Presented by Burt Gunning, Founder and MD: Gunret Foods - KFC Franchisee of the year 2012
Burt personifies the successful multi-unit franchisee. He currently controls 34 KFC outlets plus one set to commence trading before the end of the year. Burt is an accountant by profession and was a partner in his own auditing firm but failed to find fulfilment in this role. He invested in his first KFC outlet in 1985 and knew immediately that he had found his spiritual home. Everything about the brand appealed to him and he now says that “KFC is my life”.
Setting the scene
Burt’s affinity to the role of multi-unit franchisee shines through when he talks about KFC. He frequently uses “we” rather than “I” when referring to the brand, KFC South Africa or KFC International. This communicates total integration of the franchisor’s and the franchisee’s interests. “What’s good for the brand is good for everyone involved with it.”
Gunret Foods (Pty) Ltd, Burt’s operating company, is a substantial multi-unit KFC franchisee. By the end of 2013, it will operate 35 restaurants, with more in the pipeline for 2014. The company employs over 1,100 people. 30 head office staff including 6 area managers, 6 trainers and 2 store developers are part of the team. Moreover, the company has dedicated training facilities and strong systems are in place. Overall, Gunret Foods is pretty much self-sufficient in the building and ongoing operation of the KFC restaurants it owns, and that’s exactly how KFC South Africa want it.
Burt is visibly proud of the secret mix of nine herbs and spices that were developed by the Colonel himself and are essential to achieving the unique taste that has made KFC so popular. He explained that the secret is maintained by having three different companies located in various parts of the world produce one third of the blend each. These part-mixes are then shipped to a fourth company which produces the final blend. He also confided that not having access to the secret blend was a serious concern for KFC franchisees during the sanctions era but that they were able to secure adequate supplies.
At the end of this introduction, Burt related, somewhat wistfully, that the total investment required to set up his first KFC restaurant amounted to R275,000. It was located in Rustenburg, had 1 cash register and catered for take-aways only. Today, new outlets are significantly larger, incorporate drive-through, sit-down facilities and operate up to 13 cash registers. They cost close to R6 million each to set up. This excludes the cost of land and buildng.
Burt’s take on the franchise relationship
1. Compliance
Burt is a firm believer in the contention that every individual wishing to become a franchisee must find a concept whose culture she can share. Should there be a disconnect problems are bound to arise. As for himself, he explained that being a multi-unit franchisee requires a positive approach and willingness to be compliant with the franchisor’s rules – they are there for a reason. He illustrated this by referring to some established stores he had purchased from former franchisees. Simply by methodically applying KFC’s systems, he was able to increase sales by 20% within a few short months.
2. Active participation
In Burt’s view, active participation in programmes offered by the franchisor is a must. One example is his involvement with the KFC Advisory Council. It consists of representatives drawn from KFC South Africa and individual franchisees. This Council sets the strategic direction of KFC South Africa’s business.
3. Franchise fees
Burt’s professional approach towards the franchisor/franchisee relationship manifests itself in his take on franchise fees. His company pays 6% management services fee, 5% advertising contribution and 1% product sourcing fee, 12% in total. Given the size of his operation, this adds up to a tidy sum but he is happy to pay it because in his view, the value he derives exceeds the cost by far.
Burt adds that in addition to all the other benefits flowing from the relationship, TV advertising must rank high. He points out that the 5% advertising contribution Gunret pays, although substantial, would never enable him to undertake TV advertising with the necessary frequency. He is visibly proud of the fact that KFC South Africa is probably the most active advertiser on local TV.
4. Quality control
Every KFC store receives 3 inspections per month. One is undertaken by a Head Office representative and pre-arranged, the other two are carried out by mystery shoppers. Burt welcomes this – it assists him in his drive for constant improvement.
Succession planning
This ranks highly on Burt’s agenda in more ways than one. Gunret is a family business. Burt is justifiably proud of the fact that both his sons and his son-in-law are working in the business, thus succession is assured.
At team level, Burt is a firm believer in promoting from within. Systems are in place to track and regulate performance. Top performers receive all the training and support they need to advance to the next level. Outstanding performers become branch managers and branch managers have the opportunity to compete for the coveted positions of Area manager as they become available.
To ensure that the necessary talent is on tap, Burt has put systems in place that help identify talent early on and guide them towards the next level. He calls this “benching.”
1. Expansion plans
Having succession issues sorted out, Burt is keen to expand Gunret further. His plans include the building of additional stores. In this context, he is grateful to KFC South Africa for entrusting him with additional opportunities.
To drive sales in existing stores, Burt plans to introduce the KFC breakfast menu and to offer 24-hour service at selected stores.
2. Tips for success
Success is earned; luck has little to do with it. To succeed as a multi-unit franchisee, you need to:
- Love what you do;
- Respect the brand and trust the people who represent it;
- Work hard and adhere to highest ethical standards;
- Enjoy building people and their careers;
- Find fulfilment in building the business and keep on striving for further expansion.
ãKurt Illetschko 2013. Published with permission.