How an organic growth strategy was key to Galito's franchising success
CEO Louis Germishuys on growing through relationships, joint ventures and going where there is demand
The Galito's story begins in Nelspruit, Mpumalanga. The chicken franchise brand first opened its doors in 1996. From one store, today the company employs almost 3 000 people (directly and indirectly) and operates 130 stores, in 14 countries across four continents.
Galito's is operating in the casual dining segment which offers customers fast food, but made with quality ingredients and a premium setting. Their core offering is a variety of flame grilled chicken dishes.
"Consumers are looking for a higher quality of food, but the desire to find a healthier alternative does not supersede the need to eat on the go. As a result, this classification is increasingly becoming recognised in the food industry and in the franchise space to define a ‘new’ category which presents itself with its own set of opportunities - which we have capitalised on," says Galito's CEO Louis Germishuys.
From a local favourite to a global company
This growth was achieved by being strategic when capitalising on opportunities, says Germishuys.
By 2002 the single store had grown to eight and Galito's had become a Lowveld favourite. The year after franchising became the key focus of the brand which expanded into Gauteng, Kwa-Zulu Natal and Limpopo.
In 2006 the franchise brand ventured into the rest of Africa, launching restaurants in Kenya and Ghana.
"My view is that brands should only look outside of the country for opportunities if it makes sense for them – and they have the know-how to do it and to do it right"
This was followed by Lusaka, Zambia which saw three more restaurants launch in relatively quick succession, and thereafter into Zambia’s neighbouring country of Malawi. Now they are in Swaziland, Lesotho and Mozambique.
When it was time to go international Toronto, Canada was Galitos first store off the African continent to open in 2010. The brand subsequently added two more restaurants. They are now also in the UAE after signing a Master Franchise Licence with Tablez Food Company in 2014.
Germishuys speaks to SME South Africa about how they choose the right time and area to grow in, and the importance of having a risk strategy in place.
Galito's CEO Louis Germishuys.
On the decision to franchise as a business model
I never thought of making Galito’s a franchise however due to the success of the first store and the requests to expand and broaden our reach outside of Nelspruit, it just made good logical sense. And as they say, the rest is history.
Why we expanded into the rest of the continent
We have always grown organically, and given our bold African flavour and our success in the South African market, the next logical step was expansion on the continent – which has presented a different set of challenges, it also opened up the door for diverse opportunities.
The thinking behind our growth strategy
It was never about growing into a specific region – rather expansion has been a result of organic growth and a by-product of relationships, joint ventures and direct requests from specific regions looking for a franchise opportunity. In June, we announced the first location and master franchise agreement in Pakistan. The deal will see Galito’s opening three new stores in the region within the next six to nine months, starting with the flagship store located in Lahore, which should open mid September 2016.
The next phase is then the US – as this is a market Galito’s would like to enter given the need for fresh fast casual food in the region.
On taking risks
Entering a new market is always risky, so it’s important that in addition to understanding the intricacies of the market, that a risk strategy is put in place. Some of the biggest challenges include: understanding the target market, regulation, limited infrastructure, disparate geographic locations and skills shortage.
"Supply chain control is essential in ensuring your product is consistent and that the consumer’s experience with your brand is dependable – no matter where in the world they are"
SA is still ripe with opportunities
South Africa is still a growing, and in our case a thriving, market and if you get it right, there is plenty of opportunity. Economic pressures are unfortunately not just an SA problem – it’s a global one. My view is that brands should only look outside of the country for opportunities if it makes sense for them – and they have the know-how to do it and to do it right.
South Africa, and the world, is a complicated place to do business but with the right attitude and a humble approach to growth, it is also a very exciting place that boasts much opportunity for all.
The non-negotiable qualities every franchise needs to succeed
Businesses hoping to succeed in this market, or to expand, need to hold three qualities in my opinion; humbleness, a willingness to work hard and the ability to trust their gut when it comes to important business decisions. All else follows and with a little guidance and reaching out to ‘those in the know’, there is no reason for your business to fail – now is the time to make a few small changes that will make a big difference.
Why we don't believe in using the cookie cutter model
Every market is different from a regulatory and business operations perspective and as such, it’s essential that you understand this before entering a new market. And in many cases you can’t do it by yourself – so look for a partner that understands that specific country, has a network and shares your vision. Then, it is about making sure quality never waivers.
So many businesses outsource their supply chain logistics which, in the short term, keeps the clocks ticking and makes logistics processes easier. However, in the long-term, it opens up room for the quality of your product to fail. As such, supply chain control is essential in ensuring your product is consistent and that the consumer’s experience with your brand is dependable – no matter where in the world they are.