Here’s how much it costs to open a McDonald’s, Wimpy, Steers, or RocoMama’s restaurant

Source: Business Insider SA, 12/06/2019

Together, McDonald’s, Wimpy, and Steers generate annual revenue of
approximately R7.7 billion.


Although chicken franchises in South Africa generate more revenue than
any other food type, revenue from burgers is never far behind. And in
some cases, the initial franchise fees required to start your own
store in this sector are lower.

Also read: Uber Eats and Mr D Food charge restaurants up to 30%
commission â€` but ask them not to charge more

Steers and Wimpy, for example, are still among the cheapest fast food
franchises in the country - it’s still possible to start a new branch
for under R2 million.


If you have your sights set on the golden arches, or some of
RocoMamas’s growing revenue, though, you’ll need to dig a little deeper.

Steers
Steers has been around since the 1960s, and has grown from a single
American-style steakhouse into one of South Africa’s most ubiquitous
franchises.

It’s now part of the Famous Brands family, which owns several leading
brands across the quick service food industry in South Africa.

There are now more than 500 Steers branches located across Africa, but
they’re still looking for partners who fit the bill to open up new
franchises.

And the chain remains one of the better-value fast food franchises in
the country.

If you’re interested in buying a store of your own, you’ll need to pay
a joining fee of R130,000 excluding VAT. Additional set up fees for
store fitting and kitchen equipment will set you back more - the
company estimates that the total initial investment will be
approximately R1,2 million.

After that, you’ll need to pay 11 percent of your monthly revenue to
the holding company. This is split between royalties and marketing.

Wimpy
Wimpy is also part of the Famous Brands stable.

The first Wimpy opened in Durban in 1967, and there are now hundreds
of stores, that include sit-down restaurants, classic roadhouses, and
the famous Engen 1 Stop outlets on major highways.

New franchisees will need to put down an initial payment of R115,000
to apply. The cost of kitting out a new Wimpy branch is surprisingly
cost-effective compared to other similar franchises, but you can still
expect to pay up to R2.5 million before you flip your first patties.

McDonald’s
McDonald’s is easily the biggest international burger brand in South
Africa. The first store in the country opened in 1995, and today the
company operates over 200 outlets. Just over half of these restaurants
are franchised.

According to the McDonald’s website, they serve over 8 million
customers every month, and in 2017 they generated R4.34 billion in
revenue. This translates into revenue of R17.7 million per branch,
significantly more than any other burger-focused franchise in the country.

Understandably, owning a slice of the global burger giant doesn’t come
cheaply or easily.

If you fit the requirements to be a new franchisee, you’ll need to pay
an estimated R4 million to R6 million for the privilege. Franchisees
must have 35% of this in unencumbered, non-borrowed cash.

McDonald’s also requires that franchisees be “geographically
flexible”, in that they cannot guarantee applicants will be able to
establish a restaurant in a preferred location. Still, they promise to
work alongside the franchisee to find locations most likely to succeed.

RocoMamas
RocoMamas is the newest success story on the local burger block. The
chain of trendy fast-food stores is now owned by Spur, and they’ve
rolled out dozens of outlets since they formed in 2013. There are now
70 local and 11 international restaurants that form part of the
RocoMamas chain.

According to the Spur Corporate financial report, the group is
performing well. Restaurant sales at RocoMamas increased by 31.5% in
the 2017/18 financial year as they opened an additional 15 restaurants
in South Africa.

Also read: This young entrepreneur overcame failures and legal woes to
launch one of South Africa’s most popular fast-food chains

Buying into this success story requires a substantial amount of cash,
though. According to the company website, you’ll need 50% of the total
setup cost of R4.6 million in unencumbered cash. Without this R2.3
million in cash they won’t entertain your application. They also
recommend starting off with a working capital of R120,000.

As part of the franchise agreement, you’ll also need to pay monthly
royalties totalling 7%. They divide this between management services
(5%) and marketing (2%).

Burger King
Burger King has seen some success in South Africa, with revenue growth
of almost 30% in the past year, to R623.5 million. But it’s not yet
possible to purchase a Burger King of your own. The holding company
owns all the branches, and in spite of posting significant losses,
they plan to increase their footprint to 135 company-owned stores over
the next three years.