Famous Brands, logistics company

Another note on that Famous Brands acquisition that was announced yesterday. I was asked a bunch of questions by a delightful journalist from Moneyweb, Sungula Nkabinde. It became clear to him that this business was all about logistics. Group revenue was 2.83 billion Rand. The supply chain segment accounts for 2.15 billion Rand. The rest of the business, the parts that you know better has the front end store presence, the royalties earned from the franchise owners sales. If they, being Famous Brands, can squeeze more out of the production and storage process, that has a huge impact on margins. The money is made in making the products that are then sold onwards to the franchise owners, making it clear that quality will be controlled. No matter where you eat that meat product, you can taste the "sameness" each and every time. That is what people want, the same taste across the country and in this case, across the world.

Whilst we are talking about convenience dining, I saw my first Domino's Pizza this weekend, it was going up and looks about ready for opening during the quiet season here, gearing up for the year. There are 382 Debonairs Pizza stores in South Africa, as of last February. The holding company for the Domino's franchise licence in South Africa is Taste Holdings, in their last annual report (also to February 2014) there were 120 Scooters Pizza stores and 25 St. Elmo's. 145 in total. If I add Famous Brands and Taste's pizza stores together, that equals 527 stores, as at February this year. There are lots of restaurants who sell Pizza, including Primi, around 30 stores here in South Africa, that is sit down and not convenience dining, in other words, take out. 13 Andiccio stores. 30 Mimmos. 28 Col'Cacchio stores, all as per their websites. I counted (at high speed) around 99 Pizza Perfect stores. 6 Pizza huts. You get the picture, whilst there are seemingly a lot of Pizza stores around, I am of the opinion that there is huge room for expansion here in South Africa. Kevin Hedderwick always said they did not need chicken, as Famous Brands sells lots of chicken on their pizza. My only point is that there are 52 million South Africans and less than 750 (my best guess) formal pizza stores (possibly many more than formal) translates to 1 store per 35 thousand people in South Africa.