Daring to go where no one else would, poking fun at its competitors, taking risks with new products and continuously innovating. This is what has made Chicken Licken the force it is today. But it’s no time to sit back and let the business run itself, as the franchise’s founder explains. There is still much work to be done.
In the early 70s, George Sombonos assisted his father in managing his roadhouse restaurant, the Dairy Den, which was located in the south of Johannesburg. His father sent him on a trip to the US in 1972 where Sombonos spent his time absorbing restaurant trade journals and tasting food. “I would taste 12 hamburgers and 20 pieces of chicken every day until one day in Waco Texas, I tasted the best chicken ever.”
Sombonos tells the story of how he invited the owner of that particular chicken outlet out for dinner to convince him to hand over his recipe. After much negotiation, he agreed to sell it to Sombonos for $5 000. Since he only had a few traveller’s cheques adding up to $1 000, Sombonos had to settle for a different, untested recipe from the same chicken outlet.
Without his father’s knowledge, Sombonos swopped the existing chicken coating recipe at the Dairy Den with his new US recipe. Sales increased and turnover shot up to over R200 000 a month. At the start of the 1980s, Sombonos renamed the business, Golden Fried Chicken – but soon after, a waiter came up with the name Chicken Licken, which was registered for R300. The logo, which is still used today, was designed for R75.
From its early beginnings, Chicken Licken is now 245 stores strong. There are also 12 stores in Botswana, but Sombonos says he has no intention of opening more stores beyond South African borders until the company reaches 400 local stores. In the past, there have been attempts to open stores throughout Africa in countries like Nigeria, Zimbabwe and Mauritius, but these were withdrawn due to inconsistent chicken supplies and unscrupulous franchisees. Chicken Licken is currently a third of the size of KFC’s South African operation.
Only 12 of the South African stores are company-owned, six of which are the most successful. Sombonos doesn’t believe in having too many company-owned stores, citing Subway as an example of a successful franchise that only has one company-owned store. However he does believe that it is important for the franchise to run some stores to retain a certain measure of control and to know “what’s happening”
in the franchises.
Chicken Licken sells around 100 000 chickens a week and when it comes to Hot Wings, one of the most popular options on the menu, the company sells thousands of cases. At first Sombonos says his supplier, Rainbow Chicken, thought he was running a “Mickey Mouse operation” but when sales began to increase they took him seriously. Chicken Licken now buys so many wings that Rainbow Chicken sometimes struggles to supply them. He has had to import chicken from Brazil in the past.
The company’s annual turnover is now well over R1 billion and Sombonos predicts that in eight years it will be turning over R3 billion, at which point he jokingly says he will leave the business, because then he “knows they can’t mess it up anymore.”
Looking ahead, Sombonos aims to have 500 stores in South Africa in the next ten years and to increase the brand’s presence in the Eastern and Western Cape.
Growing the Business
According to Sombonos, franchising was the best means to expand the business, as he didn’t have enough seed capital to open more than one or two stores. He had seen how franchising worked in the States and realised that it was how most chains expanded.
Being a new concept, Sombonos struggled to get people to buy a Chicken Licken franchise. “People didn’t want to buy franchises. They thought ‘who’s this, they’ve got no experience’. And we were just winging it – we had no franchising agreement.”
He says that a friend who owned a Wimpy franchise in Durban sent him his franchise agreement which he copied, changing the names where necessary. Since then, he quips, the Chicken Licken franchise agreement has been changed twice to make it more in line with his company’s needs.
In 1982, he resorted to giving away the first two franchises located in Soweto and Alexandra. By 1985 he started selling franchises, but to help the franchisees get off the ground they were given R15 000 worth of equipment and stock. He also didn’t charge royalties for the first six months.
While this meant that he wasn’t making much money, it did give the brand a bit of a boost. “There were lots of fly-by-nights in the market at the time so franchisees were reluctant at first,” he adds. From franchisees, the most important response Sombonos required was that they ran their stores the way he had run his. “Nothing less,” he adds.
As the brand became more and more recognised in the townships, people were approaching the company with new sites they wanted to develop into franchises. “There were no other businesses in the townships, so finding sites was easy,” says Sombonos. The early franchisees were not ideal. “We were not in a position to be fussy.”
The majority of them have since dropped out, because according to Sombonos, they weren’t suitable. He explains that nowadays potential franchisees have to take a test to evaluate whether or not they are compatible. “About ten years ago we battled to get someone to spend R1 million to take a franchise, now they are clambering to spend the R3 million to open a store.”
Fake it to Make it
Over time, says Sombonos, Chicken Licken developed a reputation. “People learnt to trust the brand.” The early stages of setting up the franchise weren’t easy. For a new franchise, the franchisees tend to be more demanding, but with more established brands, they obey and respect the system.
Sombonos admits that the transition from shopkeeper to executive is very difficult. “We had to learn about phones, hire a receptionist, work switchboards – we didn’t even have an in-house accountant.”
To project the image of a professional organisation, fictitious names were used to give the impression that there were more people working there. So whether a caller asked to speak to Mike in marketing or Peter the accountant, little did they know that they were all speaking to Sombonos. “It looked like we had a few different people working for us, but we couldn’t afford to pay salaries to hire real people in those roles,” he explains.
Because of the growth experienced by the franchise, Sombonos was forced to formalise operations. He hired a British school teacher who had come to South Africa as a food writer, but lost her job at The Star because she wasn’t bilingual. He also hired someone to handle the PR, and began to slowly build his support team.
“You don’t attract good people in the beginning because you don’t know better. All I thought of was growing. But over the years I’ve been able to get the ideal team together. Without the right core people you are nothing,” he explains.
To say that Chicken Licken served an untapped market is an understatement. In 1975, while still trading as the Dairy Den, Sombonos contravened apartheid legislation and started serving black people in their cars. “When they saw they could get equal service at our restaurant, business boomed.”
The company’s reputation quickly grew amongst its black clientele. Sombonos says it was only logical that the next step was to expand the business into black areas like Soweto. Chicken Licken was classified as a township brand which led to it earning the loyalty of millions of customers, but the downside was that it was left with a stigma attached to it.
By 1998, Chicken Licken’s sales were going backwards. According to Sombonos this is because after 1994, those who got good jobs and could afford to move out of the townships did.
“The people with the money left. They bought houses in the surrounding suburbs.” The franchise had to follow them and start opening stores in the more upmarket areas, although there are still some outlets in the township
areas, for example at Maponya Mall in Soweto.
The move into the suburbs called for a change of menu, but Sombonos says the wings became popular for a second time around. The franchise’s stores have also been refurbished to portray a more upmarket style, complete with Louis Vuitton mock-style packaging.
The first outlet opened outside of the townships was in Alberton. Chicken Licken’s flagship store opened in Rivonia in May last year. It was the first double storey outlet and features a state-of-the-art kitchen.
The upper end of the market still perceives Chicken Licken as a township brand with low standards.
Sombonos says while the company’s white clientele is growing there are still many who refuse to eat it. This is a mindset the franchise is working hard to change. Sombonos often visits the Rivonia store on a Friday at lunch time and finds it full of customers from all racial groups. “The younger generation don’t know the Chicken Licken of 30 years ago.”
He says it is also a challenge to secure good sites in affluent shopping malls. Every time a new site is secured Sombonos and his team get excited about it. They recently concluded a deal for a site at The Zone in Rosebank, and now Sombonos has his sights set on Sandton City.
Chicken Licken also has a tarnished image with some of the local banks because of its positioning in the market. According to Sombonos, in the early 90s banks started giving 100% loans to applicants. The problem came when six months down the line a franchisee would leave the shop because they felt that it was too much work. To this day, Sombonos mentions that one of the country’s biggest banks still refuses to fund Chicken Licken franchises.
Now, Sombonos says franchisees are expected to have half the money required to buy the franchise. If his team approves the site, they approach the bank on behalf of the franchisee and convince them to provide the financing required.
For Sombonos, there are two key ingredients to a successful chicken fast food franchise: chicken and marketing. The cheeky nature of Chicken Licken’s advertising campaigns has developed over the years, he says. The first ever advertisement was filmed by a ‘quack filmmaker’ and cost R10 000 to make. The advertisements were flighted on Bop TV as he couldn’t afford to be on SABC.
In 1986 he hired an ad agency to make a more professional advertisement. The agency suggested using Joe Mafela, who was an actor in a comedy series at the time. After the advertisements were broadcast, the annual sales increased by 47%. “Sales went berserk,” says Sombonos.
The advertisement was shot in the Booysens outlet. “There was no studio, and we didn’t even have music. After Joe had a few brandies he started playing the piano and came up with the jingle ‘It’s good, good, good, it’s good it’s nice’.” This tune was used up until 1998.
Ten years ago, the annual marketing budget was R12 million. This year it has grown to a massive R64 million. Up to 95% of this spend is allocated to television. “TV is more effective. I was told that if you want to change perceptions of a brand, the best medium is TV.” Sombonos says that people are more impressed by TV and that it makes an organisation appear bigger than it may actually be – but it costs money, he adds.
Knowing the Market
With the help of menu consultants, the Chicken Licken menu is updated every May. This is done to keep things fresh. “We don’t want to be boring with the same menu for many years. You have to change the menu but you can’t do silly things with the menu. We will only sell chicken, no beef or fish,” says Sombonos.
Sombonos doesn’t believe in doing market research. “When I go to the US, if I see something I think people will like, I bring it over – this puts us far ahead of others in South Africa,” he says. He adds that when a company does market research on a new product, the opponents find out quickly.
“The best option is to gauge in a small circle if a product will work or not. When we brought in the fried spatchcock chicken, up until two weeks before we launched it, only six people knew about it. We kept it quiet.”
With this kind of thinking, Sombonos admits that the company takes chances when introducing new items to its menu. “There have been some failures,” he says. In the past Chicken Licken introduced boiled eggs with batter around them, but the product was a flop. Sombonos says they usually give a product up to six months before withdrawing it.
In 1992, Chicken Licken introduced its hot wings. Another first for the brand was injecting marinade into the chickens to make the meat juicier. Chicken Licken was also the first to buy the plates needed to flatten the chicken fillets in order to make them all the same size.
Choosing the right locations has also become important. Sombonos says he doesn’t want to go into the small towns, as the franchises just aren’t viable. He is also not interested in taxi ranks. “People want to open new locations all the time and we say no. I say no to at least ten people a week, and that’s excluding the franchise department.”
Rich List: 2019 Richest People In The World
They’re worth billions, and their wealth continues to grow each year. Here’s the top 10 richest people globally in 2019.
10. Jeff Bezos
Net Worth: USD 139,5 billion
Jeff Bezos founded e-commerce giant Amazon in a garage in Seattle, USA in 1994. He also purchased The Washington Post for $250 million in 2013.
Bezos believes in always taking a long-term view and living in the present moment.
“I think this is something about which there’s a lot of controversy. A lot of people — and I’m just not one of them — believe that you should live for the now.
I think what you do is think about the great expanse of time ahead of you and try to make sure that you’re planning for that in a way that’s going to leave you ultimately satisfied. This is the way it works for me. There are a lot of paths to satisfaction and you need to find one that works for you.”
7 Self-Made Teenager Millionaire Entrepreneurs
These teenager entrepreneurs have already made their first million and more. How did they do it and what’s their secret to success?
1. Evan of YouTube
Evan and his father Jarod started a youtube channel ‘Evantube’ to review kids’ toys. The channel was a resounding success with other kids – so much so that today it boasts just over 6 million subscribers.
Evantube brings in more than USD1.4 million a year from ad revenue generated on the channel.
How did it start? With a father-son fun project making Angry Birds Stop Animation videos, and morphed into doing reviews on toys and video games. But Jarod’s dad is aware of the responsibility of Evan’s sudden fame and hopes to teach Evan about the importance of being a good role model for others.
“Most recently, we had the opportunity to work with the Make-a-Wish Foundation, and were able to fulfill the wish of a young boy whose dream was to meet Evan and make a video with him at Legoland,” explains Jared. “It was a really incredible experience. YouTube has definitely opened many doors, and the kids have gotten to do some pretty amazing things.”
Expert Advice From Property Point On Taking Your Start-Up To The Next Level
Through Property Point, Shawn Theunissen and Desigan Chetty have worked with more than 170 businesses to help them scale. Here’s what your start-up should be focusing on, based on what they’ve learnt.
- Players: Shawn Theunissen and Desigan Chetty
- Company: Property Point
- What they do: Property Point is an enterprise development initiative created by Growthpoint Properties, and is dedicated to unlocking opportunities for SMEs operating in South Africa’s property sector.
- Launched: 2008
- Visit: propertypoint.org.za
Through Property Point, Shawn Theunissen and his team have spent ten years learning what makes entrepreneurs tick and what small business owners need to implement to become medium and large business owners. In that time, over 170 businesses have moved through the programme.
While Property Point is an enterprise development (ED) initiative, the lessons are universal. If you want to take your start-up to the next level, this is a good place to start.
Risk, reputation and relationships
“We believe that everything in business comes down to the 3Rs: Risk, Reputation and Relationships. If you understand these three factors and how they influence your business and its growth, your chances of success will increase exponentially,” says Shawn Theunissen, Executive Corporate Social Responsibility at Growthpoint Properties and founder of Property Point.
So, how do the 3Rs work, and what should business owners be doing based on them?
Risk: We can all agree that there will always be risks in business. It’s how you approach and mitigate those risks that counts, which means you first need to recognise and accept them.
“We always straddle the line between hardcore business fundamentals and the relational elements and people components of doing business,” says Shawn. “For example, one of the risks that everyone faces in South Africa is that we all make decisions based on unconscious biases. As a business owner, we need to recognise how this affects potential customers, employees, stakeholders and even ourselves as entrepreneurs.”
Reputation: Because Property Point is an ED initiative, its 170 alumni are black business owners, and so this is an area of bias that they focus on, but the rule holds true for all biases. “In the context of South Africa, small black businesses are seen as higher risk. To overcome this, black-owned businesses should focus on the reputational component of their companies. What’s the track record of the business?”
A business owner who approaches deals in this way can focus on building the value proposition of the business, outlining the capacity and capabilities of the business and its core team to deliver how the business is run, and specific service offerings.
“From a business development perspective, if you can provide a good track record, it diminishes the customer’s unconscious bias,” says Shawn. “Now the entrepreneur isn’t just being judged through one lens, but rather based on what they have done and delivered.”
Relationship: “We believe that fundamentally people do business with people,” says Shawn. “There needs to be culture match and fluency in terms of relations to make the job easier. As a general rule, the ease of doing business increases if there is a culture match.”
This relates to understanding what your client needs, how they want to do business, their user experience and customer experience. “We like to call it sharpening the pencil,” says Desigan Chetty, Property Point’s Head of Operations.
“In terms of value proposition, does your service offering focus on solving the client’s needs? Is there a culture match between you and your client? And if you realise there isn’t, can you walk away, or do you continue to focus time and energy on the wrong type of service offering to the wrong client? This isn’t learnt over- night. It takes time and small but constant adjustments to the direction you’re taking.”
In fact, Desigan advises walking away from the wrong business so that you can focus on your core competencies. “If you reach a space where you work well with a client and you’ve stuck to your core competencies, business is just going to be easier. It becomes easier for you to deliver. Sometimes entrepreneurs stretch themselves to try to provide a service to a client that’s not serving either of their needs. This strategy will never lead to growth — at least not sustainable growth.”
Instead, Desigan recommends choosing an entry point through a specific offering based on an explicit need. “Too often we see entrepreneurs whose offerings are so broad that they don’t focus,” he says. “Instead, understand what your client’s need is and address that need, even if it means that it’s only one out of your five offerings. Your likelihood of success if you go where the need is, is much higher.
“Once you get in, prove yourself through service delivery. It’s a lot easier to on-sell and cross sell once you have a foot in the door. You’re now building a relationship, learning the internal culture, how things work, what processes are followed and so on — the client’s landscape is easier to navigate. The challenge is to get in. Once you’re in, you can entrench yourself.”
Desigan and Shawn agree that this is one of the reasons why suppliers to large corporates become so entrenched. “Once you’re in, you can capitalise from other needs that may have emanated from your entry point and unlock opportunities,” says Shawn.
Building a sustainable start-up
While all start-ups are different, there are challenges most entrepreneurs share and key areas they should focus on.
Shawn and Desigan share the top five areas you should focus on.
1. Align and partner with the right people
This includes your staff, stakeholders, partners, suppliers and clients. Partnerships are the best thing to take you forward. The key is to collaborate and partner with the right people based on an alignment of objectives and culture. It’s when you don’t tick all the boxes that things don’t work out.
2. Make sure you get the basics right
Never neglect business fundamentals. Do you have the processes and systems in place to scale the business?
3. Understand your value proposition
Are you on a journey with your clients? Is your value proposition aligned to the need you’re trying to solve for your clients? Are you looking ahead of the curve — what’s the problem, what are your clients saying and are you being proactive in leveraging that relationship?
4. Unpack your value chain
If you want to diversify, understand your value chain. What is it, where are the opportunities both horizontally and vertically within your client base, and what other solutions can you offer based on your areas of expertise?
8. Don’t ignore technology
Be aware of what’s happening in the tech space and where you can use it to enable your business. Tech impacts everything, even more traditional industries. Businesses that embrace technology work smarter, faster and often at a lower cost base.
Ultimately, Desigan and Shawn believe that success often just comes down to attitude. “We have one entrepreneur in our programme who applied twice,” says Shawn. “When he was rejected, he listened to the feedback we gave him and instead of thinking we were wrong, went away, made changes and came back. He was willing to learn and open himself up to different ways of approaching things. That business has grown from R300 000 per annum to R20 million since joining us.
“Too many business owners aren’t willing to evaluate and adjust how they do things. It’s those who want to learn and embrace change and growth that excel.”
Networking, collaborating and mentoring
Property Point holds regular networking sessions called Entrepreneurship To The Point. They are open to the public and have two core aims. First, to provide entrepreneurs access to top speakers and entrepreneurs, and second, to give like-minded business owners an opportunity to network and possibly even collaborate.
“We believe in the power of collaboration and networking,” says Desigan.
“Most of our alumni become mentors themselves to new entrants to the programme. They want to share what they have learnt with other entrepreneurs, but they also know that they can learn from newer and younger entrepreneurs. The business landscape is always changing. Insights can come from anywhere and everywhere.”
The To The Point sessions are designed to help business owners widen their network, whether they are Property Point entrepreneurs or not.
To find out more, visit www.ettp.co.za
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