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 Big bet on the future of fast-food franchising

 

 After a tough many years in which the restaurant industry was among those hardest hit by the global financial crisis, Mogani Padayachee, an experienced owner of many eateries, believes that the corner will be turned within the next year – and she is willing to bet on it.

The 51-year-old franchisee from Johannesburg is planning to open no fewer than three new restaurants, a Steers, Debonairs and Fishaways, at a new shopping centre opening up in April 2015. This is in addition to her existing Steers and Debonairs at the Pineslopes Shopping Centre in Fourways.

It is a big bet on the rejuvenation of South African consumer spending, a brand new shopping centre, as well as the strength of Famous Brands, a leading South African franchise group that owns all three of the franchise brands.

To many ordinary business owners, the thought of owning more than one business, let alone increasing them from two to five, seems like sheer madness. Mogani admits that the main driving force in her entrepreneurship is to grab hold of a clear opportunity that presents itself, but she is far from being a reckless risk-taker.

Mogani has had lots of practice in running more than one project at a time. She trained as an architect in Durban – the only woman in her class – and for many years ran a flexible practice from home so that she could raise a set of twin boys.

At the same time, she got her first taste of the restaurant industry in Richards Bay. Her husband Nalen, a civil engineer specialising in commercial construction project management, is well placed to spot a good opportunity at the shopping malls which he helps to build, and the couple soon owned a Tong Lok Chinese restaurant in a local shopping centre.

It was the first of many restaurants. Next came the Steers in Pineslopes near Montecasino in Johannesburg, close to where the couple now live. After that they started two franchise coffee shops and two Dream Nails franchises which they ran for a while before selling them for a profit. Their most recent acquisition was the Debonairs in Pineslopes.

Apart from her own ability to spread herself between more than one project, Mogani says it is also the nature of the franchise industry that makes it possible. When you buy a reputable concept, you know all the problems have been ironed out already, and you are following a recipe that works.

When an entrepreneur spreads herself between more than one project, it becomes crucial to recruit, develop and support good managers and staff who can run the business with minimal participation from yourself. It requires years of work and constant vigilance from the owner to make sure the managers and staff succeed.

Mogani says it helps to start a franchise branch from scratch, rather than buying an existing outlet, because it allows her to shape and influence the mind set and culture of her team of employees hence setting the standards and expectations for the business.

This was very evident when she bought the Debonair at Pine slopes about two years ago. The shop situated next to her Steers, for many years belonged to a franchisee who seldom participated in the day-to-day running of the business. When the opportunity presented itself, she acquired the store and with the integration of both the Steers and Debonair Pizza as a combo, she could keep a close eye on each store. It also helped that both franchise concepts belonged to the same franchisor, Famous Brands, who facilitated in the concept of a combo store.

However, Mopani acknowledges that it was challenging work to take over the staff of an existing business. She was faced with extreme resistance when setting up and introducing the exacting standards and procedures that she required for the smooth and systematic running of a franchise system.

She approached her bank to finance the purchase of the shop, but “they took forever” to process her application, says Mogani. Business Partners won her over with their speed and efficiency, and she decided to take up their offer of financing the full purchase price of the Debonairs.

Running the Debonairs and the Steers as a combo proved to be hugely successful, and played no small role in Mogani and Nalen’s decision to replicate the combination in the new shopping centre later this year.

This was in sharp contrast to her experience with her existing Steers outlet, which she built from scratch thirteen years ago. Somehow, says Mogani, “everything just came together” with the Steers outlet, so that it has always run smoothly. One gets the sense that it is this satisfaction which drives Mogani to do the same with another franchise, and another.

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