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Showing posts from April, 2016

Franchises present significant growth opportunities for South African economy

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The various international retail chain store brands entering the South African market is a positive indicator for the country, and highlights the opportunity that South Africa offers to international investors, despite the flurry of negative perceptions around the current local economy.

This is according to Jeremy Lang, Regional General Manager of Business Partners Limited (BUSINESS/PARTNERS), who says that the South African franchise sector continues to grow steadily across a number of industry sectors.

Speaking in light of Franchise Month, he says that there are a number of emerging trends in the local franchise industry that are creating opportunities for franchisees. The first trend cited by Lang is the influx of international franchisors expanding operation to South Africa, such as Burger King, Starbucks, Domino’s Pizza and Pizza Hut, which are re-entering  the market, and the soon to launch Dunkin Donuts. “The launch of such large international brands in South Africa highlights…

Experience a little bit of heaven in every bite of Krispy Kreme, now at the new Mall of Africa

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Iconic international doughnut brand, Krispy Kreme, which recently launched in the South African market, with stores at The Zone in Rosebank and the Sandton Gautrain Station, has announced that it will open its third branch, a concept store, on 28 April 2016 in Gauteng’s most exciting recent retail development, Mall of Africa.  The brand, owned jointly by Fournews and John and Gerry Brands, is fast fulfilling its promise to deliver at least six ‘melt in your mouth doughnut and premium coffee’ stores before the end of the year. 

The mall, located in the Waterfall Estate between Midrand and Sandton, is set to be one of the largest shopping malls on the African continent with a shopping space of 131000m2. It will also boast over 300 shops, and will play host to a plethora of local and international brands, as well as accommodate over 7000 parking bays. It is considered South Africa’s and Africa’s most extensive single-phase shopping mall ever built.

The doughnut chain has already become a …

High food prices will not curb tourism growth

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Tourism sector remains resilient irrespective of increasing food costs

Rising food price inflation which is currently driving the increase in operating costs will not severely affect the tourism sector due to its continued resilience and increasing foreign arrivals boosted by the weak Rand.  

The latest figures from the TBCSA Tourism Business Index (“TBI”) revealed that the sector performed steadily in the first quarter of the year regardless of tough business conditions.

Charnel Kara, Tourism Specialist at FNB Business, says the recent drought which has led to a surge in food prices, coupled with broader economic challenges are placing strain on the bottom line of many tourism operators. The situation is further exacerbated by a drop in domestic tourism activities and high operating costs, driven by factors such as increasing electricity tariffs and high labour costs.

“Despite the current challenges, the travel and tourism sector is still showing strong performance, especially in acco…

Four trends shaping the fuel retail sector in SA

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With over 4 600 fuel forecourts currently in operation and more expected in the future, this industry is rapidly growing as a key driver of revenue for fuel stations in South Africa. 

Ronél Fester, FNB Franchise Industry Specialist, says the success and profitability of fuel forecourts lies in their ability to understand and meet the ever changing needs of consumers, while conveniently providing them with exceptional service at any time of the day. Even in the toughest economic conditions this business model has proven to be successful for service stations.

For instance, convenience shopping currently allows consumers to fill their petrol tanks, buy coffee, muffins or even fresh fruits while on their way to work. This gives fuel retailers a competitive edge and the opportunity to penetrate a growing market. 

“As more retail brands invest in this concept, competition has increased, leading to a battle for market share. Therefore, fuel retailers should constantly aim to innovate, reinv…

Scaling up your business: When is it the right time to expand?

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The urge to convert and scale up a small business to a medium to large enterprise is one of the most common goals among business owners. However, contrary to popular belief, scaling up a business is not just a goal for most entrepreneurs, but also a necessary step to running a business successfully.

This is according to Christo Botes, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that many entrepreneurs incorrectly believe that their business will grow organically, and that the necessary resources can simply be added to match current demand.

He explains that once a business has grown to a certain size, the owner must consciously choose to scale up rather than simply reacting to a growing market share.

When facing this cross road, Botes says that the entrepreneur should first consider the true reason for wanting to scale up before doing so. “Businesses often want to scale up to become self-sustainable, but starting…

The value of investing in renewable energy

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The success of the Department of Energy’s (DoE) Renewable Energy Independent Power Producers Procurement (REIPPP) Programme is a shining example of South Africa’s ability to undertake large infrastructure programmes to boost the local economy despite the current period of slow growth internationally. This public-private partnership programme has allowed for energy growth and successful private investment, which contrasts with a number of other international renewable energy programmes that have faced difficulties and setbacks.

According to Paschal Phelan, Chairman of Solar Capital, the renewable energy developers involved in the REIPPP Programme have funded their facilities largely through independently sourced international investors and local banks making these projects viable in the SA market. "About R47bn of the programmes awarded bidder status reached financial close in the first round and R28bn in the second round of the REIPPP Programme.”

A recent Investec report on renewab…

Neuroeconomics study reveals how consumers can avoid overspending

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When your friend excitedly explains that they are in love with their new designer jeans, they may not be exaggerating. Marketers have always known that one of the most powerful motivations for our buying behaviour is our emotions, yet while they knew it appealed to our less rational ‘feelings’, what they didn’t know was why.

“Well, not until now,” points out Taryn Schmidt, Head of Marketing at Wonga SA. Marketers have long capitalised on the link between emotions and ‘perceived value’, particularly during holiday periods when consumers may be prone to spending more than their budgets allow them to do. “By appealing to emotions, and not the rational mind, marketers manage to tap into what makes us most human. By understanding how this happens, consumers will be in a better position to make more rational spending decisions and avoid unnecessary debt.”

A team of researchers at the Duke University in North Carolina recorded the brain activity of a number of experimental subjects, includin…

Electricity price increase a double whammy for SMEs

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Gold Brands acquires exclusive rights to Harry Ramsden’s in SA

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Gold Brands Investments Ltd (“GBI”) confirmed today that it has secured the exclusive rights to bring the world famous Harry Ramsden’s restaurant chain to South Africa.  Gold Brands, which owns the highly successful ChesaNyama fast food braai brand, has according to its cautionary announcement entered into detailed negotiations with the British brand to define an Area Development Agreement which will see Gold Brands rolling out the Harry Ramsden’s concept in this country.

The area development agreement fees are as yet undisclosed as it may be subject to change until the detailed agreements are concluded.  The JSE AltX-listed company expects to announce the value of the deal at a later date.

The iconic British brand, established in 1928 by Harry Ramsden, has over 40 outlets throughout the UK.  While the first Harry Ramsden restaurant opened in Guiseley, West Yorkshire, the firm has expanded well beyond its original Yorkshire heartland, including recently to Doha, Qatar.  Bringing the b…

Milk price to increase due to supply shortages

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As consumers continue to grapple with high food prices triggered by the recent drought and the ailing economy, milk will soon be added to their list of costly staple foods.

Dairy farmers are currently facing production shortages and will likely run into supply issues in the coming months.

Consequently, some dairy processors are already paying commercial farmers 60 cents more per litre on average for milk to ensure consistent supply in winter. Poor pasture conditions due to the drought and the sharply higher grain prices have squeezed margins at farm level and the increase should help improve the situation.

The price is expected to further increase in May and will hike operating costs for the entire milk value chain, leaving retailers with no choice but to increase the price that consumers pay for milk and dairy products.

Paul Makube, Senior Agricultural Economist at FNB says the price of milk is determined by demand and supply from the market. However, because dairy farmers are price …