10% growth in international arrivals compared with July 2022.

According to the Stats SA insights, holidaymakers constituted the majority of travellers to South Africa during August, followed by individuals travelling for business, as well as students and tourists travelling for medical treatment. Africa (with 75% of arrivals) and Europe (15%) have consistently been the biggest sources of arrivals to South Africa.

Domestic tourism a cornerstone

From a domestic front, more South Africans are also heeding the call to explore their country. From January to August 2022, 21.3 million domestic trips were taken, growth of 92% over the 2019 pre-pandemic levels.

“Our domestic tourism sector is the cornerstone of our tourism sector, so we are pleased to see that domestic tourism is growing, not only in numbers but also in spend,” said Khumalo.

Year-to-date, domestic spend has seen growth of 190% over 2021 to reach R59.2 billion (€3.3bn), with the average domestic tourist spending R2 781 (€155) per trip.

“Interestingly, the number of bed nights increased, meaning people are not only travelling but are spending more nights away from home. This shows that, as South Africans, we are surely inculcating a culture of travel amongst ourselves.”

Khumalo encouraged South Africans to view summer holiday deals on the Sho’t Left website, to be able to book their festive season travel at affordable rates.

www.samigration.com

Home Affairs Minister Motsoaledi and Ramaphosa lied about e-Visa, it collapsed and only started working two months ago, after the department outsourced a private company

IOL – 31 Oct 2022

The complicated red-tape within Department of Home Affairs (DHA) has negatively affected the country’s investment opportunities, losing millions yearly because investors can’t readily access the country.

In 2018 Ramaphosa launched the SA investment summit that was meant to attract foreign investment to the country in order to raise the economy and create business opportunities.

However in about 152 investment pledges made since the start of the annual conferences, only 45 projects had been completed, while 57 others were under construction and the rest have failed to get off the ground, resulting in the loss of millions.

In March this year, the 4th investment conference, held in Sandton, Johannesburg, raised over R300 billion, Ramaphosa said in his closing address.

However, according to presidential investment envoy Jeff Radebe, it has not all been all well in the four years since its launch in 2018.

He reportedly said: “Not all the pledges [from the previous investment conferences] have been honoured. Economic challenges have conspired against these projects, but there have been some exceptional ones that have taken off.”

But according to sources, the biggest contribution to these failures is investors not being able to access the country because of difficulties getting visas.

The overhaul of the country’s immigration system has also not helped the situation.

The new system has caused a massive backlog because submissions previously went through visa and permit facilitation centres which would process applications and send the outcomes directly to the foreign national.

The news system visa applications will be processed through a centralised adjudication system which prolongs the process.

A number of immigration agents and immigration legal representatives told The Star they are frustrated due to the visa backlog and are concerned that potential investors are taking their funds to other countries.

Sources from the DHA have also told the paper that under the department, e-Visa collapsed and they blamed the DHA Minister Aaron Motsoaledi for failing to implement the e-visa process and properly manage it.

DHA sources also accused Motsoaledi of lying to Ramaphosa that e-Visa was implantation and it was working, while it collapsed and only started working in August and not via the department but through VFS Global.

The company is private and is also known as Visa Facilitation Services for government and diplomatic missions.

On February 10, 2022, Ramaphosa told the nation that the e-visa system had been launched in 14 countries including China, India, Kenya and Nigeria.

He said government was streaming and modernising the visa application process to make it easier to travel to South Africa for tourism, business and work.

However a sources said this was not working and it has brought misery to foreign clients.

“By the time Ramaphosa made that announcement, e-Visa was not working. Ramaphosa and Motsoaledi lied to the nation. The process was made so complicated that a person could apply from the US but their applications had to come to the country, then it had to go through five to seven people. That is why it collapsed. The only thing concerning e-visa that worked was during the piloting,” said a source.

The source said the applications had to be adjudicated by DHA officials manually since the system lacked artificial intelligence.

“When e-Visa collapsed at Home Affairs, without any tender process or advertising, the department used services of VFS,” she said.

According to another source, from 2014, VFS did normal visa applications until their contract expired in 2019.

“The minister further extended the contract with VFS, the contract is due to expire at the end of December this year. It will be interesting to know if the minister will extend the contract again without following open tender processes or if other companies will get a chance.

“Motsoaledi failed to implement the system and hired a private company due to inconvenience, and that he does not take advise from anyone except DDG advocate Constance Mootse,” said another source.

He said another concern is that anyone can apply for e-Visa from any part of the world, even inside South Africa.

“The lack of AI means that even terrorists or illegal immigrants in the country can apply, is that dangerous for the country? Another problem is that the e-Visa is not integrated to South Africa’s Risk Engine (SAPS, Intelligence, Sars, State Security Agency), this means that the adjudicator must check manually, isn’t this a safety and security concern?” he asked.

Another source said he is aware that in one of the Asian countries, since January this year there were over 9 000 visa applications, and no visa has not been issued yet.

Immigration agent Pieter van der Walt said Motsoaledi failed and is letting the country down.

“As long as we have the incompetent minister in that department, government can host countless investment summits, but business and tourism will not grow because of the backlog of visa applications,” Van der Walt said.

Immigration lawyer Gary Eisenberg said the DHA cannot cope or fulfil the constitutional obligation.

“DHA has a constitutional mandate to provide services to the public efficiently. That is why I am saying they are incapable of doing so because they have no interest in helping foreigners. There is a total mismanagement at DHA,” Eisenburg said.

Another source said being a DHA senior employee means that you can be made to break the law.

“Cabinet ministers including Motsoaled have power to instruct us as senior staff at DHA to bend rules even though foreign nationals don’t meet a standard to enter South Africa. We have to toe the line,” said the source.

Motsoaledi’s spokesperson, Siyabulela Qoza, was given almost 24 hours to respond but failed by publication.

Ramaphosa’s spokesperson, Vincent Magwenya, was contacted for comment, however no comment was received from him.

www.samigration.com