Taking chicken to the people
● Fast-food chain Galito’s is on an expansion drive, hoping to open another 200 stores in SA over the next three to four years, says CEO Louis Germishuys.
The group currently sells its version of Portuguese flame-grilled chicken in more than 100 South African locations and nearly as many abroad.
Obviously when the words “Portuguese” and “chicken” are mentioned in the same sentence, it conjures up Nando’s, and in fact Germishuys was a Nando’s franchisee in the early 1990s. But in 1996, he started Galito’s, choosing his home town of Nelspruit (now Mbombela) for the first outlet.
“Chicken is universal. I don’t see it as a fad. You know, in the way Mexican probably is at the moment,” he said.
Weak economic growth and record-high unemployment have made consumers very cost-conscious — which Germishuys is positioning his business to benefit from.
“The price point is critical, because people are under pressure. Financially it’s tough out there. You can’t sell for R80 if all a person has is R50.”
Galito’s is well represented in his home province of Mpumalanga and neighbouring Limpopo, but it remains virtually unknown in the Western Cape, Eastern Cape and Free State. Germishuys is targeting the most populous provinces first. In the next three years he wants to open 40 outlets in Gauteng, where most of SA’s buying power resides.
And he has relocated himself to Durban as part of the expansion plan — he sees KwaZulu-Natal as a very lucrative market for his business model.
“If I want to get to 300 stores in SA, I have to take the chicken to the people,” he said. That means opening stores in rural areas.
Already more than a third of the group’s stores are in small towns.
To make the business model viable, the company ropes franchisees in with a relatively low-cost model.
He is taking on powerful incumbents — quick-service chicken restaurants are a regular fixture in South African central business districts and shopping malls, with KFC, Nando’s and Chicken Licken the clear market
Financially it’s tough out there. You can’t sell for R80 if all a person has is R50
leaders. “You have to do things differently to get ahead of the pack. And the chicken pack is big,” he said.
Keeping set-up costs down is an important ingredient. That is why he has moved to internalise functions such as design, architecture and many of the services for which others might hire contractors.
The result is that new stores are opened quickly, with Galito’s mostly finishing off the building phase in six weeks to two months, said Germishuys. Stores are usually about 160m² in size in SA.
To keep his finger on the pulse, Germishuys has a few of his own franchise outlets and Galito’s has 15 corporate stores.
There are Galito’s in 16 countries, including Kenya, Canada, India, Malaysia and Pakistan. Even in Kazakhstan, the chicken-eating public is now sampling a recipe developed in Mpumalanga.