How much it costs to buy a bar or pub franchise like Tiger's Milk, News Cafe, Cubaña, or Bossa
20 March 2023 | News24
South Africa's bar and pub scene has changed significantly in recent years - particularly when it comes to national franchises.
What was once a market dominated by a handful of traditional pubs and bars has seen the line blurred between bar, pub, and restaurant - to create a safer jack-of-all-trades model.
Many South African bars now tend to look more like restaurants - doing quieter trade during daylight and ramping up with live music, DJs, and drinks specials in the evenings.
They also tend to serve simple meals like burgers and pizzas throughout the day and late into the evening - a move that likely increases the appeal and potential revenue versus the days of grabbing a few evening pints at the bar.
It's a move that seems to be paying off for some franchisors. The bar, restaurant, and canteen industry is forecast to see revenue of over R100 billion in 2023 - and South Africans have a problematic love for alcohol that's further driving revenue in the liquor trade.
The hybrid model may increase potential revenue for individual stores - but adding full-service kitchens, wide menus, and bigger floor space also increases establishment costs.
It's not something that appears to have restricted the rollout of some bar franchises.
Newer franchises that exploit this hybrid model, like Life & Brand's Tiger's Milk, and to a lesser extent La Parada, have seen significant expansion in recent years. Industry stalwarts, like News Cafe and Cubaña, have lost a few branches in recent years but remained otherwise stable with national store networks.
Here's how much it costs to open a bar or pub franchise like Tiger's Milk, La Parada, Rhapsody's, News Cafe, Cubaña, Bossa, or Brazen Head:
The Brazen Head
The Brazen Head is one of the few remaining Irish pub-style franchises available in South Africa. The first Brazen Head franchise store opened in 2003, and although growth has been muted, there are now five branches, mainly in Johannesburg's northern suburbs and East Rand.
The pub offers a variety of relevant food and drinks for evening entertainment, with some stores branching out into lunch and breakfast, too.
Cost to open a Brazen Head franchise: A new Brazen Head franchise requires a R120 000 franchise fee and recommended capital of R150 000. Establishing a branch costs an estimated R2.4 to R3.5 million. Franchisees must pay ongoing advertising, marketing, and management fees totalling 7% of turnover.
Tiger's Milk
Tiger's Milk started as a single store in Cape Town's Muizenberg and has seen rapid expansion in recent years. There are now more than 20 branches located throughout the country, with a strong focus on what they call "dude food" and a wide range of alcohol products.
Much of their expansion has come through a franchising model overseen by Life & Brand, who also sell similar franchises in the restaurant space.
Cost to open a Tiger's Milk franchise: A new Tiger's Milk franchise requires an initial franchise fee of R400 000, and building out a new branch costs approximately R15 000 per square metre. Once established, franchisees must pay 8% of monthly turnover towards management and marketing fees. In total, franchisees will need between R6 and R8 million to buy a new Tiger's Milk store.
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