Fast Foods
| For newcomers seeking to take a bite out of the South African eating-out market, ‘glocal’ is also lekker
FAMILIAR FOOD: Famous Brands’ Wimpy chain is one of South Africa’s favourites NEWCOMER: Taste Holdings has brought the Domino’s Pizza brand to South Africa WHOPPER DEAL: GPI launched Burger King in South Africa stores trading in the last quarter of 2015. The company has pencilled in between 85 and 100 outlets by the end of the conversion period.
Last October, Taste Holdings CEO Carlos Gonzaga said the “learnings” from the Domino’s roll-out had been instructive in how the company planned to roll out Starbucks.
Gonzaga was unable to comment this week.
The worry for some punters, notably Vunani Securities analyst Anthony Clark, was that Taste had repeatedly tapped the market for fresh funding with no tangible evidence of appetising returns on these monies. With the Starbucks roll-out just starting, it appears as if shareholders will have to delay gratification in terms of rich dividend flows.
Like Taste, it’s still too early to make a definitive prediction on longterm prospects, but GPI did report that in the half-year to end-December Burger King cut its after-tax losses markedly to R24-million from a R40million loss in the previous interim period. More important, revenue increased 66% to R224-million and restaurant operating profit before head-office costs and franchise fees increased 352% to R12-million.
There is persistent chatter that Spur and GPI could work more closely together in years to come. A crossshareholding arrangement — with Spur taking a strategic stake in GPI — might not work because the latter’s empowerment credentials would be diluted. What might work is if GPI, which has confessed to coveting a larger stake in Spur, reversed its fast-food brands (and associated food-services interests) into Spur in exchange for scrip.
The gut feel, though, is that GPI would probably like to bulk up operating profits before engaging with Spur.
Tipping well in US restaurants is legally optional but culturally compulsory
A FEW years ago in Manhattan, I had dinner at a pub with seven or eight New Yorkers. We ran up one bill, and our arithmetic was booze-impaired, so we guesstimated the tip.
Mistake. As we trooped out onto the pavement, the waiter rushed out of the pub and hollered at us: “You guys! 15%?! What the hell?”
So we returned and sheepishly bumped up his tip to 25%. For a South African, it was an odd experience — we’re not used to our gratuity being furiously challenged.
In major US cities, tipping well in sit-down restaurants is legally optional but culturally compulsory. In New York, the minimum restaurant wage is $7.25 (R103) an hour, which might net a waiter $1 300 a month. To put that in perspective, the average rent for a one-bed apartment in New York is $3 152 a month. But the vast majority of most waiters’ income is in tips, which serve to make the job a viable career.
Compare that to South Africa, where the minimum wage for restau- rant workers is a miserable R14.15 an hour — roughly one-seventh of its New York equivalent — and yet our tipping norm is 10% for good service, more if you’re feeling generous. Many South Africans don’t tip at all, or shed some pocket change. In most restaurants, full-time waiters take home less than R5 000 a month. That’s not enough to build a life or raise a child.
Our tipping culture is particularly miserly given that eating out in South Africa is, by global standards, unusually affordable for middle-class consumers. A meal at a mid-priced restaurant is often not much more expensive than cooking the same meal yourself at home with good ingredients — and that’s not the case in most developed economies. Restaurant chains are effectively subsidised by extremely low staff input costs, with rock-bottom kitchen salaries the norm. High staff turnover is routine as a result.
This doesn’t mean the South African restaurant business is a cakewalk — particularly in these grim times. But its viability in South Africa is largely down to an oversupply of cheap labour.
This partly explains the appetite among foreign restaurant chains to set up shop here. There is always a queue of jobseekers waiting to replace a cook or waiter fed up with earning a pittance.
That imbalance sustains many other local industries, but consumers can’t tip miners or farm labourers. The South African restaurant is an unusually porous boundary between two economic worlds. Its customers wield the power to ease, in a small but potentially significant way, the gruesome inequity of our society — by tipping at a level that is morally appropriate to the gap between their income and the waiter’s income.