Here’s how much it costs to open a McDonald’s, Wimpy, Steers, or RocoMama’s restaurant
- The top six franchise brands in SA primarily sells hamburgers.
- They annually generate revenue of approximately R7.7 billion.
- Opening typical franchise fast food in the country costs between roughly R2 million to R6 million.
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Burgers in South Africa are big business. In 2017, three of the top six franchise fast food brands that produced the most revenue in the country dealt primarily in hamburgers.
Together, McDonald’s, Wimpy, and Steers generate annual revenue of approximately R7.7 billion.
Although chicken franchises in South Africa generate more revenue than any other food type, revenue from burgers is never far behind. And in some cases, the initial franchise fees required to start your own store in this sector are lower.
Steers and Wimpy, for example, are still among the cheapest fast food franchises in the country - it’s still possible to start a new branch for under R2 million.
If you have your sights set on the golden arches, or some of RocoMamas’s growing revenue, though, you’ll need to dig a little deeper.
Steers has been around since the 1960s, and has grown from a single American-style steakhouse into one of South Africa’s most ubiquitous franchises.
It’s now part of the Famous Brands family, which owns several leading brands across the quick service food industry in South Africa.
There are now more than 500 Steers branches located across Africa, but they’re still looking for partners who fit the bill to open up new franchises.
And the chain remains one of the better-value fast food franchises in the country.
If you’re interested in buying a store of your own, you’ll need to pay a joining fee of R130,000 excluding VAT. Additional set up fees for store fitting and kitchen equipment will set you back more - the company estimates that the total initial investment will be approximately R1,2 million.
After that, you’ll need to pay 11 percent of your monthly revenue to the holding company. This is split between royalties and marketing.
Wimpy is also part of the Famous Brands stable.
The first Wimpy opened in Durban in 1967, and there are now hundreds of stores, that include sit-down restaurants, classic roadhouses, and the famous Engen 1 Stop outlets on major highways.
New franchisees will need to put down an initial payment of R115,000 to apply. The cost of kitting out a new Wimpy branch is surprisingly cost-effective compared to other similar franchises, but you can still expect to pay up to R2.5 million before you flip your first patties.
McDonald’s is easily the biggest international burger brand in South Africa. The first store in the country opened in 1995, and today the company operates over 200 outlets. Just over half of these restaurants are franchised.
According to the McDonald’s website, they serve over 8 million customers every month, and in 2017 they generated R4.34 billion in revenue. This translates into revenue of R17.7 million per branch, significantly more than any other burger-focused franchise in the country.
Understandably, owning a slice of the global burger giant doesn’t come cheaply or easily.
If you fit the requirements to be a new franchisee, you’ll need to pay an estimated R4 million to R6 million for the privilege. Franchisees must have 35% of this in unencumbered, non-borrowed cash.
McDonald’s also requires that franchisees be “geographically flexible”, in that they cannot guarantee applicants will be able to establish a restaurant in a preferred location. Still, they promise to work alongside the franchisee to find locations most likely to succeed.
RocoMamas is the newest success story on the local burger block. The chain of trendy fast-food stores is now owned by Spur, and they’ve rolled out dozens of outlets since they formed in 2013. There are now 70 local and 11 international restaurants that form part of the RocoMamas chain.
According to the Spur Corporate financial report, the group is performing well. Restaurant sales at RocoMamas increased by 31.5% in the 2017/18 financial year as they opened an additional 15 restaurants in South Africa.
Buying into this success story requires a substantial amount of cash, though. According to the company website, you’ll need 50% of the total setup cost of R4.6 million in unencumbered cash. Without this R2.3 million in cash they won’t entertain your application. They also recommend starting off with a working capital of R120,000.
As part of the franchise agreement, you’ll also need to pay monthly royalties totalling 7%. They divide this between management services (5%) and marketing (2%).
Burger King has seen some success in South Africa, with revenue growth of almost 30% in the past year, to R623.5 million. But it’s not yet possible to purchase a Burger King of your own. The holding company owns all the branches, and in spite of posting significant losses, they plan to increase their footprint to 135 company-owned stores over the next three years.
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