Daring to go where no one else would, poking fun at its competitors, taking risks with new products and continuously innovating. This is what has made Chicken Licken the force it is today. But it’s no time to sit back and let the business run itself, as the franchise’s founder explains. There is still much work to be done.
In the early 70s, George Sombonos assisted his father in managing his roadhouse restaurant, the Dairy Den, which was located in the south of Johannesburg. His father sent him on a trip to the US in 1972 where Sombonos spent his time absorbing restaurant trade journals and tasting food.
“I would taste 12 hamburgers and 20 pieces of chicken every day until one day in Waco Texas, I tasted the best chicken ever.” During our franchise interview, Sombonos tells the story of how he invited the owner of that particular chicken outlet out for dinner to convince him to hand over his recipe.
After much negotiation, he agreed to sell it to Sombonos for $5 000. Since he only had a few traveller’s cheques adding up to $1 000, Sombonos had to settle for a different, untested recipe from the same chicken outlet.
Without his father’s knowledge, Sombonos swopped the existing chicken coating recipe at the Dairy Den with his new US recipe. Sales increased and turnover shot up to over R200 000 a month. At the start of the 1980s, Sombonos renamed the business, Golden Fried Chicken – but soon after, a waiter came up with the name Chicken Licken, which was registered for R300. The logo, which is still used today, was designed for R75.
From its early beginnings, Chicken Licken is now 245 stores strong. There are also 12 stores in Botswana, but Sombonos says he has no intention of opening more stores beyond South African borders until the company reaches 400 local stores.
In the past, there have been attempts to open stores throughout Africa in countries like Nigeria, Zimbabwe and Mauritius, but these were withdrawn due to inconsistent chicken supplies and unscrupulous franchisees. Chicken Licken is currently a third of the size of KFC’s South African operation.
Only 12 of the South African stores are company-owned, six of which are the most successful. Sombonos doesn’t believe in having too many company-owned stores, citing Subway as an example of a successful franchise that only has one company-owned store.
However he does believe that it is important for the franchise to run some stores to retain a certain measure of control and to know “what’s happening” in the franchises.
Chicken Licken sells around 100 000 chickens a week and when it comes to Hot Wings, one of the most popular options on the menu, the company sells thousands of cases. At first Sombonos says his supplier, Rainbow Chicken, thought he was running a “Mickey Mouse operation” but when sales began to increase they took him seriously.
Chicken Licken now buys so many wings that Rainbow Chicken sometimes struggles to supply them. He has had to import chicken from Brazil in the past.
The company’s annual turnover is now well over R1 billion and Sombonos predicts that in eight years it will be turning over R3 billion, at which point he jokingly says he will leave the business, because then he “knows they can’t mess it up anymore.”
Looking ahead, Sombonos aims to have 500 stores in South Africa in the next ten years and to increase the brand’s presence in the Eastern and Western Cape.
Growing the Business
According to Sombonos, franchising was the best means to expand the business, as he didn’t have enough seed capital to open more than one or two stores. He had seen how franchising worked in the States and realised that it was how most chains expanded.
Being a new concept, Sombonos struggled to get people to buy a Chicken Licken franchise. “People didn’t want to buy franchises. They thought ‘who’s this, they’ve got no experience’. And we were just winging it – we had no franchising agreement.”
He says that a friend who owned a Wimpy franchise in Durban sent him his franchise agreement which he copied, changing the names where necessary. Since then, he quips, the Chicken Licken franchise agreement has been changed twice to make it more in line with his company’s needs.
In 1982, he resorted to giving away the first two franchises located in Soweto and Alexandra. By 1985 he started selling franchises, but to help the franchisees get off the ground they were given R15 000 worth of equipment and stock. He also didn’t charge royalties for the first six months.
While this meant that he wasn’t making much money, it did give the brand a bit of a boost. “There were lots of fly-by-nights in the market at the time so franchisees were reluctant at first,” he adds. From franchisees, the most important response Sombonos required was that they ran their stores the way he had run his. “Nothing less,” he adds.
As the brand became more and more recognised in the townships, people were approaching the company with new sites they wanted to develop into franchises. “There were no other businesses in the townships, so finding sites was easy,” says Sombonos. The early franchisees were not ideal.
“We were not in a position to be fussy.” The majority of them have since dropped out, because according to Sombonos, they weren’t suitable. He explains that nowadays potential franchisees have to take a test to evaluate whether or not they are compatible. “About ten years ago we battled to get someone to spend R1 million to take a franchise, now they are clambering to spend the R3 million to open a store.”
Fake it to Make it
Over time, says Sombonos, Chicken Licken developed a reputation. “People learnt to trust the brand.” The early stages of setting up the franchise weren’t easy. For a new franchise, the franchisees tend to be more demanding, but with more established brands, they obey and respect the system.
Sombonos admits that the transition from shopkeeper to executive is very difficult. “We had to learn about phones, hire a receptionist, work switchboards – we didn’t even have an in-house accountant.”
To project the image of a professional organisation, fictitious names were used to give the impression that there were more people working there. So whether a caller asked to speak to Mike in marketing or Peter the accountant, little did they know that they were all speaking to Sombonos. “It looked like we had a few different people working for us, but we couldn’t afford to pay salaries to hire real people in those roles,” he explains.
Because of the growth experienced by the franchise, Sombonos was forced to formalise operations. He hired a British school teacher who had come to South Africa as a food writer, but lost her job at The Star because she wasn’t bilingual. He also hired someone to handle the PR, and began to slowly build his support team.
“You don’t attract good people in the beginning because you don’t know better. All I thought of was growing. But over the years I’ve been able to get the ideal team together. Without the right core people you are nothing,” he explains.
To say that Chicken Licken served an untapped market is an understatement. In 1975, while still trading as the Dairy Den, Sombonos contravened apartheid legislation and started serving black people in their cars. “When they saw they could get equal service at our restaurant, business boomed.”
The company’s reputation quickly grew amongst its black clientele. Sombonos says it was only logical that the next step was to expand the business into black areas like Soweto. Chicken Licken was classified as a township brand which led to it earning the loyalty of millions of customers, but the downside was that it was left with a stigma attached to it.
By 1998, Chicken Licken’s sales were going backwards. According to Sombonos this is because after 1994, those who got good jobs and could afford to move out of the townships did. “The people with the money left. They bought houses in the surrounding suburbs.”
The franchise had to follow them and start opening stores in the more upmarket areas, although there are still some outlets in the township
areas, for example at Maponya Mall in Soweto.
The move into the suburbs called for a change of menu, but Sombonos says the wings became popular for a second time around. The franchise’s stores have also been refurbished to portray a more upmarket style, complete with Louis Vuitton mock-style packaging. The first outlet opened outside of the townships was in Alberton. Chicken Licken’s flagship store opened in Rivonia in May last year. It was the first double storey outlet and features a state-of-the-art kitchen.
The upper end of the market still perceives Chicken Licken as a township brand with low standards. Sombonos says while the company’s white clientele is growing there are still many who refuse to eat it. This is a mindset the franchise is working hard to change. Sombonos often visits the Rivonia store on a Friday at lunch time and finds it full of customers from all racial groups. “The younger generation don’t know the Chicken Licken of 30 years ago.”
He says it is also a challenge to secure good sites in affluent shopping malls. Every time a new site is secured Sombonos and his team get excited about it. They recently concluded a deal for a site at The Zone in Rosebank, and now Sombonos has his sights set on Sandton City.
Chicken Licken also has a tarnished image with some of the local banks because of its positioning in the market. According to Sombonos, in the early 90s banks started giving 100% loans to applicants. The problem came when six months down the line a franchisee would leave the shop because they felt that it was too much work. To this day, Sombonos mentions that one of the country’s biggest banks still refuses to fund Chicken Licken franchises.
Now, Sombonos says franchisees are expected to have half the money required to buy the franchise. If his team approves the site, they approach the bank on behalf of the franchisee and convince them to provide the financing required.
For Sombonos, there are two key ingredients to a successful chicken fast food franchise: chicken and marketing. The cheeky nature of Chicken Licken’s advertising campaigns has developed over the years, he says. The first ever advertisement was filmed by a ‘quack filmmaker’ and cost R10 000 to make. The advertisements were flighted on Bop TV as he couldn’t afford to be on SABC.
In 1986 he hired an ad agency to make a more professional advertisement. The agency suggested using Joe Mafela, who was an actor in a comedy series at the time. After the advertisements were broadcast, the annual sales increased by 47%. “Sales went berserk,” says Sombonos.
The advertisement was shot in the Booysens outlet. “There was no studio, and we didn’t even have music. After Joe had a few brandies he started playing the piano and came up with the jingle ‘It’s good, good, good, it’s good it’s nice’.” This tune was used up until 1998.
Ten years ago, the annual marketing budget was R12 million. This year it has grown to a massive R64 million. Up to 95% of this spend is allocated to television. “TV is more effective. I was told that if you want to change perceptions of a brand, the best medium is TV.” Sombonos says that people are more impressed by TV and that it makes an organisation appear bigger than it may actually be – but it costs money, he adds.
Knowing the Market
With the help of menu consultants, the Chicken Licken menu is updated every May. This is done to keep things fresh. “We don’t want to be boring with the same menu for many years. You have to change the menu but you can’t do silly things with the menu.
We will only sell chicken, no beef or fish,” says Sombonos. Sombonos doesn’t believe in doing market research. “When I go to the US, if I see something I think people will like, I bring it over – this puts us far ahead of others in South Africa,” he says.
He adds that when a company does market research on a new product, the opponents find out quickly. “The best option is to gauge in a small circle if a product will work or not. When we brought in the fried spatchcock chicken, up until two weeks before we launched it, only six people knew about it. We kept it quiet.”
With this kind of thinking, Sombonos admits that the company takes chances when introducing new items to its menu. “There have been some failures,” he says. In the past Chicken Licken introduced boiled eggs with batter around them, but the product was a flop.
Sombonos says they usually give a product up to six months before withdrawing it. In 1992, Chicken Licken introduced its hot wings. Another first for the brand was injecting marinade into the chickens to make the meat juicier. Chicken Licken was also the first to buy the plates needed to flatten the chicken fillets in order to make them all the same size.
Choosing the right locations has also become important. Sombonos says he doesn’t want to go into the small towns, as the franchises just aren’t viable. He is also not interested in taxi ranks. “People want to open new locations all the time and we say no. I say no to at least ten people a week, and that’s excluding the franchise department.”