Fa­mous Brands Turn

Finweek English Edition - - COMPANIES & INVESTMENTS - Garth The­unis­sen

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.

Kevin Hed­der­wick

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