“I always talk of the two Africas – the Africa of challenge and the Africa of opportunity,” he says. “The thing is that you can’t get to the Africa of opportunity without going through the Africa of challenge.”
Some of those challenges are the obvious ones that have become synonymous with the continent: lack of infrastructure, corruption, bureaucratic red tape and political risk. However, those factors can combine to throw up other, more unexpected obstacles.
For example, Layzell says some of the KFC franchises that Yum! has established on the continent have had to be equipped with two generators in case of power failures as well as a full water treatment plant to supply water safe for human consumption. Then there’s also the perennial unavailability of building supplies such as the appropriate tiles or countertops, which often have to be imported from SA or elsewhere.
The result is that capital expenditure costs to set up a franchise in some African countries can often amount to as much as $100 000 more than if the same franchise were set up in SA.
“The costs increase exponentially the further north one gets from SA,” says Layzell.
Nevertheless, he says one cannot fall into the trap of trying to run the business from the Johannesburg boardroom. One has to spend time in the markets one is operating in, while the appointment of local people (as opposed pp to flying yg in SA expats) p ) is also crucial, he says. Only that way can one begin to grapple with by far the biggest challenge faced by companies trying to establish a presence in Africa: supply chain issues.
For KFC the biggest supply chain problem is sourcing quality chicken. Layzell says one cannot simply resort to importing the birds from SA as many African countries either impose heavy tariffs on chicken imports or ban them altogether. The result is that Yum! has had to not only develop its own business on the continent, but also help develop the businesses of its suppliers.
That’s why Layzell says the expansion of rival outfits like Nando’s and Famous Brands on the continent is actually beneficial for the entire sector as they help create an environment in which emerging suppliers can grow and f lourish. It’s something Layzell says will benefit all players in the long term.
While he acknowledges that all of subSaharan Africa is an eventual target for his business, thus far KFC’s expansion on the continent is being driven through Nigeria, Ghana, Namibia, Botswana, Mozambique, Lesotho, Swaziland, Zambia, Malawi and Kenya. This year will also see new outlets opening in Tanzania, Uganda and Zimbabwe.
While he’s reluctant to disclose revenue f igures he does say that in terms of the number of restaurants, the rest of Africa accounts for just 10% of the current footprint in SA. It’s a status quo that is unlikely to last very long.
“We’re very small at the moment but over time we will exceed what we have in SA,” he says. “There are 50m people in SA and a billion people north of our borders.”