[LINK] "Pizza Hut Returns to Africa"

[rfmcdonald]

Janice Kew and Christopher Spillane, writing for Bloomberg, describe how Pizza Hut is trying to break into booming African markets.

Pizza Hut knows a few things about fast expansion in emerging markets. In less than 25 years, the chain has added more than 1,300 restaurants across China. But Randall Blackford, the general manager of Pizza Hut’s operations in Africa, says the restaurant operator is taking its time expanding on the continent. In Africa, “we are a small company right now and will stay small for some time,” he says, eating pizza at one of his restaurants in Soweto township in Johannesburg. “It gives us flexibility to respond to local tastes, to engage more. We can’t be first, can’t be the cheapest, so we got to be the best.”

Blackford has reason to be cautious: The world’s largest pizza purveyor, a unit of Louisville-based Yum! Brands, failed in sub-Saharan Africa seven years ago, after consumers were cool to its prices and dine-in model. This time around, Pizza Hut is targeting takeout and delivery service. It will limit drop-off distances to a few miles, which means eventually it will have smaller stores in lots of neighborhoods. From its current eight stores in South Africa and Zambia, it aims to have 200 stores across the continent in three years.

While fast-food purchases in South Africa are growing, with about 34.8 million people expected to buy meals from such restaurants by 2017, up from 31 million now, much of that nation’s fast-food industry is homegrown, according to Euromonitor International analyst Elizabeth Friend. In countries such as Ghana, Kenya, and Nigeria, there’s less competition than in South Africa. So while supply chains are less reliable, those newer markets offer foreign restaurant players good growth opportunities, “at least for those chains that can survive until that investment starts to pay off,” Friend says.

Almost half of Africa’s fast-food restaurants are focused on chicken, then comes burgers. Pizza is a distant third, accounting for about 5 percent of total spending. One reason: the more moderate cost and wider availability of poultry supplies. Some Pizza Hut toppings, such as air-dried pepperoni, have to be imported. That affects customers’ checks. The Streetwise 5 meal from Yum’s KFC, which includes a large order of fries and five pieces of chicken, costs $5.50 in South Africa, while a fully loaded large Pizza Hut pizza approaches $8. In Zambia, the same pie costs about $10. “The pizza outlets are going to have to focus on pricing, bringing it more in line with what chicken costs,” says Wayne McCurrie, a money manager at Momentum Asset Management in Johannesburg.

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[needled_ink_1975]

(random stranger; feel free to ignore)

Pizza Hut will fail here (S.Africa) *again*. I have no idea why they're trying to make a comeback. For years and years Pizza Hut ruled here: if you wanted pizza they were about the only place to get it, and you had to pay through the nose. Then along came Debonairs Pizza, and in about 2 years, they'd forced Pizza Hut into the niche 'designer pizza' market. About 6 years ago, things were so bad for Pizza Hut here that they bailed right out of the country.

Debonairs currently owns the biggest chunk of SA's mainstream pizza market for good reason: they don't sell American-style pizza; they sell what SAfricans think of as pizza. Pizza Hut will have to change their entire menu and their manner of presentation if they hope to compete. Seeing as they haven't done so for about 25 years, I doubt they'll try to fit in and match up now.

For decades our mothers made some nonsense dough, pressed it into a (square!) baking tray, baked it for a bit, then took it out and added sauce (usually barbecue!), some tomatoes, sandwich ham and cheese (cheddar!), stuck it back in the oven, and when it was gloopy and browning a bit, took it out, and that was pizza. Debonairs is a bit fancier than that, and the bases are round, but at heart they're South African pizzas, and we like 'em that way.

We also like weird variations like this, and (it gets weirder) THIS, which I don't think Pizza Hut calls 'pizza'. :)

Related: Burger King arrived here just last year with big fanfare, and then shut up fast. They don't even have ads on TV or radio anymore, and their initial sponsorship of various sporting events has since disappeared. Why? They can't afford it. Likewise, McDonald's is a failure here, and that's mostly because SAfricans don't like to be told that our idea of food is wrong.

–N