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South Africa: Simply Asia to Expand Nationally
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Business Day (Johannesburg)
15 May 2008
Posted to the web 15 May 2008
Nicola Mawson
Johannesburg
FRANCHISE group Simply Asia said last week it aimed to have a national presence by 2010, with outlets in all of the major shopping centres, and will grow its footprint by 12 stores this year.
Chai Lekcharoensuk, who founded Cape Thai Restaurant Holdings, of which Simply Asia is a subsidiary, said there were 16 Simply Asia stores, with one due to open in the next few weeks. The brand was started in Cape Town five years ago and is now moving into Gauteng.
Philip Smith, Gauteng franchise director, said Gauteng residents were not as familiar with the brand, so demand for outlets was not as high as in Cape Town. "We can see that starting to change now as the brand gains a higher profile."
But Imara SP Reid analyst Warwick Lucas is not so bullish on prospects for the restaurant sector. He says the outlook is generally not positive as consumers tighten belts and input costs rise, putting pressure on margins.
Restaurants could therefore benefit from trading down.
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The Thai restaurants can be acquired by aspiring franchisees for about R660000 for a takeaway outlet, or about R950000 for a full sit-down restaurant. Lekcharoensuk said there were three express stores open and -- after Sea Point opened -- there would be 14 sit-down outlets.
The group also invested R2,5m in a central kitchen and infrastructure to service the outlets. The central kitchen and head office in Cape Town employ about 40-45 staff and each new shop creates jobs for 11-14 staff.
Lekcharoensuk said the 12 new stores planned this year would create another 150 jobs.
Due to the poor performing economy at this stage it will be advice able to clearly look at the future of the Simply Asia Franchise. It came under my attention that the Parklands / Sunningdale branch was declared insolvent just a week ago. Therefore, I must comment with regret that clearly this Franchise is not performing that well as everybody believe. The trend of Thai food can not be classified in the same category as sushi and it is exactly what it is, a trend. For all investors out there, I will look twice before investing in a dying franchise.
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