Piatto grows with black franchisees
September 20, 2007
By SLINDILE KHANYILE
Durban - Piatto Mediterranean Kitchen had struck a deal with the Industrial Development Corporation (IDC) to provide five black economic empowerment (BEE) franchisees with their own outlets, financial director Pano Economou said yesterday.
This is part of the group's expansion plans, which will include diversifying and opening 12 restaurants in the next two years. Growth could culminate in a JSE listing.
The black-owned restaurants that are already up and running are in Cape Town, Pietermaritzburg, and Hillcrest near Durban. Outlets in Richards Bay and Port Elizabeth will be rolled out in December and next year, respectively.
The group opened its first restaurant seven years ago and now has 23 outlets around the country.
"From a growth perspective, we are doing well," Economou said. "But food inflation has had a bit of an effect … For the first time this year, we have had two price increases on our menus. It would have been difficult to maintain a return on investments if we had not increased the prices."
It costs between R2.8 million and R3.2 million to set up a Piatto Mediterranean Kitchen. The BEE franchisees had to come up with 40 percent of the required capital, and the IDC funded the rest. Two new stores are earmarked for Soweto and Alexandra townships.
"This is a type of restaurant that could work anywhere," said Economou. "We are busy looking for sites at the moment before advertising to potential franchisees. Six outlets will be opened in 2008 and another six in 2009. We still need to tackle the Free State, the Northern Cape, Mpumalanga, and do more in the Western Cape."
Clinton Lafoy, a franchisee in Pietermaritzburg, opened his doors last week. "This is our first business venture and we like this restaurant because it attracts people from all walks of life. The menu is balanced," he said. "As soon as we pay our IDC loan, we would like to buy another one."
The restaurants, which serve mainly Italian, Greek and Portuguese cuisine, generate an average turnover of R780 000 a month.
Economou said the company would consider listing in about two years' time.
"Our ultimate goal is to list, but our primary goal is to expand and have the right franchisees in place who are passionate about the business. If your franchisees are happy, then business is good.
"The group has also started diversifying into the coffee market with a new brand called Piatto Pranto, which will trade during the day only. So far there is only one shop that has been opened, in Woodmead [Johannesburg]. The official launch and roll-out will be in the middle of next year.
"From next month, there will be a central kitchen in Johannesburg which will distribute to all the restaurants to maintain consistency. The other brands in the group are Circus Circus, Centre Court, Vilamoura and Pantsula Bites."
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