Vida e Caffè (Facebook)
- Coffee franchises may be common, but they are still growing in South Africa.
- Most large franchises are always on the lookout for new apps, but there are smaller, cheaper options available as well.
- In total, buying a branded turnkey cafe always costs at least R 1 million, with prices increasing with store size and menu options.
- For more stories go to www.BusinessInsider.co.za.
Cafes, like many fast food restaurants in South Africa, have been hit by the coronavirus pandemic. With in-store service halted at various times over the past 18 months, restaurant and cafe revenues have fallen 32%.
But historically, the coffee industry has a clear growth path – and many stores in this sector have already started showing a recovery.
Private and independent coffee shops are now commonplace in South Africa – and some recognizable brands, like Seattle and Starbucks, still keep their stores in-house. This means that only a few brands dominate the coffee franchise industry in South Africa, with Vida E Caffè, Mugg & Bean and Bootlegger Coffee Company holding the majority.
If you’ve always wanted to run a cafe, buying a franchise can be the safest and easiest way to get there. While buying from a recognized brand can be more expensive than starting an independent store and comes with restrictions that might frustrate true coffee enthusiasts, it takes care of several complexities such as distribution, layout of the store. store and brand recognition.
Here’s how much it costs to buy top coffee like Mugg & Bean, Vida E Coffee, and Bootlegger.
Mug & Bean
Mugg & Bean has a large store footprint of over 200 branches in South Africa – many of which are full service restaurants. The coffee shop franchise, owned by franchise giants Famous Brands, has introduced several smaller store formats, including full and limited-service On the Move branches.
Successful franchise applicants for large format stores will undergo extensive training at least one month before opening. Staff at the back of the house attend at an established restaurant in the area. On the Move stores require three weeks of training.
The initial franchise fee for Mugg & Bean has dropped significantly since 2020. The initial franchise fee for a standard Mugg & Bean restaurant is currently R95,000, excluding VAT, which is about half of what it was in the year. last. A full service On the Move Mugg & Bean attracts a franchise fee of R45,000 excluding VAT, and the limited-service variation of R50,000 – both of which are also lower than in previous years.
The approximate setup fee for a new full-service Mugg & Bean franchise in 2021 will cost roughly the same as last year – it’s estimated to be around 3.6 million Rand, excluding VAT.
On the Move branches typically cost between R 1.3 million and R 1.6 million.
These costs exclude project management fees, which are calculated at 4% of the construction cost. And franchisees must also pay royalties and marketing fees of 10% of gross store sales per month once established.
Vida E Coffee
Vida E Caffè is the largest coffeehouse franchise in South Africa, with 250 branches across the country. Despite this large footprint, they still accept applications from new franchisees who wish to open their own Vida branch.
Due to the success of the franchise, the application process is rigorous. Franchisees must not only be financially strong and have good financial resources, but also demonstrate several other skills, including experience in services, business and people management.
If your application is successful, a team from Vida will work with you to determine a suitable location based on the demographics of the region and the franchise’s catchment area. Franchisees will also have to undergo theoretical and practical training before opening a branch.
The franchise fee for a new Vida E Caffè is R 150,000 plus VAT. Establishing a branch costs around R 1.2 million, with the bulk of the expense going to kitchen equipment and store fittings.
As soon as a new store opens, franchisees must pay a fee equivalent to 10% of their net monthly turnover and 5% of loyalty turnover. There are also recurring costs of around R 2300 per month for items such as point-of-sale machines, music licenses, and LCD screens.
It is also possible to purchase a drive-in style branch. Depending on the branch’s format, you can expect to pay between R 900,000 and R 1.3 million for a drive-thru.
These costs are largely unchanged from 2020.
Bootlegger Coffee Company
Bootlegger Coffee Company is a smaller but growing coffeehouse franchise with 26 stores, with six more expected to open before the end of the year.
The business started out as a Sea Point-based retail coffee brand, but has since grown into a quick-service restaurant that serves meals, snacks, alcoholic beverages, and a range of specialty coffees.
Bootlegger is currently expanding its franchise operations in the Western Cape and Gauteng, favoring applicants with a good knowledge of their region.
To open a new Bootlegger branch in 2021, an initial franchise fee of Rand 120,000 is required. A new store costs R 2-3 million to set up, and franchisees are required to pay a monthly franchise fee of 5% and a marketing fee of 2%.
Bootlegger also offers a cheaper kiosk option that only sells coffees and pastries, which costs between 800,000 and 1 million rand.
The Daily Coffee Café and Express
The Daily Coffee Group operates a network of 30 coffee and trailer franchises. They have branches all over the country, focusing on small towns or locations in malls and commercial areas.
They currently have two types of franchises available for purchase, both of which are cheaper than some of the franchises offered by the more recognizable brands in South Africa.
A full Daily Coffee Café is usually around 100 square meters and can accommodate up to 60 people. The franchisor offers a turnkey coffee shop option starting at R 1.58 million, excluding VAT. Franchisees will also need working capital of R60,000 and pay a monthly management fee of 6% of turnover.
The Daily Coffee Express is a branded trailer with many of the same features as the Cafe, but without the ability to seat inside. The trailers serve both coffee and food and are mobile. This option starts at R 310,000 excluding VAT and R 10,000 in working capital. There is also a fixed monthly franchise fee of 5,000 Rand.
The famous bean cafe
The Famous Bean Café is another franchise that offers several turnkey coffee businesses in South Africa. The company is now in its fourth year and is looking to expand beyond its network of six branches. They assist in all aspects of establishing and launching a new cafe and offer advice throughout the process.
The Famous Bean Café offers five types of stores that vary in size from a mobile trailer to a 190 square foot store. The mobile trailer is their cheapest option and costs 350,000 Rand, while stationary stores cost between 490,000 Rand and 1.45 million Rand, depending on service offerings and size.