Samantha Enslin-Payne
Giramundo, a small fast-food chicken business in which Famous Brands bought a share last year, is being groomed as a serious contender to Nando’s, but the group, which is better known for its Wimpy, Steers and Debonairs brands, intends to gradually grow this brand.
When Giramundo was acquired in August last year, it had an outlet in Bramley, Johannesburg, and three operating out of containers in Alexandra, Tembisa and Soweto. Buti van der Merwe, who started the business in 2007 with his wife Maki, had pestered Famous Brands chief executive Kevin Hedderwick for a year to visit his operation. Hedderwick did so reluctantly as it was too small for Famous Brands to consider as an acquisition.
“It was a tiny operation, but selling the most amazing peri-peri chicken.” That was the clincher and although small, it has given Famous Brands the opportunity to re-enter the chicken category, which it exited almost a decade ago after the Church’s Chicken deal failure that left it without exposure to the significant chicken market in South Africa.
Famous Brands bought a 51 percent stake in Giramundo and has invested in re-engineering the brand. It has since opened outlets in Nelspruit, Kokstad and Pretoria, which has been done in a low-profile fashion in a bid to test consumer reaction.
“We are about to come out of the closest,” Hedderwick said.
Outlets would soon be opened in Douglasdale in Johannesburg and in Richards Bay. The business was now actively pursuing sites in metro areas.
“I believe it has the pedigree to become a challenger in flame-grilled chicken.”
Hedderwick said Nando’s was a fantastic business, but there was no second player.
Giramundo is targeting living standards measures (LSMs) 6 to 8, while Nando’s targets LSMs 8 to 10.
Giramundo should be at a 10 percent price advantage to Nando’s, Hedderwick said.
Famous Brands’ previous experience with chicken was a bruising one. In 2002 the group signed a master licence agreement with US-based AFC International to roll out the Church’s Chicken brand in South Africa and 18 African countries.
But the drier texture and taste of Church’s fried chicken did not appeal to South Africans, who were used to the oily taste of KFC.
With weak demand for the product, targets to open stores were hard to meet. Equally challenging was that royalties had to be paid in dollars, exposing the business to currency risk. A year after signing, Famous Brands exited the deal.
This time around, the group is taking it slow. “With Giramundo we are going at our pace. It will be a slow burn,” Hedderwick said.