At the end of 2011, a Yum! Brands (the US-based owner of KFC, Pizza Hut and Taco Bell) executive said that Africa won’t significantly increase the Group’s overall profits for the next decade. Do you agree with this?
Absolutely. What we want to do is we want to build steady, sustainable growth. We can go ahead and build a significant number of stores that were badly planned, badly built, badly executed – it would fall over. We don’t want to build a house of cards. We want to build something that is strong, that will be sustainable for a long, long time. And that means a slow growth at the end of the day. We want to do things right.
At the moment our sub-Saharan Africa stores is about 10% of our South African stores. So we’ve got a long way to go to catch up and that will take some time. But if you have a look at the potential upside of sub-Saharan Africa – it is massive. We really believe in it. And we want to see Africa’s contribution to our global results increase year on year on year.
Some South African retailers have noted that a lack of suitable retail space is holding back their growth in the rest of the continent. Is this also a problem for KFC?
It is a massive problem for us. The classic example always given is Lagos – a city of 15 million people, and it essentially has two world-class malls, which clearly aren’t enough. There aren’t real retail nodes as you would expect to find in South Africa, or in Europe or America. So you can’t just walk into a place and there is already a beautiful store that is just waiting for you to shopfit it. What we have to do is go and find usually private individuals who own properties, and say, “can we use your land to develop a KFC?”
So even the sophistication of the retail property development market isn’t there. But what we are seeing is there are many South African property developers moving up in Africa. There are many international property developers starting to look at the opportunities in Africa, and seeing the importance and the opportunity for laying down these formal retail nodes. Down the line we will have more access to that, but certainly at the moment, there is a massive dearth of quality retail space.
How would you describe the competition in sub-Saharan Africa’s fast-food industry, excluding South Africa?
Fast-food is well established in these markets. There are many quick service restaurants in all these African countries, and they have been in there a lot longer than us, and they are the incumbents. So when you go into a market, it will be arrogant to say, “here comes KFC and we are going to change the world”. Competition is valuable for everybody, it keeps us on the front foot, it keeps us strong. We have been very impressed with some of the brands that have grown up in some of these countries.