- Many established bar and restaurant brands are available to buy and run as franchises.
- But they aren't cheap.
- You can expect to pay millions for a recognised bar franchise like Tiger's Milk or News Café, and ongoing royalties of up to 9%.
- For more financial news, go to the News24 Business front page.
South Africa's bar and pub scene has changed significantly in recent years - particularly when it comes to national franchises.
What was once a market dominated by a handful of traditional pubs and bars has seen the line blurred between bar, pub, and restaurant - to create a safer jack-of-all-trades model.
Many South African bars now tend to look more like restaurants - doing quieter trade during daylight and ramping up with live music, DJs, and drinks specials in the evenings.
They also tend to serve simple meals like burgers and pizzas throughout the day and late into the evening - a move that likely increases the appeal and potential revenue versus the days of grabbing a few evening pints at the bar.
It's a move that seems to be paying off for some franchisors. The bar, restaurant, and canteen industry is forecast to see revenue of over R100 billion in 2023 - and South Africans have a problematic love for alcohol that's further driving revenue in the liquor trade.
The hybrid model may increase potential revenue for individual stores - but adding full-service kitchens, wide menus, and bigger floor space also increases establishment costs.
It's not something that appears to have restricted the rollout of some bar franchises.
Newer franchises that exploit this hybrid model, like Life & Brand's Tiger's Milk, and to a lesser extent La Parada, have seen significant expansion in recent years. Industry stalwarts, like News Cafe and Cubaña, have lost a few branches in recent years but remained otherwise stable with national store networks.
Here's how much it costs to open a bar or pub franchise like Tiger's Milk, La Parada, Rhapsody's, News Cafe, Cubaña, Bossa, or Brazen Head:
The Brazen Head
The Brazen Head is one of the few remaining Irish pub-style franchises available in South Africa. The first Brazen Head franchise store opened in 2003, and although growth has been muted, there are now five branches, mainly in Johannesburg's northern suburbs and East Rand.
The pub offers a variety of relevant food and drinks for evening entertainment, with some stores branching out into lunch and breakfast, too.
Cost to open a Brazen Head franchise: A new Brazen Head franchise requires a R120 000 franchise fee and recommended capital of R150 000. Establishing a branch costs an estimated R2.4 to R3.5 million. Franchisees must pay ongoing advertising, marketing, and management fees totalling 7% of turnover.
Tiger's Milk started as a single store in Cape Town's Muizenberg and has seen rapid expansion in recent years. There are now more than 20 branches located throughout the country, with a strong focus on what they call "dude food" and a wide range of alcohol products.
Much of their expansion has come through a franchising model overseen by Life & Brand, who also sell similar franchises in the restaurant space.
Cost to open a Tiger's Milk franchise: A new Tiger's Milk franchise requires an initial franchise fee of R400 000, and building out a new branch costs approximately R15 000 per square metre. Once established, franchisees must pay 8% of monthly turnover towards management and marketing fees. In total, franchisees will need between R6 and R8 million to buy a new Tiger's Milk store.
La Parada is a tapas bar that started on Cape Town's Long Street and has since expanded to nine stores in Johannesburg, Cape Town, and Durban. Like Tiger's Milk, it now falls under restaurant franchising company Life & Brand, with similar costings to its portfolio stablemates.
La Parada takes a slightly more sophisticated approach than Tiger's Milk, offering a variety of South African-inspired tapas dishes in some of the country's well-heeled neighbourhoods.
Cost to open a La Parada franchise: A new La Parada branch requires an initial franchise fee of R400 000 and costs an estimated R15 000 per square metre. Franchisees must also pay 8% of monthly turnover towards marketing and management. La Parada franchisees must have between R4.5 and R7 million available to build a new branch.
Rhapsody's is a food and drink franchise that aims to offer a “natural ambience which is lively yet effortless”. They've got just three South African branches, in Centurion, Klerksdorp, and Sunnyside, and three others in neighbouring countries, but they're looking to expand their footprint through a franchising model.
The stores come in two formats, a traditional restaurant and Rhapsody's lounge, which have similar per square metre setup costs. Restaurants are much larger and require a greater staff complement, increasing costs.
Cost to open a Rhapsody's franchise: A new Rhapsody's restaurant or lounge costs R10 000 to R12 000 per square metre. The maximum size of a restaurant is about 650 square metres, whereas lounges are smaller at about 450 square metres.
Bossa is a casual restaurant with a simple and diverse drinks menu that focuses on helping people “unwind from a hard day at the office”. The franchise is now 23 years old and styles itself as a place for the whole family.
There are 17 stores in the group, focused mainly around the Western Cape but with branches in Gauteng, Freestate, and Mpumalanga. They're looking for new franchisees to run stores in all nine provinces.
Cost to open a Bossa franchise: Bossa charges a franchise fee of R175 000, excluding VAT. Depending on the complexity of the build, a new store costs approximately R6 million. Bossa charges 7% of net turnover for franchise and marketing.
News Cafe is an established South African bar franchise serving meals throughout the day. The brand is owned by Fournews, which counts Moyo, Brooklyn Brothers, Senhor Jorge, and Soul Souvlaki in its portfolio. At last count, there were 16 News Cafe branches throughout South Africa, but its primary focus is on Gauteng, with stores in suburbs like Midrand, Rivonia, Rosebank, and Sandton.
Cost to open a News Cafe franchise: News Cafe charges approximately R5.95 million in set up costs for a new franchise. Franchisees must also pay monthly fees totalling 9% of turnover for royalties and marketing.
Cubaña considers itself a social cafe. They serve various Cuban-inspired dishes, including breakfasts, but focus primarily on after-dark activities with cocktails and alcoholic drinks.
The first branch was established in 2001, and there are now 11 stores in its portfolio strategically located throughout South Africa.
Cost to open a Cubaña franchise: Cubaña does not publish franchise fees on its website and did not respond to requests for information prior to publication. However, historical costs place a new Cubaña in the region of R10 million, with ongoing marketing and management fees at 8% of turnover.
The article has been corrected to state that the bar, restaurant, and canteen industry is forecast to see revenue of more than R100 billion, not R100 million.