How much it now costs to buy a KFC, Nando`s, and Chicken Licken - or some cheaper takeaway options

Source: Business Insider SA, 03/01/2023

Chicken franchises are among the most popular - and expensive - takeaway businesses to buy in South Africa. Much of this has to do with demand - South Africans collectively eat around 1.92 million tonnes of poultry, or up to 16 birds each, per year. And several brands, like KFC, Nando`s, and Chicken Licken, have made a good business of getting South Africans to buy even more in ready-to-eat formats. The country`s top takeaway chicken spots pull crowds with familiar branding, strong marketing campaigns, and popular recipes and preparation methods. Many of these branches are franchisee-owned and run - and even the leading brands still have some locations available to buy.
Their streamlined systems and strong branding come at a premium to franchisees, though - and may be too rich for first-time chicken shop operators. This is why many smaller, newer franchises are looking to cash in on this chicken love affair.

Here`s how much it now costs to buy a Nando`s, KFC, Chicken Licken - plus a few other lesser-known but cheaper chicken franchise businesses.

Nando`s

It`s not easy to become a Nando`s franchisee in South Africa - the first thing South Africa`s leading homegrown chicken franchise says in its prospectus is that most don`t make it through the application process. They don`t only require a pretty hefty payment - but also want people who possess `the attributes of a business owner to successfully fulfil your role as a Nando`s franchisee`. They require franchisees to get involved with the business and only accept those who will be owner-operators.

As part of the turnkey business you`re buying, Nando`s commits to handling premises selection, interior design, site development, and project management. There`s also a non-negotiable two-month training period.

Cost of buying a Nando`s branch: Nando`s charges a R35,000 application fee followed by a R250,000 franchise fee payable upfront. Establishing a new Nando`s branch costs about R3.7 million. Franchisees also need at least R415,000 in working capital. In total, if you`re deemed worthy, a new Nando`s franchise will cost between R5.25 million and R7.05 million, depending on store format.

Nando`s no longer stipulates fees for royalties and marketing, but these have previously been set at 12% of net monthly sales.

Alternatively, Nando`s posts established franchises for sale on a dedicated website.

Chicken Licken

Chicken Licken has a long history in South Africa - its first branch opened in the Johannesburg suburb of Ridgeway in 1981. Despite this, it`s a chicken fast food chain that`s somewhat flown below the radar compared to the likes of Nando`s, instead earning a cult status among fans. There are, however, hundreds of stores around the country, many of which are franchises.

Chicken Licken says its franchise model with `tightly controlled internal cost structures` has proven successful across the continent. They`re looking for franchisees who are financially stable `with business acumen, living close to the proposed site and prepared to become fully involved in the running of the business`.

Cost of buying a Chicken Licken branch: Chicken Licken charges an upfront franchise fee of R180,000. Depending on the store`s size, type, and location, the total investment amount is estimated to be at least R4 million - or about R3 million more if you want to build a drive-through option. They also charge ongoing fees for advertising, marketing, and royalties, which total 12%.

KFC

KFC is the global leader in fried chicken sales, and it’s no different in South Africa. The store has a dominant position for its target market here, and as such new franchises are hard - if not impossible - to come by. If you`re desperate to own a KFC store over any other chicken franchise, your best bet will likely be the purchase of an existing KFC an old franchisee may no longer want or be able to keep.

Although this may raise some concerns about the historical success of the branch, KFC says they are “constantly on the lookout for potential franchisees to purchase existing KFC businesses that may become available from time to time”. They’re looking for operators with proven track records in the industry and “the financial muscle to grow the KFC brand in your chosen geography”.

Cost of buying a KFC branch: KFC does not stipulate the cost of purchasing a new KFC franchise in South Africa, if available, nor did it respond to Business Insider’s request for information.

Historically KFC in South Africa has given the first bite of new franchises to existing owners with good track records, and prices for these started at about R6 million.

Galito`s

Galito`s started as early competition to the rise of Nando`s, and in many ways, follows a similar approach in recipe and marketing. The business began with a single store in Mbombela but has grown to 183 in 16 countries.

Cost of buying a Galito`s franchise: Galito`s charges an initial joining fee of R130,000. Store setup costs roughly R2 million, depending on size and format. Franchisors also charge a monthly fee of 9% of turnover, which goes towards marketing and management.

Bird & Co

Bird & Co is a fast-food franchise that focuses on chicken and pizza. On the chicken side, they offer items like burgers, wraps, and wings. It`s a comparatively small franchise, with just 11 branches mainly focused around the Durban area. This means they are relatively competitively priced compared to some of the more prominent names in the industry.

Cost of buying a Bird & Co franchise: Bird & Co charges an R80,000 upfront fee. They estimate that opening a new branch will cost in the region of R1.75 million. They charge a 5% ongoing management fee.

Chicken Bar

Chicken Bar started in September 2019, intending to become `the new home of African grilled chicken dishes`. The business is still small, with only one branch listed on their website, but costs are comparatively low, with minimal working capital required, compared to more established franchises. They offer a kiosk or container option to prospective franchisees.

Cost of buying a Chicken Bar franchise: Chicken Bar charges an upfront fee of R100,000 and estimates the total investment amount to be R981,000. They charge an ongoing fee of 8% for marketing, advertising, and management.

Chicken Xpress

Chicken Xpress started as a single store in 2011 and expanded using a franchise model. They now have more than 20 stores, with several located in Botswana and Uganda. They sell fried chicken in burger, pieces, and wings formats at competitive prices.

Cost of buying a Chicken Xpress franchise: Chicken Xpress charges an upfront fee of R125,000, and estimates the total investment amount to be R1.54 million. They charge 6.5% fees allocated towards advertising, marketing, and management.

Honchos

Honchos is a chicken franchise started in Pietermaritzburg in 2005. They focus more on the flame-grilled side of the industry and offer items like burgers and shawarmas. They now have 98 stores, including some in Botswana, eSwatini, and Lesotho. They have two store formats available for purchase which differ in size and cost.

Cost of buying a Honchos franchise: Honchos charges an upfront fee of R150,000 and estimate the total investment amount to be between R1.8 million and R2 million. They recommend a working capital of R150,000 and charge 7% ongoing fees for management and marketing.

Pedros

Pedros is a flame-grilled chicken business that has tried hard to take on Nando`s in both recipe and advertising. They`ve grown rapidly in recent years and now have over 100 stores. They offer both standalone and drive-through options. These cost less than many of their big-name competitors but more than many of the smaller operators in this sector.

Cost of buying a Pedros franchise: Pedros charges a R125,000 joining fee. They estimate a standard store will cost between R1.7 million and R2.8 million, while drive-throughs will likely cost between R2.5 million and R3.5 million. They charge an ongoing fee of 7%, which goes towards royalties and marketing.

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