• Here's how much it costs to open a RocoMamas, Steers, or McDonald's burger franchise in SA.
  • South Africans eat a lot of burgers, and businesses like McDonald's, Steers, and RocoMamas are some of the country's more successful franchises.
  • Although drive-through restaurants can cost millions, there are cheaper alternatives.
  • And as far as franchising goes, burger shops are often among the best-priced businesses to buy.
  • Here's how much it costs to buy a burger franchise in South Africa in 2021.
  • For more stories go to www.BusinessInsider.co.za.

Although chicken may still be the darling of the South African fast-food industry, burgers aren't far behind. Of the top ten food franchises that generate the most revenue in South Africa, at least four made a name for selling hamburgers.

The local burger quick-service restaurant and takeaway landscape has grown significantly in recent years. Established players like McDonald's and Steers have recently been challenged by newcomers RocoMamas and Burger King. 

All but Burger King are available as franchises in South Africa - often for less than other franchises in the quick-service restaurant sector. And it's possible to buy a turnkey burger chain business for under R2 million - and some franchises are now also offering smaller and cheaper kiosk-type options.

Here's what you can expect to pay to open a Steers, RocoMamas, or McDonald's in South Africa in 2021:

Steers

Steers has a long history in South Africa, and it was the starting point for franchising giants Famous Brands back in the early 1960s. It's since become one of the most popular homegrown burger chains - with 617 Steers branches, 21 of which are new in the last financial year. 

Despite this consistent rollout of new stores in South Africa, the group is still open to applications for those interested in owning a Steers branch. The franchise now offers a "standard" Steers, stores with drive-through facilities, and a kiosk store option.

Steers requires that new franchisees pay a joining fee of R68,000 excluding VAT for a standard Steers, and R75,000 for a drive-through. Both also require design fees of R43,500 and R75,000, respectively, and a 5% project fee.

A standard Steers currently costs R1.97 million excluding VAT, whereas the drive-through option is roughly double that, at R3.75 million.

Franchisees must also pay monthly royalties of 11% of monthly turnover towards advertising and royalties.

McDonald's

McDonald's first opened its doors in South Africa in 1995, and it has grown to become one of the most successful and sought-after franchises in the country. There are currently more than 300 McDonald's restaurants located throughout South Africa, roughly half of which are franchised.

Although McDonald's is open to new franchisee applications, securing a branch of your own is challenging and expensive. They have a fairly stringent application process that involves a telephonic and in-person interview, personality test, and an on-the-job evaluation which requires three days in an existing McDonald's restaurant. If you pass these requirements, you'll need to have an in-depth interview with the management team, and then undergo up to 12 months of unpaid training in one of their restaurants.

With the application process agreed to, franchisees will need to pay R4 to R6 million to open a new McDonald's franchise, depending on the type and size of the restaurant. According to franchise documents, at least 35% of this must be available as unencumbered cash. The franchise agreement with McDonald's, should your application be successful, lasts ten years.

RocoMamas

RocoMamas is a fast-casual burger joint 70% owned by the Spur Corporation. The brand launched in 2015 and today has 75 stores throughout South Africa - and another 14 in ten other countries. 

In 2020, the brand contributed 9% to the group's total restaurant turnover - roughly the same as its pizza and pasta franchises and a sixth of Spur Steak Ranches' contribution.

RocoMamas franchisees pay a monthly franchise fee of 5% of restaurant turnover and a marketing fee of 2%. Franchisees are also required to pay for the full development of new outlets and any necessary refurbishments or relocations.

Establishing a new RocoMamas branch in South Africa will cost roughly R4.6 million, down slightly from the estimated costs last year. Franchisees must have at least 60% of this available, and a further R2,2 million sufficient surety to borrow the remainder.

Burger Perfect

Burger Perfect is a burger takeaway restaurant that started off the back of Pizza Perfect's success. The burger franchise dates back to 2006, and they currently have five branches located around Johannesburg. They're looking to expand, though, and are accepting applications from new franchisees.

To own a new Burger Perfect branch, you'll need to pay an application fee of R10,000 and a joining fee of R65,000. After that, ongoing fees and royalties amount to 8% of turnover. 

Burger Perfect estimates that the average set-up costs for a new 90 square metre square takeaway outlet will be roughly R1.45 million, excluding VAT. This amount excludes rental deposits, legal fees, on-training costs, opening stock, and delivery vehicles.


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