How container chicken shacks help empower townships
The music is loud and the uniforms even louder as staff in colourful shirts prepare grilled chicken meals at a new fast-food shack in Soweto.
The youngsters are polite and enthusiastic and one brings me a bowl of hot water and a towel to wash my hands before I eat. Passers-by look with curiosity and a little envy at customers eating in the bright red shipping container decorated with chirpy chicken logos. It’s one of 10 Nkukhu Boxes, a chain designed for the townships that should have Nando’s, McDonald’s and KFC watching with concern.
The franchise owners of this Orlando branch, Hepworth Xaba and Tshepiso Ntuli, defected to Nkukhu Box from a rival food chain they worked for because this is a black-owned business that wants black people to benefit, says Xaba.
They drove around Soweto looking for the perfect spot and chose Letsatsi Street, near a court, police station, taxi rank and a student residency. They also set up a car wash next door so customers can leave with a full belly and clean wheels.
"We are employing 25 people so we’re providing jobs and helping the community," says Ntuli. "The day we opened some mothers were crying and saying they can’t believe what we’ve done for their kids, because they were all unemployed before."
Nkukhu Boxes were created by Itumeleng Mpatlanyana, a baby-faced 38-year-old who has already run several businesses, not always successfully. He’s learned to keep a tight control on the operations and believes he’s found the right recipe to make this venture a national success.
He grew up in a small township in Mpumalanga, where his first business saw him pushing his mother’s electric lawnmower from garden to garden, back in the days when having an electric mower meant you were privileged, he says.
He graduated from the University of Pretoria with a BCom in entrepreneurship and on the side he leased student flats from several landlords, furnished them from pawn shops and rerented them to other students at a profit. He bought his first car with the proceeds and added an extra service of picking up bewildered first-time students at the taxi rank and driving them to their new homes.
His university studies taught him how to put together a good business plan, but he believes entrepreneurial drive is something you are born with. While university taught him 20% of the business savvy he has now, practical experience added the other 80%.
After university he bought a franchise to the now defunct Fashion TV Café. "We raised R3m in bank loans with zero balance — zero everything. I was 27 and my partner was 24, but the business fell flat. The rent was very expensive and we were young and inexperienced and didn’t get enough support or coaching," he says. "That was the time I got to know that there is a person called a sheriff, because the bank wanted its money, the landlord wanted his rent and suppliers wanted their money and sued us."
The food gets cooked in front of you and you sit and have your meal and use your hands and there’s the atmosphere of the township, with loud music from the taxis and the tavern next door
The sheriff repossessed everything, right down to his iron and ironing board. But instead of feeling depressed as he helped to carry his own goods away, Mpatlanyana decided to come back bigger and better the next time. "I call that my scars on the battlefield because every great warrior needs his scars," he says. He still hasn’t cleared those debts and hopes to be ready when people hearing about his new venture come looking for their money.
What Nkukhu Boxes does differently from rivals is sell an "eating experience" rather than just sell a box of food, he claims.
"The food gets cooked in front of you and you sit and have your meal and use your hands and there’s the atmosphere of the township, with loud music from the taxis and the tavern next door. Compared with the big boys we are 15% cheaper.
"We have meals from R20 all the way to R300, which can feed a whole family and the next-door neighbours."
The franchises serve the same menu at the same prices and buy their stock from the company’s headquarters in Midrand. There the chickens are cut up, marinated in sauces that Mpatlanyana developed, then get vacuum packed and delivered. They also serve pap and kotas made from bread stuffed with chakalaka, salad, chicken or livers — like a pimped-up bunny chow.
The first branch opened in Mamelodi in August 2016, based in a converted shipping container. "A big advantage is that there’s minimal rent, unlike in the shopping centres, and if a store doesn’t perform as well as anticipated we bring a truck, pick it up and try somewhere else so you don’t lose your investment — you own every nut and bolt of the shop."
Once he had the first store running successfully, he persuaded a friend to invest to fund its expansion.
Franchisees pay R1.3m for three weeks of training, a ready-built store and equipment, uniforms and the initial stock. Each branch aims to turn over R500,000 a month, at a margin that will make the owners rich if they shift enough chicken. The track record is a return on investment after 13 months. Because not all the potential franchisees have R1.3m, the firm will help them apply for loans if they can invest at least 20%.
"We are looking for people who know what they are getting themselves into and are willing to work long hours. We’re not really strict that they need to have business experience as we are aware of the market we’re playing in and not many guys have the money or the skills to run a franchise, so we hold their hands throughout the process," Mpatlanyana says.
He spent three years developing the business plan and still oversees everything himself, although he is learning to delegate and has appointed some key staff. He’s highly aware of the risks of picking a poor manager, allowing deviation from the expected quality and even the chance of branches being torched in township riots. Franchise managers visit each store every week to check the quality and make sure they are sticking to the plan.
Everything is done to the letter of the law, including land leases, water and electricity connections, health and safety inspections, and proper employment contracts. "The biggest thing I have learned is that we as young black businesses tend not to invest enough in the legalities, like checking all the paperwork and terms and conditions are done correctly from day one. My biggest drive is to make sure everything is legally compliant," he says.
Eight more chicken shacks are under construction and in the next five years he aims to have branches across most of the country.
"We could have hundreds — imagine how many townships are in SA and some are so massive they could accommodate five stores," he says.