Famous Brands satisfies burning desire with flame grilled chicken deal
After an exhaustive decade-long search, Famous Brands has finally secured its entry into the mainstream chicken category, with the acquisition of a peri peri flame grilled chicken offering, ‘Giramundo’, Portuguese for ‘around the world’. The transaction has an effective date of 1 August 2010.
Famous Brands CEO, Kevin Hedderwick says, “Filling the gap in our brand portfolio with a mainstream chicken offering has been a major priority for the Group over many years; however, the barriers to entry in this category are high and the market is one dominated by three major existing players, two of which compete in the deep fried category, and the other flame grilled. We have over the past few years researched and robustly examined a number of existing brands, but to date none have met our requirements – either the price has been unrealistic or the product has not been capable of achieving our best-in-class philosophy whereby we occupy either the number one or two position in its category.”
He adds, “The Giramundo transaction ticks all the boxes in terms of our acquisition criteria and Group strategy. Key to the acquisition is the low cost of entry and limited associated risks. Famous Brands will invest R1.2 million in the business to re-engineer and enhance the existing intellectual property and cover operational costs for the first two years. Of major importance is the product’s flame grilled positioning – a category within the chicken market that is showing strong growth. In addition, the product itself has performed brilliantly in our market research in terms of presentation and taste. Flame grilled product has gained wide acclaim as a healthy alternative to deep fried chicken.”
In terms of the agreement, Famous Brands will acquire a 51% controlling stake in the newly constituted business. Partner Buti Van der Merwe will be retained as a consultant to collaborate on refining and improving the intellectual property that he has developed since launching the brand. The Group will also take on the manufacturing and distribution operations currently conducted at Giramundo’s Bramley facility. From the outset, Giramundo will have full access to Famous Brands’ comprehensive business model which includes franchising expertise, manufacturing, distribution and logistics infrastructure, new business development assistance and an immediate route to market. Critical to the growth of the business is Famous Brands’ renowned brandbuilding expertise.
He notes that the Group has already identified sites and franchisees for two new outlets in Kokstad and Nelspruit, which should commence trading by November 2010.
Significantly, in addition to the potential presented by a network of new Giramundo stores, is the opportunity to roll out this brand to the Group’s existing 1500 South African franchisees as well as its petroleum partners. The business model will be based on stand-alone restaurants, and where existing franchisees might have excess retail floor space, a “clip-on” trading format can be installed. Hedderwick says, “Our franchise and strategic alliance partners will be ecstatic with this acquisition, because it adds another vital component to their offering.”
“Our vision is to make Giramundo’s a serious contender in the mainstream chicken category. With this transaction we believe that we have the opportunity to take a very appealing product and develop it further to become a strong challenger brand within the flame grilled peri peri chicken market in South Africa,” says Hedderwick.
Giramundo founder, Buti Van der Merwe says, “Giramundo means ‘around the world’ and that is my ambition for this business – my biggest dream is to achieve Giramundo’s true growth potential. By partnering with Famous Brands I know that we can do that. Their expertise and achievements in the food services industry is incomparable.” He adds, “Over the past 18 months I have had numerous approaches from other corporates and venture capitalists, which I’ve considered, and I’m satisfied that I have chosen the best possible partner.”
Hedderwick notes, “A joint venture has a lot of advantage for us in that we retain the original skills set and gain valuable insight into this market. It is also Famous Brands’ first real BEE project in terms of franchising and franchised brands.”
Hedderwick says that in addition to empowering the Van der Merwe’s business, this acquisition will afford many other potential entrepreneurs an opportunity to access the lucrative and growing chicken category at a set-up cost which is very attractive. “We have set ourselves the objective whereby a typical 70 – 90 square meter Quick Service trading format will not cost more than R1 million,” says Hedderwick.
“Against the odds, this humble chicken restaurant has built a formidable reputation in its surrounds. I am confident that the combination of this superb quality product and Famous Brands’ core competence of building brands in the food service arena will ensure that Giramundo’s will become one of the Group’s mainstream brands. The prospects are compelling,” Hedderwick concludes.
Notes to editors:
The Group’s brand portfolio includes Steers (516] , Wimpy including UK (651), Debonairs Pizza (309), FishAways (107), Mugg & Bean (109), tashas (5), House of Coffees (24), Brazilian Café (44) and Blacksteer (10). The Group also manufactures and supplies its franchisees and the retail trade with a wide range of meat, sauce, bakery, ice cream, fruit juice and mineral water products.