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Here’s Why Ethiopia Is Pizza Hut’s Latest Investment

While it hasn’t been on many franchise’s radars as a fast food destination, Ethiopia is quietly becoming an attractive investment for major restaurant chains.

Diana Albertyn

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Ethiopia is getting a slice of international fare as Pizza Hut becomes the one of the first major restaurant chains to set up shop in Africa’s second most-populous country. This will bring Pizza Hut’s African footprint up to almost 200.

“Let’s be prudent because in Africa there may be some levels of instability and also when you are opening some routes that take time,” Ewan Davenport, General Manager of Pizza Hut Africa, says.

“But the sky is the limit. At the moment, we are looking at opening at least 50 stores a year.”

Like Davenport says, it’s not the easiest market to crack, so why Ethiopia?

Related: Should You Purchase An Existing Franchise?

It’s set to become a lower-middle income country by 2025

Ethiopia’s economy is expected to grow second-fastest in sub-Saharan Africa after the Ivory Coast’s. The International Monetary Fund (IMF) forecasts a 7.5% increase in the nation’s economy.

The advent of Ethiopia edging closer to becoming an industrialised nation, and this new-found spending power of its almost 100 million residents is beginning to attract international brand-name multinational companies.

Neighbouring Pizza Hut franchises are already doing well

With outlets in Angola, Djibouti and Ghana looking good, Togo is another consideration in addition to Ethiopia.

A top-performing Pizza Hut location will have “well in excess” of 1000 weekly transactions, says Davenport. Their target is 2200 transactions per week, adding up to an estimated USD1.1 million a year, from each outlet.

The perfect partnership was established

Yum! – Pizza Hut’s Kentucky-based parent company – has always had its eye on Ethiopia, for the above reasons, but local company, Belayab Enterprises PLC was the ideal partner to get the ball rolling.

Related: Owning A Franchise – Good Idea Or Bad Idea?

“It’s still at that explore stage, to find the right partner, to see if the business model will work,” said Bruce Layzell, Yum’s general manager of new African markets back in 2014.

Three years later, the partnership with Belayab has been signed and sealed and the deal sees three restaurants operational within the next six months and another seven over the next three years, bringing Pizza Hut’s Ethiopian footprint to ten by 2020.

Diana completed a BA in Journalism in 2010 and has honed her skills as a newspaper reporter, senior communications specialist and most recently worked at a weekly magazine as a writer. She joined the EMTS Group in 2016 as a writer for Entrepreneur magazine and SmartCompany Networks. Passionate about honing her writing skills and delivering exceptional client results, Diana continues to keep a finger on the pulse of industry news and insights.

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Key Franchising Trends To Consider For 2018

The franchising industry has steadily shown adaptability to the tough economy by growing the sector 3,6% over the past four years – from contributing an estimated 9,7% to the country’s GDP in 2014 to its recent figure of 13,3%.

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The franchising industry has steadily shown adaptability to the tough economy by growing the sector 3,6% over the past four years – from contributing an estimated 9,7% to the country’s GDP in 2014 to its recent figure of 13,3%.

This trend is expected to continue in the same trajectory in the short-term and could possibly improve should SA see better economic growth.

According to a survey conducted by the Franchise Association of South Africa (FASA), 78% of most franchisors are optimistic about future growth in their businesses. Although this translates to positive sentiments, the franchising is still, like other businesses, also vulnerable to the economic headwinds. As a result, franchisors need to keep abreast of their operating environment.

Morne Cronje, Head of Franchising at FNB Business says, “2017 has been a very tough year for businesses and consumers. However, the sector continues to perform well gradually year in and year out. This is testament that franchising is robust and holds a key for employment and economic growth.”

Cronje shares top trends to look out for in 2018:

The significance of online and social media – Traditional marketing is no longer the magic bullet as more people are starting to use social media to interact with brands, whether to express anger, inquire or to show appreciation.

It is no longer about the question of should a business use social media or not, it is now more about how a business uses social media to better serve its customers.

Related: The Secret Sauce To Great Franchise Leadership

Multi-brand franchisees

More franchisees are starting to jump into the bandwagon of having several franchisees on their belt not just having one, doing this helps to improve cash flow as well as the protection of the ups and downs in business.

Health and education

According to FASA, these two sectors are rapidly growing, because more people are starting to become health conscious, while on the other hand education is a priority for South Africa. As a result, there is a strong demand for these sectors.

Increased customisation

Consumers have gained control of what they want; it is no longer about what do you have on the menu, it is now about how your product or service can be tailor made to what a customer really wants. For example, Brian Altriche, Founder of RocoMamas with 61 franchise outlets is of the view that, his business model clearly responds to the essence of this trend by allowing consumers to create their own burgers as they want.

Related: RocoMamas Founder Brian Altriche On Fabulous Failures And Visualising Success

On-demand products/ services

In this fast paced environment customers control their experiences by wanting products or services that speak to this need. Franchisors who want to expand their business should start exploring this trend.

“2018 Will no doubt bring its challenges, however for every challenge there is a window of opportunity to explore. We are advising franchisors to scrutinise these trends carefully, it can definitely give them a boost for 2018,” concludes Cronje.

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Franchising Sector – The Year That Was

Morne Cronje, Head of Franchising at FNB Business agrees that even in what is said to be tough year, South Africa has managed to attract global franchise brands.

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2017 Has been a year fraught with challenges for both consumers and business alike. South Africa has however remained an eye-catching destination for international brands looking to expand their businesses; none show this more than franchising in South Africa.

Morne Cronje, Head of Franchising at FNB Business agrees that even in what is said to be tough year, South Africa has managed to attract global franchise brands.

“A recent example of a global franchise brand coming into South Africa is Popeye’s, an American brand best known for its spicy Chicken. They launched here in July 2017. That is on the back of Krispy Kreme and Burger King having recently launched too – even with our challenges, we still offer growth opportunities to global entities.”

Related: Krispy Kreme Remains Triumphant Despite The Strain Of International Brands In The Local South African Market

Cronje shares key take outs from the year that was in franchising:

More clothing & fast-food brands

Retail franchising continued to grow in 2017. Over the past few years, we have seen more global brands like Burger King, Dunkin’ Donuts, Pizza Hut, Krispy Kreme, Dominos, Starbucks and clothing brand Cotton opening their stores in South Africa.

Growth in quick-service restaurant segment

People still value a restaurant experience. Consumers, though looking for convenience and reasonable options, still value the idea of sitting and enjoying a meal in the traditional sense. More businesses have now jumped on this bandwagon and we are starting to see more and more that fast food spaces are also playing in the “sit-and-serve” space.

Use of Online and digital channels

More franchises have embraced online and mobile methods technology to reach their customers faster, easier and relatively cheaper than the usual above the line approach. We are also seeing businesses receiving online orders from their own or third party apps which enable the consumer to order from wherever they are and whenever they want to.

Related: (Watch) Make Krispy Kreme Happen

Value for money

In these tough economic times, consumers will continue to ask why they should spend money in your business. If businesses ignore this, consumers are likely to shift their attention to competitors.

“As we wrapped up 2017, it is important for the franchising sector to reflect on the trends that shaped the year that was. In my view, franchising remains one of the key sectors that will continue to grow steadily despite the slow growth environment. This is a trend that we have been monitoring without fail over the past years,” concludes Cronje.

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Nando’s Adopts Technology; Focuses On Food & Funny

Without a secure failover, erratic fixed line connectivity can cause havoc, especially in the high-demand, fast-paced fast food sector.

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Without a secure failover, erratic fixed line connectivity can cause havoc, especially in the high-demand, fast-paced fast food sector. As the name suggests, the expectation is that both the food and service are delivered quickly, and at a standardised (high) level of quality. 

Modern customers require modern restaurants. As smart technology becomes the norm, diners expect reliable, high-speed networks and communications solutions, especially in the fast-food environment. These contemporary restaurants must, therefore, offer reliable POS systems and dependable back-office administrative support. In order to deliver on these requirements, a stable network is required.

“For Nando’s, downtime means an unreliable Point-of-Sale (POS), lost revenue and a frustrated customer base,” advises Sugan Ganasen, Cradlepoint Lead: Ingram Micro Southern Africa. The beloved fast-food franchise started in 1987, with the first restaurant opening in Rosettenville, Johannesburg.

“With a broad footprint of over 1 000 franchises across the globe, and 259 branches in South Africa alone, sending customers away because the POS isn’t working simply isn’t an option.”

Related: (Watch) Why Nando’s Is Clucking Its Way To The Top

According to Stephen Brookstein, Nando’s Head of Technology: South Africa and EMEA; “Nando’s is 30 years young, and facing the same challenges as all business in the local market. Stability is the key to offering customers a better experience, and this requires an integration of technology.”

In South Africa, the pace of work is at an all-time high. In the food and beverage industry, this means that downtime results in exponential losses, and reputational damage that may hinder relationships with a fickle consumer base. Whenever connectivity is interrupted, credit/cheque card payments cannot be accepted, and off-line card payments are particularly susceptible to fraud. With no secondary line for a failover connection, the required constant connection cannot be achieved.

“Customers expect to be able to make a card payment on a secure POS system, and our franchisees expect a constant connection. In a digital age, everything relies on internet access, and constant uptime must be achieved to deliver both productivity and profitability,” says John Sikiotis, Chief Strategy Officer and CFO: India, Middle East and Africa at Nando’s.

“As such, our business needs include full failover capability, centrally managed software, improved response to communication issues experienced at restaurant level, enhanced security and PCI compliance – all delivered in a scalable manner across the continent.”

After much market research and a comparison of the solutions available, Nando’s deployed Cradlepoint’s AER2100 and NetCloud Manager, supported by Infoprotect. This delivered reliable 99 percent uptime across all Nando’s restaurants in South Africa, guaranteeing that sales are never lost and customers are always satisfied.

“Nando’s selected a countrywide store advanced offering, which ensures that each store is fitted with a Cradlepoint AER2100,” confirms Ganasan. This solution is a new generation, cloud-managed 3G networking device that helps Nando’s to increase bandwidth and achieve four-nines reliability in a secure, flexible, and open-architecture platform. The AER2100 operates as the primary connection, with a cellular modem and dual sim capability.

Implemented by Infoprotect, offering managed IT solutions, data usage is centrally managed, monitored and controlled using the NetCloud Manager (Enterprise Cloud Manager). “This enables Nando’s to deploy and dynamically manage networks at geographically-distributed stores and branch locations, improving productivity, reducing costs and enhancing the intelligence of the network and business operations,” advises Brad Fraser, Infoprotect’s CEO.

Related: Show Me The Funny

This monitors ADSL data usage and adds valuable business resiliency. According to Sikiotis; “The NetCloud Manager allows Infoprotect to perform remote diagnostics, upgrade firmware, and configure devices remotely. This means our restaurants enjoy better return on investment with optimised data usage, real-time monitoring, load-balancing and proactive usage alerts.”

The result is a scalable solution offering effective uptime, a primary and secondary network ensuring a constant connection, uninterrupted card transactions, constant uptime, data usage management, PCI compliance and security, automated support, configuration and monitoring, and sophisticated scalability. 

“These solutions were impeccably implemented within tight timelines, and have created a future upgrade path, ensuring minimal disruptions. The benefits offered speak for themselves,” concludes Sikiotis. “The cost-efficiencies realised include less downtime, more satisfied customers and less data breeches. Customers are satisfied and no sales losses are experienced due to offline POS systems. With this in mind, a reliable network and constant uptime offer a real cost saving solution.”

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