Since the implementation of the stringent COVID-19 measures and standards, all businesses have been under tremendous pressure to survive even though most of the industries have been unable to trade. Those that have been fortunate enough to trade have been adhering to strict hygiene protocols and standards to promote social distancing. We are faced with dire economic forecasts for the South African market, and the pandemic has instilled a sense of fear and uncertainty within businesses and all communities.
Challenging as these times are, there are several franchises and chain store groups that have been responsive by developing strategies and stepping up to assist their franchisees, their staff, and the local community.
“This is a humanitarian disaster that necessitates that we all walk this journey together to survive,” – Mark Farrelly, Spur Corporation Group CEO
We all are aware of the precautionary measures business have set in motion to assist in “flattening the curve” from offering PPE to staff members, marking the stores with bright stickers to enforce social distancing to the interesting/creative customer count methods businesses are all implementing i.e. Food Lovers Market with their disinfected number cards, Pepkor ranging from baskets per customer to Pick n Pay Clothing’s washing pegs or numbered kids hangers that you need to take when entering the store.
However, this article takes a look at what various franchise groups and chains have been doing during the lockdown period apart from following the Covid-19 policies and regulations in general.
1. Appealing for Intervention
Various brands and industries within the franchise sector has been appealing to the government for intervention as this sector contributes 14% to the South African GDP.
- The Franchise Association of South Africa has informed its members regarding the measures taken by the government to assist businesses financially through the exemptions for the retail sector, the UIF emergency funding application, the SMME funding through SEFA as well as other emergency relief measures as they are announced.
- Sorbet has been appealing to the government to open all salons, hairdressers and nail bars under extremely strict hygiene conditions and protocols. “The closure of the salon industry due to the national lockdown is having a devastating impact on the industry, the salon owners, their employees and dependents,” Sorbet. Even though salons can open to sell products under the revised level 4 lockdown, this only accounts for a fraction of revenue. The group is also planning to challenge the regulations in court.
- The QSR-industry with brands such as KFC, Burger King, McDonald’s and Nando’s are in talks with the government to allow for the opening of drive-thru ordering/collection
2. Creating Awareness for Bounce Back SA
Minuteman Press has launched an initiative for free COVID-19 resources to support local businesses within the community that has been affected by the pandemic. These resources help support businesses by finding a way to work together. Minute Man Press is distributing COVID-19 awareness posters at no charge and offering free local advertising on a website. “We truly believe that a rising tide will lift all ships, and we want to make sure our communities stay afloat” – Nick Titus, President of Minuteman Press International.
3. Make Space for Local Offerings, Suppliers and Service Providers
The Spar Group is seen as a voluntary buy-in group where independent owners run their business as they see fit. An owner-operator in the Western Cape closed down their stationry section and removed their frozen burgers to support and assist local suppliers when the regulations for lockdown level 4 were announced.
4. Zero-Rated Franchise Fees
The Spur Corporation has suspended all franchise and marketing fees to all franchisees across South Africa to lessen the financial burden of lockdown on the franchise network. “We have tried to set a national example by providing our franchisees with significant financial relief because our people are our primary concern,” – Mark Farrelly, Group CEO
5. Business Un(usual) Strategies and Partnerships
- Woolworths is launching a “drive-thru” type of option at selected stores, with a promise that you don’t have to leave your car, staff will deliver to your boot. The current “click-and-collect” options where customers can order online and collect from a store will now allow customers to receive goods at a designated parking bay during a specific timeslot. One of our staff members tested this and it seems to work well.
- Uber Eats had to adapt to the restrictions imposed during lockdown where they had to shut down all food deliveries and aggressively expand to other product deliveries that might in the long term be a competitive advantage to the partners within their industries.
- Game and Uber Eats now offer the widest range of essentials for delivery (both partners are leveraging of each other’s strengths)
- Exclusive Books and Uber Eats are now delivering books across the country from selected stores at 10% more than you would have purchased the item in store
- Virgin Active and Discovery Vitality are offering online exercise videos for their members. Virgin Active has waived all membership fees during the lockdown period.
- Tiger Wheel & Tyre are challenging expectations to bring the best in service excellence, delivered straight to their customer’s door with their new Xpress Pick Up & Delivery Service for emergency vehicle repairs.
- Netflorist also started the delivery of fresh fruit and vegetables and other grocery essentials during level 4. It seems that this will remain part of their offering for the foreseeable future.
6. Rumours: Open for Delivery Only
- There were discussions that the government would consider an exemption to the hard ban for some selective McDonald’s Kitchens (not the stores), that they would plan to re-open before the lockdown ends to prepare food for donations through non-profit organisations for the poor and vulnerable communities.
- Some of the QSR brands have collaborated on a #SteetwisePERiPERiMcBurger initiative where all the partners i.e. McDonald’s, Nando’s, KFC, SA Harvest and #JAMSACommunityofHope distribute food offering to the communities
- Some of the smaller Nando’s stores will re-open their kitchens to help cook meals for communities where access to food is a major challenge
7. Supporting Staff and The Cause
- Spur Corporation is encouraging franchisees to look after their staff by making use of available disaster relief resources that are at their disposal.
- Shoprite Checkers has allocated appreciation bonuses to all front-line staff to show support to their vital teams. In addition, they have also donated to the Solidarity fund as well as implemented an initiative where customers, can contribute to the cause via the Act for Change Fund at their pay points nationwide.
- Anat turned to crowdfunding to survive the lockdown, stay afloat and to support staff through the GoFundMe platform. “You need to ask for help. This is a business that people love, and you can get a community to come together and save the business. So many businesses are getting help from the government, banks and landlords, and I thought let’s also try to reach out to the community and see if we can get some help,” – Gilli Apter, the daughter of founders Anat and Menachem Apter
- Defy hopes to expand its product range by building ventilators as part of the National Ventilator Project initiative to assist with the COVID-19 crises in South Africa and across sub-Saharan Africa.
8. Sending a Digital Voucher Your Way
- Pick n Pay launched digital vouchers that can be sent to a phone number or email that can be used at any of their stores. The majority of our communities do not have access to cash or bank facilities to withdraw funds and this initiative helps to transfer funds for food purchases during lockdown. “The timing of the new feature is particularly relevant as many customers look to support each other, from a distance” – Richard van Rensburg, CIO.
- Shoprite Checkers have partnered with Computicket to purchase vouchers that can be used for in-store purchases. The voucher is valid for 3 years, and change is given in the form of a gift card in store.
- MoneyMarket counters at Shoprite, Checkers and Usave allow the customer to receive funds without the use of a bank account.
9. To Pay, or Not to Pay Rent
- In these tough times, the commercial landlords need to exercise Ubuntu by being accommodating to tenants.
- A trend has been identified where the bigger franchises and groups are negotiating rent reductions or more favourable terms with the landlords and some are refusing to pay rent
- The Spur Corporation is only willing to pay a small turnover based rental with a promise to shun landlords who drive their franchisees into bankruptcy
- Despite Dischem being open for trade during the nationwide lockdown, they are refusing to pay the full rental amount due to non-essential items having lower profit margins and their primary responsibility is to retain their workforce with the normal wage structures in place. “Based on the prevailing situation and the extended lockdown we have paid all levies and other municipal costs together with a fair and significant portion of the base rental together with suggesting a turnover based rental. This, we feel, is a fair compromise considering the very depressed restricted trading environment.” – Ivan Saltzman, CEO
- KFC-owner Yum! Brands has told landlords in South Africa that they won’t be paying rent while outlets are closed during the enforced lockdown period and the franchisees are negotiating with landlords and making their own arrangements.
10. All Things Food – Delivery is Now Allowed
- Restaurants are known to hike prices on delivery services to cover the 30% commissions charged by MrD and Uber Eats.
- Food outlets are now looking for cheaper alternatives such as Bolt which charges a 14% fee or planning to do their own deliveries going forward.
- Various franchised brands within the QSR-industry have opened selected stores for delivery between 9:00 and 19:00 daily only for example McDonald’s, Chicken Licken, Debonairs Pizza, Spur, Burger King, Romans Pizza, Steers, Wimpy, only to name a few.
Some brands have decided to not open stores until lockdown restrictions have eased as the income expected from delivery and the commission fees for deliveries may not cover the operational expenses for the stores.
- In previous comments, Ocean Basket CEO Grace Harding stated that opening the chain’s restaurants for deliveries won’t make financial sense. Nando’s felt the same when lockdown Level 4 was announced and would only open once drive-thrus were permitted, but since then they had a change of heart and selected stores are open for delivery.
- For some brands, delivery is a small part of their business e.g. KFC is only trading at 16-20% of capacity and they commented that “Your favourite might not be available immediately but will be back in time” however “We are committed to continue working with landlords, suppliers and aggregators to increase our delivery footprint and open even more restaurants in the coming weeks.”
Conclusion: Preparation is Key
Brands are waiting in anticipation to return and open their doors for trade. Sorbet has been proactively informing guests of the precautionary measures that are being put in place to create a safe environment for customers when they are allowed to frequent the store for beauty offerings #SorbetCares
- Franchise Association of South Africa
- Business Insider South Africa