The battle to decide who rules the roost in South Africa’s fast-food industry is hotting up — and at the centre of it lies the country’s most-consumed protein: the humble chicken.
Experts say chicken is the most brutally contested fast-food category in the country, with a market worth projected at R40bn this year, which is why a slew of new contenders are fluffing out their feathers in a bid to knock the American-owned KFC off its perch.
According to market intelligence company Euromonitor International, KFC’s market share grew from 62.5% in 2023 to 63.2% last year, with everyone else light years behind.
This illustrates how KFC, which opened its first local store in Orange Grove in Joburg in 1971 at a grand cost of R39,000, has become entrenched. And it cuts both ways: South Africa is critical for KFC’s owner, Yum! Brands, since its 1,200 restaurants put it in the top five countries globally, ahead of the UK and India.
The second-most popular chicken chain in South Africa is Nando’s, a global brand that launched in 1987 when friends Robbie Brozin and Fernando Duarte bought a Portuguese-style restaurant named Chickenland in Rosettenville. But its 6.9% of the market is considerably weaker than the 8.2% of 2023.
It would seem a lot of Nando’s market has gone to Pedros, which has seen its share climb to 6.6% from 5.2% in 2023, while fried chicken chain Chicken Licken has risen to 5.2% from 4.4%.
Greg Aubin, senior research analyst at Euromonitor, says these fast-food chains have bet big on townships and rural markets. “These areas offer growth opportunities because many locations remain underserved by large formal restaurant chains,” he tells the FM.
The savvier chains have also struck deals with fuel stations. Pedros, for instance, did a deal with BP last year, which has helped it take a larger bite of the market.
Yet Aubin says KFC remains hard to topple. Its huge footprint appeals to shoppers across the value chain “from entry-level Streetwise meals to larger sharing buckets”. It buys all its chicken locally, betting that its proposition — consistency, convenience and trust — will keep it flying above cheaper rivals.
So why does fast-food chicken have such a hold on South Africans?
Smalltalkdaily analyst Anthony Clark says it’s a simple calculus: chicken provides the most food for the least money, a “tummy filling” buttressed by bread rolls, mini loaves, pap and gravy.
Clark says that at any given time there are about 200-million chickens being farmed in South Africa. And the industrial scale of it isn’t pretty: birds are raised to about 1.8kg and slaughtered about 32 days after hatching. Those not sold to the quick-service restaurants are then portioned into pieces, frozen, brined and bagged.
Given how lucrative chicken has been for KFC, it’s remarkable that South Africa’s two JSE-listed restaurant groups — Famous Brands and Spur — have never been able to make serious inroads into this market. Both tried, and learnt an expensive lesson: chicken is a category where franchise economics don’t survive contact with price-sensitive consumers.
In 2002, Famous Brands launched Church’s Chicken, one of KFC’s biggest rivals in the US, in South Africa with about 12 outlets. It failed to fly and, with Famous Brands on the hook for dollar-based royalties, opted to fold it within a year.
Spur has also shied away. It once owned Captain DoRegos, which offered fried chicken and fish. After growing to more than 50 branches, it was sold off. The company has now opted to buy smaller regionally loved brands, such as Hussar Grill, RocoMamas and Casa Bella, and scale them from there. Chicken isn’t an obvious fit for such a strategy, especially given how competitive the market is.
New pretenders
But there are a couple of companies rattling KFC’s cage.
Hungry Lion started in 1997 as a small subsidiary of the retail behemoth Shoprite, when it opened its first store at the Eikestad Mall in Stellenbosch. At the time it wasn’t a chicken specialist — it began with burgers, pies and sandwiches — but when it saw what consumers really wanted, it narrowed the menu.
Under the leadership of Adrian Basson, the son of Shoprite’s much-heralded former CEO Whitey Basson, who joined Hungry Lion in 2001, it grew from strength to strength. In 2018, it spun off from Shoprite, becoming an independent company.
Basson tells the FM there is one goal driving Hungry Lion: “To grow the business as big as possible and employ as many people in Southern Africa as possible."
That’s evidently happening: last year it was the fastest-growing chicken outlet in South Africa and now runs 570 stores across 10 African countries, with 11,000 staff. Basson says the plan is to open 200 new stores this year and 250 next year, funded almost entirely off its own balance sheet.
That’s some speed. In July, for instance, it opened 13 new stores, including in the relatively affluent Fourways Mall, as well as in poorer areas such as the Diepsloot Mall.
Hungry Lion’s edge is structural. Unlike most rivals, it is almost entirely corporate-owned rather than franchised, so it avoids both franchise fees and royalties flowing offshore. That saving goes straight into the price of the meal — typically two pieces of chicken, chips and a drink.
It buys from all the largest suppliers — Rainbow Chicken, Astral Foods, Country Bird Holdings, Sovereign Foods, Supreme — and deliberately avoids delivery apps such as Uber Eats or Mr D, arguing that their commissions clash with its value positioning and that fried chicken doesn’t travel well.
It seems to be working. Euromonitor puts its share of the market at 3.6%, up from 3.2% in 2023. Others estimate its share could be as much as 15%.
Aubin says its appeal is affordable pricing and large portion sizes, plus it is well-positioned in townships and rural areas. “Its focus on accessible price points has helped it perform well during a period of pressure on household budgets,” he says.
Yet there is a newer chicken brand that has grown even faster than Hungry Lion: Pedros, which offers a flame-grilled chicken reminiscent of Nando’s right down to its Afro-Portuguese marketing — just a whole lot cheaper.
Founded in 2018 in KwaZulu-Natal by businessman Moosa Bux, Pedros’ pitch is that “good food doesn’t have to come with a hefty price tag”. Evidently this resonates, as it now has more than 210 stores in South Africa, Botswana and Kenya.
There are a number of other formidable challengers to KFC’s crown. This includes Galito’s, which was founded in Nelspruit in 1996 by former Nando’s franchisee Louis Germishuys. Its niche is that its chicken is marinated for 24 hours in secret sauces and paired with a “bold African flavour”. Galito’s now has more than 250 stores across 15 countries on four continents.
And everyone knows Chicken Licken from its cheeky advertising, but you probably don’t know that it is the largest fried-chicken chain in the world that isn’t owned by an American, thanks to its 286 stores.
Founded in 1981 by George Sombonos, the son of a Greek immigrant who had helped his father run a roadhouse, he picked up the recipe in Waco, Texas, which he then used to launch the restaurants in Soweto and Alexandra.
Nando’s sheds market share
Still, if you’re looking for the most successful South African export, besides Charlize Theron and Trevor Noah, you’d be hard pressed to beat Nando’s. It might be shedding market share in South Africa, but Nando’s now runs more than 1,000 restaurants in more than 30 countries. And it clearly isn’t pinning its hopes on the value market: a whole chicken in London will set you back £15.25 (about R334) — considerably pricier than the R205 you’d pay in South Africa.
With rivals such as Pedros launching similar flame-grilled chicken menus in South Africa, Nando’s has come under pressure. “As consumers scrutinise price and portion size more closely, [this has made] Nando’s relatively premium positioning harder to defend against value-focused challengers,” Aubin says.
In South Africa, at least, it would seem to be a risky strategy: keeping margins high, at the expense of market share. This is especially so in a world where Hungry Lion, Pedros and Chicken Licken are growing fast by keeping their prices low.
All of these upstarts believe they can offer chicken just as finger-lickin’ good as that of the 55-year-old KFC, and having seen other homegrown chicken outlets leapfrog to global success, they’ll likely have similar ambitions.
