Bought at Bare Bones
Both brands have been neglected and the restaurant and pub chains are a shadow of their former selves. Once famous for its ribs, the Black Steer network is fragmented and has dwindled to 15 franchises from 28. Most of these are not full-scale restaurants, but take-away joints and diners which, in some cases, are barely profitable. And in SA’s competitive pub scene, just one Bulldog remains attached to the Black Steer in Rosebank in Johannesburg.
By comparison Famous Brands, which owns Steers, Wimpy, Debonairs Pizza, Fishaways, Mugg & Bean and the up-market eatery Tasha’s, has grown significantly over the past six years, growing both the individual brands and its portfolio of brands. Earnings rose from R48m in 2004 to R282m in 2009 and market capitalisation from R240m to R2,4bn today. There are about 500 Steers and 250 Debonairs Pizza outlets around the country.
COO Kevin Hedderwick admits that the acquisition was not part of a deliberate strategy. Rather it was an opportunistic move. The brands, which have traded hands several times in the past decade, were sold by Mvelaphanda Group to private entrepreneurs. In their hands the companies went into liquidation and Hedderwick snatched them up for a song.
The amount was not disclosed, but it was not enough to trigger a mandatory Stock Exchange News Service announcement on the deal.
There is continual blurring in the public’s mind between Black Steer and our Steers brand,he says. So I would rather own Black Steer than have one of my competitors own it. In that way I can control the brand’s destiny in the marketplace.
He was approached to buy the group before it was acquired by Rebhold, the precursor to Mvelaphanda, but walked away because the price was too high.
So what is the plan now? I don’t have ambitious plans for the brand at all, he says. It needs a lot of repair, time and investment if we are to reinvigorate it.
It may be worth it. It’s amazing how much equity the Black Steer brand has, he says.
The immediate focus will be to consolidate the franchisees into the group’s supply chain.
At the very least they can procure product through the centre simplifying their ordering process and lowering costs. They feel betrayed [by former franchise rights holders] and we will look after them.
Stay, close or rebrand
Les Meyerowitz, a partner in the Black Steer in Rosebank which he says is thriving is reserving his opinion on the new rights holders.Famous Brands is a professional outlet. But we will have to wait and see what its plan is for the business whether it will want to close us down or turn us into a Steers remains to be seen.
It may prove to be a good buy. Internally Famous Brands has reorganised its local business into two distinct streams: mainstream franchise brands into which Black Steer and Bulldogs fall squarely and theatre of food, the high-end casual dining experience the company is actively developing.
It is possible that with some imagination and strategic thinking, these new brands could once again delight their customers.
By: Sasha Planting
Source: Financial Mail