A growing middle class, worsening traffic problems and rising interest among local investors are making East Africa an increasingly attractive market for fast food franchises, according to a report in HowWeMadeItInAfrica.
Youth and the growing middle class are trendsetters in East Africa and are “the answer for the food business going forward,” said Louis Venter, East Africa country manager for Famous Brands, a South African restaurant franchise group.
“Takeouts and takeaway is where the industry is going,” Venter said. “That is what we are aiming for.”
Although there are a number of shopping malls under construction in East Africa, demand exceeds supply, and Famous Brands is looking for potential sites and scouting new
developments, according to the report.
Famous Brands plans to introduce Mugg & Bean restaurants and other new restaurant chains in Kenya, Venter told HowWeMadeItInAfrica. Famous Brands already operates 13 franchise stores in Kenya — mainly Debonairs Pizza and Steers brands.
“The Mugg & Bean brand will be the next focus point for us,” Venter said. “It’s going to be in Nairobi in one of the bigger shopping centers.”
Debonairs Pizza and Steers are able to compete in the Kenyan market with popular fast-food chicken restaurant franchises, according to the report.
Pizza, burger and fries franchises have been ideal in the market because they can fit into
any available shopping center in the country, Venter said. They are also competitive with the thousands of low-cost chicken-and-chips restaurants.
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“Because of the strength of chicken as a takeaway and takeout business it is a difficult market to compete against,” Venter said. “The only product that can really take on chicken as very good competition, as a tummyful and as value for money, is Debonairs Pizza. It
has done extremely well for us (and) it is perceived as value for money. Debonairs and Steers are performing so well… in East Africa. Those are the brands that I would try to push as hard as we can.”
Mugg & Bean coffee shop franchises will compete with local brands such as Java House, Artcaffe Coffee & Bakery, Dormans Coffee and Savanna Coffee Lounge, according to HowWeMadeItInAfrica.
Mugg & Bean franchises are present in South Africa, Namibia and Botswana, among others. Famous Brands also plans to introduce a “cake brand” in Kenya, the report said.
The fast food and casual dining restaurant franchisor has about 2,400 stores in Africa including 52 in East Africa. It plans to roll out at least 20 to 25 more in the next financial year and also “tackle” new markets including Uganda and Tanzania, Venter said.
East Africa “is the new hub and it is experiencing growth,” Venter said. “It is very much a stable market. A lot of investors all around the world are now getting into this market. From a value-proposition point of view and return on investment, I also think the Kenyan market particularly is ready to take our brands. Local people are interested in becoming our investors.”
The boom in the restaurant business is driven partly by an “up and coming, new-era market,” Venter said. “(These are customers) who don’t necessarily own a car or spend a big amount of money monthly on property, but they do have disposable income. That is what makes our business so attractive because it’s all about convenience and choice. People have busy schedules and they spend a lot of time stuck in traffic… (and face) shortages of electricity.”
For Famous Brands, one of the challenges is changing the culture of people getting involved in franchising, Venter said. It’s a new concept for a lot of people in the market.
“If you give someone (money) in Kenya he is going to buy a piece of land and do farming. So we need to change that attitude…”