Holy mole as lone local Mexican outlet attracts hefty Famous Brands
SALSA Mexican Grill has one outlet and yet fast food giant Famous Brands has bought a controlling interest in the brand.
The biggest food franchisor in South Africa is heading more aggressively into casual dining, one of the fastest growing segments in restaurants, to extend its offering to include eateries that cover the evening trade.
Famous Brands is best known for big brands Steers, Debonairs and Wimpy. “These are very significant in their lives but they need to try these smaller concepts,” said independent analyst Jean-Pierre Verster.
Salsa Mexican Grill is in Fourways, Johannesburg, near Montecasino. At the light and airy venue, patrons order their meal by ticking off a selection on a paper menu, including any add-ons, to make the meal their own.
It is in the neighbourhood of well-known party and fun eateries such as Rodizio, RocoMamas and Beerhouse.
Based on a US concept, Salsa Mexican Grill plans to open a further two outlets, in Parkhurst and Bedfordview, this year.
Darren Hele, Famous Brands CEO, said the group had been researching the Mexican-food market for the past 18 months and was planning to launch its own brand, when it found this offering.
“We felt the chemistry, and from our perspective we could leapfrog the development stage and be able to franchise sooner as the Salsa team had already gone through the pains of the start-up and honing the business model,” said Hele.
He added that “South Africans are starting to slowly adapt to food of ethnic origins. Our focus is making sure we have the appropriate offerings for evenings and fast casual brands.
“For us, it’s to make sure our brand portfolio is able to extend to a different part of the day. We’re underrepresented in eateries that open at night,” said Hele.
The acquisition of Salsa Mexican Grill for an undisclosed amount comes less than a month after Famous Brands bought 51% of KwaZulu-Natal-based Italian restaurant chain Lupa Osteria.
The group’s other casual dining purchases include steakhouse Turn ’n Tender and Greek restaurant chain Mythos.
Orin Tambo, senior analyst at Intellidex, said Famous Brands had a bigger bias towards quick-service restaurants such as Fishaways, Steers and Debonairs, while competitor Spur had always had a bias towards casual dining with table service.
“But Famous Brands has been making strides into this evening dining segment through acquisitions — Tashas, Europa, Salsa Mexican Grill and Lupa Osteria — targeting businesses that are not direct competition to its existing offerings in terms of location, product offerings, income segments and market segment, but rather complement its existing offering.”
Hele said it was still early days for Turn ’n Tender “but it’s starting to show some nice traction and we’re very encouraged by that performance and the interest in terms of consumers and landlords”.
Although Famous Brands is mostly acquisitive, it has started some brands from scratch, including Fishaways, and a new premium restaurant-pub concept, 14 on Chartwell, in Durban. “We might not franchise the name but we could leverage the concept,” said Hele.
Famous Brands has a track record of taking concepts that might be small, testing them in the market and leveraging them if they work.
“The best example is Tashas, which had great growth prospects. But Juicy Lucy, on the flip side, didn’t take off,” said analyst Verster. “They learnt from Tashas that if you have a very passionate founder, it has a greater chance of success.”
Mexican food is increasingly popular around the world. In the US, consumption is growing faster than in any other segment of the industry and it is the third most popular menu type, representing about 8% of US restaurants.
In the UK, the number of Mexican restaurants rose 71% in 2014, outstripping growth in burgers, according to the Guardian.
Verster said Mexican chain Taco Bell was huge in the US, which is understandable given the large Hispanic population. Locally, he said, the success of Nando’s implied that the South African consumer had a taste for hot, spicy food.
They learnt . . . that if you have a very passionate founder, it has a greater chance of success