International companies are gearing up their investment plans to feed African populations on the go
In a sign that cash-rich corporate America is rebounding, several big companies are looking to offset flat growth at home by looking at faster growth abroad. Following the announcement of Walmart’s foray into the South African market, it is now the turn of fast-food restaurants to reboot their flatlining US sales by plugging into African dynamism.
The US group Yum Brands, owner of KFC, is planning to double the number of its fast-food chicken outlets in Africa. There are currently 600, the majority of which are in South Africa, and the company is targeting expansion in Nigeria, Zambia, Angola, Namibia and Ghana, where middle-class expenditure is heading up. It also wants to double revenues to $2bn, with franchises expected to invest $500m across Africa over the next four years.
Yum Brands chairman and chief executive David Novak said that Africa is “exploding with opportunity,” presumably a reference to KFC’s unique offering, ‘popcorn chicken’. Currently the deep-fried meal magnates claim to reach 180m Africans, many more than US fastfood rival McDonalds, which has just 200 outlets on the continent.
The knock-on effects for supply chains will also be positive, if African agribusiness can compete with frozen chicken imports into Africa from international heavy-hitters such as Brazil. South African giants Rainbow Chicken, Afgri and Astral Foods will all be scratching around for deals. Feed suppliers, the veterinary sector and a whole raft of support services to the industry can all expect a boost.
But while KFC rules the roost when it comes to South Africa – where it has a 44% market share for eateries – there are homegrown challengers in other markets which could eventually work their way up the pecking order, such as Mr Biggs in Nigeria.
Nando’s, a South African peri-peri chicken joint, may have just 6% of the local market, but as KFC expands at home, Nando’s is strengthening abroad, with more than 200 restaurants in the UK, more than 30 in Malaysia, and 10 new outlets in Singapore planned over the next ten years.
This article was first published in the February 2011 edition of The Africa Report
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