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Why Flame-Grilled Chicken Franchise Galito’s Opened Up Shop Right Next To The Competition

How Louis Germishuys turned a simple idea into an international business with an annual turnover of R700 million by going head-to-head with the big boys. Here are five growth lessons from Galito’s.

GG van Rooyen

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Vital Stats

  • Player: Louis Germishuys
  • Position: Founder and CEO
  • Company: Galito’s
  • About: Galito’s is a South African flame-grilled chicken franchise that has opened more than 60 international stores over the last three years. Countries include the DRC, Mozambique, Malaysia, Pakistan, Mauritius, India, Sri Lanka, the UAE and Canada.
  • Turnover: R700 million
  • Visit: www.galitos.com

A few years after leaving school, Nelspruit native Louis Germishuys, founder and current CEO of Galito’s, was working as a load master for a South African airline (a load master oversees the loading and unloading of cargo, and is responsible for calculating the correct placement of a load on an airplane). He was living in Rosettenville and would often buy flame-grilled chicken from a local takeaway called Chickenland.

Related: With Only A $1 000 Loan Legendary Subway Founder Fred DeLuca Began A Business Empire

One day, Germishuys noticed that the chicken restaurant had changed its name — it was now called Nando’s Chickenland. And pretty soon, Nando’s outlets were popping up everywhere. 

1. Learn the ropes

“I immediately knew that I wanted to own a Nando’s franchise,” says Germishuys. “But I was encouraged to work at the company first. It meant that by the time I opened my own Nando’s in my home town of Nelspruit, I didn’t only understand the fast-food industry, but the business side of things as well.”

Things went well with Germishuys’s first store, and after a short while, he opened a second. Then the rug was pulled out from under him.

“Nando’s decided to go public, and therefore wanted to buy stores back from franchisees. I was offered the chance to work for Nando’s directly again, but it wasn’t for me. I wanted to own and operate my own thing.”

2. Embrace the competition

Germishuys’s association with Nando’s was coming to an end, but he had fallen in love with the flame-grilled chicken business, and he had some carefully developed ideas around what he’d do differently with his own brand. Freed from the limitations franchisees face, Germishuys opened his first Galito’s in Nelspruit — by design, right next to the Nando’s he had once owned.

“People said I was crazy,” recalls Germishuys. “They said I would be out of business in six months. How could I try to compete so directly with an established player?”

But there was method to Germishuys’s madness. He realised that hiding from the competition was not necessarily a good thing. Facing competitors head-on actually brought with it certain advantages.

“I knew that I didn’t have the marketing budget of many of the established fast food brands. But I could benefit from their marketing spend by positioning myself close to them. They would bring in the crowds – I just needed to be able to coax consumers my way once they got there.”

In 2008, OgilvyAction did a study on 14 000 consumers across 24 countries. They discovered what Germishuys already knew in his gut — that many buying decisions are made in the final moments before choosing a brand, product, or in this case, meal. It’s known as the last mile of marketing. The study found that 39% of shoppers decide brand choice instore, and that the decision is most frequently triggered by a product demo. Germishuys triggered this buyer psyche by targeting the senses of his potential customers.

“In the early days, I would actually put the grill outside and let the smell of the marinade lure people over,” says Germishuys. It was a smart, innovative way for an entrepreneur with a great product but smaller resources to compete with bigger players who had more extensive marketing budgets.

Related: Make Krispy Kreme Happen

galitos-chicken-franchise

3. Know your customer

The kind of bold approach that Germishuys employs with his competition requires something very specific: An excellent product.

“You need to know that your product is excellent — that it can compete with anything the competition has to offer. That’s why I never considered moving into a different industry. I knew that this was an area in which I could deliver an exceptional product. It’s important: You can’t compete effectively against strong and established competitors if you don’t have a good product. While you’re still building the strength of a brand and name recognition, you need to have that advantage.”

A lot of this comes down to knowing the customer and providing a predictable and satisfying experience.

“You need to know, and listen to your customer. You need to give them what they ask for. This can be tricky when it comes to fast food franchising, since you need to make sure that your offering remains consistent, regardless of the specific store. We manage this by making sure that our core offering — our chicken — is consistent, and then playing around with side dishes that a specific market might want,” says Germishuys.

4. Ensure consistency

How does one ensure consistency when operating in so many countries?

“You need to keep a close eye on the supply chain,” says Germishuys. “Our product is good because we use top-quality chicken, and because our marinade is made from all natural ingredients. This has to be the same everywhere in the world, so we approve all suppliers at a head office level. You can’t allow anyone to try and cut corners.

“At the same time, you need to be sensitive to the fact that franchisees can feel pressure, thanks to price hikes and inflation, so you need to help them buy better — to cut out the middleman, if possible — and to be aggressive with shrinkage. As an organisation, you also need to be willing to forfeit a bit of profit in order to ensure quality.”

5. Grow organically

Galito’s has expanded quickly over the last few years. In fact, the last three years have seen it expand into the DRC, Mozambique, Malaysia, Pakistan, Mauritius, India, Sri Lanka and the UAE. Importantly, though, it has not had a rigid expansion strategy as it has moved into foreign markets.

“What works in one scenario does not necessarily work in another. In Africa for instance, we have entered into a joint venture, while in others, we have granted master licences. It really depends on the specific situation.

“What is certain, however, is that you need local partners when going into foreign markets. You need someone who can help you understand local tastes and customs. Franchising requires a careful balancing act. You want to keep your product consistent, but still be mindful of local expectations,” says Germishuys.

Related: Starbucks Brings Baking To (Some Of) Its Stores

Key learnings

  • Embrace competition. You can benefit from strong opposition.
  • Know your customer and trust your product. Do you have a world-class experience?
  • It’s easy to sacrifice quality and consistency when scaling. How can you combat this?
  • Explore all growth options and opportunities. Don’t be too inflexible in your expansion planning. What avenues are available?

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.

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27 Of The Richest People In South Africa

Here are 27 of South Africa’s richest people, but how did they achieve this level of wealth? Find out here.

Nicole Crampton

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Learn the secrets of SA’s most successful business people, here is the list of the 27 richest people in South Africa:

In a world with growing entrepreneurship success stories, victory is often measured in terms of money. The feat of achieving a place on this list is, however, years of hard work, determination and persistence. “One has to set high standards… I can never be happy with mediocre performance,” advises Patrice Motsepe.

From the individuals that made the 27 of the richest people in South Africa list, actual entrepreneurs and self-made business people dominate the list; while those who inherited their fortunes have gone on to do even bigger and better things with their wealth. Over the years, some have slipped off the list, while others continue to climb higher and higher each year.

  1. Elisabeth Bradley
  2. Sharon Wapnick
  3. Bridgette Radebe
  4. Irene Charnley
  5. Wendy Ackerman
  6. Paul Harris
  7. Wendy Appelbaum
  8. Mark Shuttleworth
  9. Desmond Sacco
  10. Giovanni Ravazzotti
  11. Markus Jooste
  12. Gus Attridge
  13. Gerrit Thomas Ferreira
  14. Cyril Ramaphosa
  15. Adrian Gore
  16. Raymond Ackerman
  17. Michiel Le Roux
  18. Lauritz Dippenaar
  19. Jannie Mouton
  20. Stephen Saad
  21. Patrice Motsepe
  22. Allan Gray
  23. Koos Bekker
  24. Ivan Glasenberg
  25. Christoffel Wiese
  26. Johann Rupert
  27. Nicky Oppenheimer
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Watch List: 50 Top SA Black Entrepreneurs To Watch

South Africa needs more entrepreneurs to build businesses that can make a positive impact on the economy. These up-and-coming black entrepreneurs are showing how it can be done.

Nicole Crampton

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Early-stage South African entrepreneurial activity is at an all-time high of 11%, according to Global Entrepreneurship Monitor, and entrepreneurial intentions have also increased to 11.7%. With both activity and intentions growing significantly year-on-year, there are more businesses opening up around South Africa than ever before.

The increase in entrepreneurship has seen the rise of more black entrepreneurs across numerous sectors. From beauty brands to legal services and even tech start-ups, these are 50 top black entrepreneurs to watch:

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Watch List: 50 Top SA Small Businesses To Watch

Keep your finger on the pulse of the start-up space by using our comprehensive list of SA small business to watch.

Nicole Crampton

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Entrepreneurship in South Africa is at an all-time high. According to Global Entrepreneurship Monitor (GEM), total early-stage entrepreneurial activity has increased by 4.1% to 11% in 2017/2018. This means numerous new, exciting and promising small businesses are launching and growing.

To ensure you know who the innovative trailblazers are in the start-up and small business space, here are 50 of South Africa’s top establishing companies to watch, in no particular order:

  1. Livestock Wealth
  2. The Lazy Makoti
  3. Aerobuddies
  4. Mimi Women
  5. i-Pay
  6. AfriTorch Digital
  7. Akili Labs
  8. Native Décor
  9. Aerobotics
  10. Quality Solutions
  11. EM Guidance
  12. Kahvé Road
  13. HSE Matters
  14. VA Virtual Assistant
  15. Famram Solutions and Famram Foundation
  16. BioTech Africa
  17. Brand LAIKI
  18. Plus Fab
  19. LifeQ
  20. Organico
  21. 10dot
  22. Lenoma Legal
  23. Nkukhu-Box
  24. Benji + Moon
  25. Beonics
  26. Brett Naicker Wines
  27. Khalala
  28. Legal Legends
  29. The Power Woman Project
  30. Aviro Health
  31. AnaStellar Brands
  32. Data Innovator
  33. Fo-Sho
  34. Oolala Collection Club
  35. Recomed
  36. VoiceMap
  37. ClockWork
  38. Empty Trips
  39. Vula Mobile
  40. SwiitchBeauty
  41. Pineapple
  42. The Katy Valentine Collection
  43. OfferZen
  44. KHULA
  45. Incitech
  46. Pimp my Book
  47. ART Technologies and ART Call Management
  48. Prosperiprop
  49. WAXIT
  50. The Sun Exchange
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