To say Chesa Nyama has a good story to tell would be an understatement. An aggressive expansion strategy has seen the traditional flame-grilled meat franchise brand become one of South Africa’s fastest growing national brands.
In February this year, the brand announced that they would be taking the concept of a traditional African chesa nyama or braai cuisine to the US.
The chain’s growth story is nothing short of impressive. From the launch of the first restaurant in 2012, the restaurant chain has almost 300 franchises across South Africa and employs over 3 000 people.
Chesa Nyama’s rapid growth led to the listing of its owner company, Gold Brands Investments, on the JSE at the beginning of 2016.
Chesa Nyama Growth Strategy
Gold Brands is a platform that drives the aggressive expansion of high grossing, fast moving franchises.
Last month Gold Brands Investments CEO, Praxia Nathanael announced that the group is looking to expand its brands further into Africa specifically in Botswana, Zimbabwe, Zambia, Namibia, Swaziland and Mozambique, and that the Centurion-based company, which has a turnover of over R 210 million, is also looking for opportunities globally.
This was followed closely by an announcement that Chesa Nyama was planning to open its first restaurant in Nashville, Tennessee in October.
The company had signed a memorandum of understanding for the expansion of the brand with private investors, the South African industrial holdings firm Red Hornbill, and the White Family Partnership, an American partner.
While Gold Brands will not provide capital for the US venture, it will be responsible for logistical support in the development of the product lines, branding, menu costing and strategic support.
A Franchising Veteran
Chesa Nyama is the brainchild of franchising veteran, CEO Stelios Nathanael who has been in the franchising industry since the mid-80s.
Besides Chesa Nyama, what he is perhaps most well known for was founding the highly popular Fish and Chips Company in 2009. The concept proved so successful that it was acquired by Taste Holdings for R 65 million in 2012.
We speak to Nathanael about what goes into an expansion like this, and why other franchise brands should be looking outside SA for opportunities.
Q: Congratulations on the milestone, the Chesa Nyama brand is one of the country’s fastest growing franchise brands. What are your thoughts on what’s behind the brand’s expansion success?
Firstly, I think it is the more than 2 million patrons a month that support our owner-operators in their local communities. Our popularity amongst our fans is without a doubt fuelled by our generous portions, delicious own sauces and marinades made at our Sauce World factory, and such affordable prices that means the whole family can enjoy a hearty meal.
Then the Chesa Nyama concept that brings the local butcher to your doorstep is also a key to our success, because it is fast food but not junk food. Fresh meat, from farm to fork. We deliver real authenticity in our food. I personally can’t stand processed meat, and processed products and wanted to offer something wholesome and fresh.
Finally, delivering value for money meals of the freshest meat would not be possible without our one-stop distribution centre and in-house professional butchers and our procurement and logistics teams that work hard to keep all our costs as low as possible to benefit the owner-operator and the consumer.
Q: What drove the decision to expand to the US?
We have always had ambitions of bringing the brand beyond Africa. We have looked at the UK and the USA before. It’s important to have the right partners to drive an expansion like this. We are fortunate that without a doubt we have found the right partners for the US venture. They are passionate and knowledgeable and intend to be hands-on. This is key for us. So the decision was easy, the right people came along and we said yes.
Also, there is a lot of change happening worldwide in the fast food and quick service restaurant space, and the number one trend in America is an increasing desire for healthy food, and transparency of the production chain is increasing in importance.
One trend which is topping the lists for 2016 is clean eating, or food made with ingredients that are free of additives and not processed. People are opting for food and beverages that are considered wholesome and real.
Since our meat offerings are A-grade butcher’s cuts and are not processed, this means that people know exactly what they are eating, whether it is a rib, a brisket or a steak, and this is in line with the real food trend.
Furthermore, in 2015, for the first time, the average American spends more on eating out than groceries and at least one meal a day is either fast food, quick service or fast casual. Our partners are confident that in a market saturated by traditional options, something new and wholesome will have broad appeal.
Q: As a franchising veteran – can you share what goes into preparing for an expansion like this?
The main thing is to understand the market. Our partners did a lot of research and reconfirmed a lot of what I had gathered around the US market. What did surprise me was that the Americans’ favourite cut of meat is the brisket. Brisket is one of our best sellers on the menu and the most popular meat cut.
We have determined that we will need to make minor adjustments to the menu in terms of mix of products, but it won’t lose the South African flavour. That’s important because in Tennessee, where the first store will open, there is a South African community of more than 150 000 families. I think they will be longing for a taste of home.
Q: What do you believe makes the US especially suited for Chesa Nyama’s food offering in terms of taste and brand appeal?
Whether it’s braai or barbie or BBQ, most nations around the world love meat over a flame or grill. Braai culture over an open flame is essential to South African life. And with having the US having its own barbeque culture, we want to show them how we do it in South Africa. We can’t bring everyone here, but we can bring braai to the world. Our international expansion is about bringing our master braai flavour and experience to the world.
Furthermore, in 2013 we sent a Chesa Nyama braaimaster team to compete in the Jack Daniels annual BBQ competition and we won! So we think the US will love the South African braai.
Q: What was the expansion strategy taken in heading into the US, compared to the strategy taken in expanding to the rest of Africa?
The US deal is an Area Development Agreement and is structured in such a way that we keep 30% of the US company as a free carry and our partners fund the development. It is less risk for us, and having partners so heavily invested is important because they will be hands on to see it succeed.
In Africa, we also look carefully for the right partners, but because it is closer to home, we sell a master licence for that country. It’s a large investment for the master licensee, so again they need to be committed to rolling out multiple stores and building a successful chain.
Q: What are some of the challenges faced with expanding outside SA, and the US in particular?
I’d have to say getting the right partners or master licensees, you don’t want to start with the wrong people on the ground and see it fail, only to have to try again with someone new. It’s important to have people with the same vision and passion for the brand.
Q: With SA under continuing economic pressure, do you believe it’s time that other brands start looking outside the country for opportunities?
A mix of strategy is a good thing. Many local businesses are bringing in big foreign brands. We’ve focused on developing our own local brands and based on the phenomenal success and popularity of Chesa Nyama, we think it’s time to take it overseas.
The main thing is that there is no global braai take-away brand for it to compete against. If you have a burger or chicken brand, it’s harder, because there are lot of global brands in that space.
That is not to say that we wouldn’t consider bringing in a brand. Right now we want to keep Chesa Nyama growing locally and spend some time on building up our other local brands as well.
Chesa Nyama is a quintessential South African brand with a very South African taste.
Q: What is your advice for other SA brands in packaging and selling their offerings outside the country?
If you have something uniquely South African and it has no competition globally, there is no reason why you shouldn’t consider it. There are South African communities [everywhere] from Canada to Australia. You can find a South African expat community just about anywhere, and the thing with South Africans is that they are strongly patriotic, so they will no doubt loyally buy the taste from home.
