Famous Brands Turn
Famous Brands, the diversified fast food group, plans to open at least 25 more Turn ’n Tender steakhouses in South Africa’s major metropolitan areas over the next five years, while also expanding its newly acquired Bread Basket brand in a smaller format.
“Turn ’n Tender has to become a national brand,” Famous Brands Chief Executive Officer Kevin Hedderwick told Finweek in an interview. “We’d be very disappointed if we didn’t have another 25 Turn ’n Tender restaurants in the next five years.”
Famous Brands acquired a 51% stake in the Turn ’n Tender steakhouse network effective 1 June 2013. Turn ’n Tender comprises five steakhouses in the Johannesburg area (Parktown, Illovo, Bryanston, Bassonia and Bedfordview) as well as a butchery, which Famous Brands wants to use to supply choice-cut meat to its wider franchise network.
Hedderwick said Famous Brands is targeting Durban, Bloemfontein, Nelspruit, East London, Port Elizabeth and Cape Town for its Turn ’n Tender expansion. The expansion is all part of a plan to capture what Hedderwick says is the missing middle of the family steakhouse dining experience.
“Spur has pretty much cornered the bottom end of the family steakhouse dining trade, the crayons and balloons segment,” he says. “The upscale part of the market is ser ved by the l i kes of the Butcher Shop & Grill, but there isn’t any- thing catering to the middle segment of the market.”
Famous Brands also has big plans for the Bread Basket, the bakery and delicatessen in which it acquired a 51% controlling stake effective 2 April 2013.
“South Africa doesn’t really have a nationwide footprint of small, neighbourhood bakeries that offer great bread and pastries in a grab-and-go format,” says Hedderwick. “We’re looking at rolling out smaller Bread Baskets of between 70 to 80 square metres. The type of large Bread Basket you have at Sandton City where they sell everything from ciabatta bread to goat’s cheese and salad isn’t really appropriate for a national rollout.”
Hedderwick says the model he wants to emulate with the Bread Basket rollout is “exactly” that exemplified by Australia’s Bakers Delight, which has over 700 outlets across Australia, New Zealand and Canada. He also wants to utilise Bread Basket’s manufacturing facility in Linbro Park to supply some of the brand’s “fancy breads” to other franchises in the Famous Brands stable.
The group is also about to open its first Steers franchise in the UK with the first outlet planned for Clapham Junction in south London sometime in the middle of July. Hedderwick says the pending opening has already caused a stir on social networking sites among South Africans living in London.
Then there’s also the arrival of Debonairs Pizza in Mumbai, India, although in a somewhat different format to account for cultural dietary changes such as the fact that Hindus are prohibited from eating beef. Hedderwick says Famous Brands has partnered with an Indian family-run business for the Debonairs rollout and says the potential in India is massive.
“If anything, we have to hold them back,” he says. “But Mumbai is so full of energy and has so much potential that if I were a bit younger, I’d probably ask to transfer there.”
One might even be tempted to warn Hedderwick of the Chinese saying: “Beware what you wish for.” The scale of India, coupled with Hedderwick’s track record of growing fast food franchises in emerging markets, might just tempt shareholders to harness his know-how in the Indian market of 1.24bn people.
Under Hedderwick ’s stewardship, Famous Brands delivered another impressive set of results for the year ended 28 February 2013 with revenue climbing 17% to R2.5bn and headline earnings up 22% to 339 cents/share. Dividends also rose 25% to 250 cents/share, not bad for what remains a tough consumer environment in SA.