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Hooters: Spencer Shaw

With two outlets thriving and a third on the way, Hooters South Africa exclusive licensee, SG Shaw Foods’ CEO, Spencer Shaw, divulges some of the tricks of the trade.

Chana Boucher

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Spencer Shaw

It took some convincing but Spencer Shaw, CEO of SG Shaw Foods, explained to the American owners that South Africa was unlike any other market and that things needed to work differently.

The first outlet, Hooters on the Rocks, opened in Umhlanga in December 2009. Shaw customised the marketing to make it relevant to South Africa; he also came up with his own design, and had his construction company build the outlet. The Hooters headquarters in the US had to approve the design however, and dictated the fittings and finishes to be used. Shaw had to make use of the training and operations manuals provided. Hooters has specific layouts for its outlets on which Shaw based his designs. He had to stick to the guidelines provided for the brand. Shaw says they are “pretty strict” but when an employee travelled from the US to assess the South African stores, he rated them excellent.

In the beginning stages, Shaw sent some of his employees to the US to train, but also trained them the “South African way.” According to Shaw, the American level of service is of a very high standard, which is why he brought in a US Hooters girl to train her South African counterparts.

Shaw says Hooters succeeds in South Africa because it is a totally new concept, something South Africans have never experienced before. Despite the image most people have in their minds about Hooters, Shaw says it is a family restaurant, complete with kiddies items on the menu and the girls get special training in dealing with children.

Local Flavour

The menu is 80% American and 20% South African. Shaw says it had to be tailored as some items like Alaskan snow cones wouldn’t work in South Africa. He removed them from the menu and added some South African favourites, including fillet steak and the soon to be launched boerewors roll. The menu consists predominantly of big burgers, but Hooters is famous for its chicken wings and curly fries, as well as its ‘Big Daddy’ one litre beers.

The US stores are usually located in smaller towns and target the ‘everyday American’, says Shaw, but in South Africa the market includes a range of customers from businessmen, students and bachelor and bachelorette parties, to sports teams and sports lovers.

One of the main differences is the style of service. South Africans, unlike Americans, don’t like having a waitress constantly checking in with them. In the US, around 68% of sales are from food, 4% from merchandise, and 28% from beer, wine and spirits; while in South Africa sales are usually around 75% alcohol and 25% food. Shaw says this also has to be taken into consideration when studying the South African market. He relied on existing businesses for insight into the local consumer and studied the locations of McDonalds’, Steers and other recognised restaurant brands.

“There is always a vibe here,” says Shaw. The target market ranges from kids to adults during the day. Hooters recently hosted a 90th birthday party. At night, the clientele ranges from 18 to 45 and this is when alcohol sales surge. “We sell cold beer and a lot of it,” Shaw says. Hooters is where people come to enjoy good American food and cold beer, and to meet people.

As Seen On TV

Without doubt, the popularity of the Hooters brand is partly because of the self-proclaimed ‘nearly famous’ status it has. Many South Africans who had never been to an outlet would have seen it featured in many American movies and TV shows. But Shaw says that while the brand brings clients to the outlets at first, good service keeps them there. “People know about Hooters from TV but this is a South African Hooters. A brand can only do so much; if you don’t have the correct infrastructure, you’ve got nothing,” he explains.

Shaw says the tongue-in-cheek approach is present in all marketing campaigns carried out by Hooters. The marketing team keeps the brand edgy and will often play on words. Hooters girls are seen at outside events like Splashy Fen, the Durban July, matric Rage events and the cage fighting event, Fight Force. Shaw believes that these appearances provide another way of educating the market on what Hooters is.

“We have had a really warm response from South Africans. The public is open to the brand and likes it. It is a great brand.” Shaw emphasises that Hooters is not a sleazy outlet and is open to anybody.

The Girls

“The Hooters girls are the brand,” says Shaw. He describes them as being the “captains of the ship” as they are basically responsible for running the store. The element of female sex appeal is synonymous with the Hooters brand. Shaw says Hooters girls are as socially acceptable as a Sharks or Bulls cheerleader.

Since the first outlet was opened, the uniforms have hardly changed, except on Fridays, when Hooters girls around the globe wear black. Otherwise, their uniforms consist of orange shorts and tank tops. Pantyhose and bras are a requirement. Girls have to fit the Hooters profile to be considered in this role and Shaw explains that the uniform comes in only one size. Each store manager is responsible for recruiting and selecting the girls who range from 18 to 30 years old and need to be independent and provide good service to customers.

Footprint

Hooters South Africa’s head office is based in Umhlanga and comprises about 30 executive employees. Including all staff at the outlets, the staff complement is over 400. Shaw says to date, Hooters South Africa has performed beyond expectation, even winning the Service of Excellence award presented by the Restaurant Association of South Africa (RASA) at the end of 2010. Hooters on the Buzz, the second outlet, located in Fourways, is the largest Hooters outlet in the world by square metre, and Shaw says it began turning a profit within seven months of opening.

While not revealing specific numbers, Shaw says Hooters South Africa is a multimillion rand corporation — one which he expects will reach  a nine-figure turnover by the end of the year. SG Shaw Foods purchased the franchise rights to 20 outlets in South Africa, and Shaw says he plans to open all 20.

The third outlet will be opening this month in Durbanville, Cape Town and by the end of September Shaw hopes to have opened a fourth at Emperors Palace. Pretoria is the next town he has his eye on, and will hopefully be the site of the fifth Hooters by the end of 2011. “We will open new stores as quickly as locations become available. If I find the right location, I’ll open a store,” he says.

To find these locations, Shaw relies on agents and word-of-mouth. “We like buying sites with existing restaurants and redoing them according to our design.” Shaw looks for locations in highly residential areas as Hooters is a family restaurant.

Challenges

Shaw has experienced two main challenges in the establishment of the Hooters concept in South Africa: critics and staffing. He says people often criticise the brand before they actually see what it’s about. “It’s easy to change a critic’s mind. Once they walk through the doors they see what we are actually about,” he adds.

Shaw says it is critical to have the right staff, particularly managers, in place. “I encourage the managers to run their outlets like they are their own, so it is important to have a good manager.”

There is also a strict policy in place to avoid staff fraternising with the Hooters girls, explains Shaw.

He brings eight girls from the US and six training co-ordinators to South Africa to train his staff, which is particularly important when opening stores. Shaw says some of the girls have attended 24 store openings which is a huge benefit as they know how to deal with customers in these circumstances and can pass on this know-how.

The concept

Delightfully tacky, yet unrefined

With the above as its slogan, Hooters is clearly a brand unlike any other. During its history, the Hooters concept has undergone very little change. The current logo, uniform, menu and ambience are all very similar to what existed in the original store in 1983. This lack of change is understandable given the tremendous success the Hooters concept has enjoyed. The casual beach-theme establishments feature ‘oldies’ jukebox music, sports on television, and a menu that includes seafood, sandwiches, salads and spicy chicken wings. The ‘nearly world famous’ Hooters girls are the cornerstone of the Hooters concept. The chain has acknowledged that many consider ‘Hooters’ a slang term for “a part of the female anatomy”, but said that it does have an owl as part of its logo to allow debate to occur over the meaning’s intent. The company has no plans to alter the concept and feels doing so would be a tremendous disservice to its franchisees, employees, and customers.

Lessons learnt

  • Leveraging off a successful brand. Using the globally recognised Hooters brand has been a huge benefit for SG Shaw Foods. With 27 years’ experience, the Hooters South Africa team is able to call on Hooters of America for advice on the brand and has done so extensively for opening procedures.
  • Surround yourself with good people. Success is possible with a strong team, from having a good lawyer to a good chef.
  • A higher level of professionalism. Meeting with Hooters of America exposed Shaw to a new level of franchising. He was made aware of operational professionalism and he knew from his experience in the US that the standard of service had to be high and that Americans are used to doing everything by the book.
  • Research, research, research. Shaw says when dealing with a large company like Hooters it is essential to do as much research as possible. “Don’t go in cold. You actually have to anticipate all the questions they will ask and have the answers ready.”

Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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Vital Stats

Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

appanna-ganapathy-art-technologies

The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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Entrepreneur Profiles

30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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