SA’s KFC entrepreneur Burt Gunning: How to build a business from zero to 41 stores

Chicken and chips meals are a South African favourite, so it's little wonder that KFC is a massive presence on the tip of Africa. But there's more to running a successful KFC business than demand. One of South Africa's successful entrepreneurs, Burt Gunning, tells BizNews founder Alec Hogg how he built his business of KFC outlets to 41 stores, with no money of his own at the early phase of his journey. Gunning, a chartered accountant who moved out of the accounting business to develop his fast food empire, snapped up KFC stores when international investors exited South Africa in the mid-1980s. Since then, his family business has bought up outlets as he has seen the opportunities. Hogg asks Gunning to share the secrets of his success – and these include selecting the right store locations, sticking to the KFC principles and procedures, continually developing a computer programme to assist with ensuring speedy service in stores and ongoing staff training. – Jackie Cameron.Quite a show to start our life here at WeWork in our brand-new studio and we're closing it off with a highlight. Burt Gunning is the proprietor/owner of 41 KFC's. It's good to have you in the studio. You've had lots of awards, which we'll talk about in a moment but KFC (according to Wikipedia anyway) is by far the biggest fast-food operation in South Africa. I couldn't get the exact number, but the latest figure I saw was 960 outlets..___STEADY_PAYWALL___.Yes, that's correct. There are 960 outlets in South Africa and they're busy expanding into the rest of Africa. Recently they opened a store in Madagascar and Sudan..That would make South Africa the 4th biggest country in the world. (Again, according to Wikipedia). They say that in China, there's over 4,500 KFC's, US has 4,000, Japan has 1,200, UK has 900 and South Africa has 960. That's extraordinary..It is extraordinary and it's been in South Africa for about 40 years. The big expansion has really taken place over the last four to six years..Why is that?.I think they realise that there were many areas that could have been exploited, not just suburban KFC's. There was quite a big rush to open a lot of them and luckily, they were nearly all successful..You're an accountant – a Chartered Accountant – who were you with? Where did you do your articles?.I did my articles in Johannesburg with a firm called Richardson, McEverley & Reed and then I formed my own auditing practice. It was called Gunning, Boshoff, and Munroe.I was in practise for about 10 years..What got you into a completely different area? Because franchising is not for the fainthearted..I think I've always been an entrepreneur and when I got to know about KFC and how they operate and what they're doing, I found that that's what I wanted to do and I was lucky enough to get involved with them in 1985 when I got my first KFC in Rustenburg. I turned it into quite a reasonably successful operation..Did you live there?.No, I didn't. I've always lived in Johannesburg, in Sandton..One hears that the difficult about any retail outlet, particularly in the food business is that if you're not on the premises or if you don't have very good managers, it can be quite challenging..It is extremely challenging but fortunately, I was able to get somebody to take charge of that store, who I could trust, and who did a hell of a good job..So, from that first store, you now have 41..In 1987, after I'd had the store for about two years or more, the good Rev. Jesse Jackson from America, compelled the USA that they were not to have any assets or people in South Africa, so there was a big exodus (Barclays Bank, Mobil and KFC). They had about 40 stores throughout the country and they had to sell those and so I was allowed to bid on an auction for them and I bought six stores with no money at all. I borrowed it all..How? The best companies in the world are divesting and you haven't got any money and you manage to pick up six stores. Who was the banker that believed in you?.It was the old Trust Bank, which is now Absa. I was very nervous – I must tell you that – because it's the first time in my life that over a three-week period, I lost about 10kgs because of nervousness..You had the Rustenburg store so you knew a lot about how that store operated. What made you confident enough to go and borrow money for another six?.I thought that it was a very good and honest franchise and so I was quite prepared to take that risk. It was a risk because everybody else was divesting at that time. The stores that I bought were all in Pretoria and they were quite close to where I live, and I started off that way. Then it grew organically from there, opening up about two or three stores per year. I also bought one or two stores from franchisees as well over the years. .How does one get into a KFC?.At the moment, it's not that easy but I must say that I'm a franchisee. I'm not a franchisor. The essence of any fast-food outlet and ours particularly, is the site. So, you need to have a site that you can either get a lease for, or that you own and then you need to present a business plan to KFC. They'll evaluate that together with evaluating you as a potential franchisee and also, whether you're compatible with their philosophies..And what are they?.Well, that you're prepared to work in the system. What we try and do if we've got a problem, we try and speak to the franchisor, but try and come with a solution as well and not just the problem. Now, luckily, the KFC franchisor in South Africa is very open to discussion with her franchisees insofar as they have councils. There'll be a council for marketing and a council for purchasing, etc. About three to four franchisees sit on those as well and I sit on some of those councils. Ideas are cross-pollinated in those councils but it's on an advisory basis and so, once the policy is made, then it's the policy for the whole of KFC..It's very much a listening organisation. According to the press releases; you had that first and second Most Successful Franchise stores in the country in Midrand and Centurion out of 960. That's quite some going. What is it that you're doing that others might not be doing?.We try and stick to the principles and systems that KFC have got, which are very good but in addition to that, we have developed some additional things. We've got a computer program that we uplift and revise every year to be able to service our customers quickly and this has helped us tremendously. It's an in-house product and in addition to that, we keep training. Not a day goes past that we don't train people..So, it's reinvesting in the staff – people..Yes, and one of the other things we've been doing, is that we promote within. We don't hire people from outside. We give people a chance to grow within the business and it gives even the lowliest worker a chance to see that there's some light at the end of the tunnel..How do you recruit ?.We recruit by putting in adverts and particularly, when we open in an area, we nearly exclusively recruit the customer service workers and the food service workers from around that area so that we hopefully, get something back from that community and we give something back to that community as well..Is that a KFC process around the world?.I think it is very much so, but we, adhere to that because it has paid dividends for us..What gets you up in the mornings? Forty-one stores: it's quite an empire to manage, particularly if you own them. What keeps you going?.I think I'm fortunate enough to have found my spiritual home in KFC and so, I'm very happy to get up in the morning to try and get people motivated. Where they really try and show enthusiasm, – which I think is the biggest attribute – I'd like to take them on that journey with me and hopefully, that does work..That story about one of your managers, Martia Mohlahla. She was selected as one of the three in the world to go to Singapore. What did you do to help her to get there?.Well, first of all, that's a really good news story and we're extremely proud of that. Her name is Martia and she works in our Midrand drive-thru. She was selected for that because she increased the sales of that store tremendously. She ran it to the standards and beyond that KFC want and she just make a tremendous ambassador for us..And she's also the manager of the #1 store in South Africa in the whole of KFC. Where did you find her?.We found her, like we found most of the people and she worked her way up from a cashier on the till to a shift supervisor, then assistant manager, then a manager. She has always been bright and spontaneous and we've been able to work with her and she with us..So, no university degree..No university degree..Is that a prerequisite at your business, that you don't have a university degree?.No, not at all. We're quite happy to have that but it's quite difficult to find a lot of people with university degrees who want to be cashiers and managers of a KFC..It's hard work..When we first started – I did years ago – it was quite an easy job. We sold chicken and chips. Now, we've got about 20 products and we have to really be on the ball, unlike another restaurant, we make the food before you come and we hope that you're going to buy that but we must project. We also have to be careful because we're only allowed to keep that food for 1½ hours so if it's more than 1½ hours, we have to discard it but we also want to have the food there when you do come because we are, after all, a fast-food outlet..Burt, I saw that the head office of KFC is in Louisville, Kentucky. Now, that's not the centre of many parts. I have been to Louisville, Kentucky to watch the Kentucky Derby a few years ago. Have you visited there? Have you visited with the people there?.Well, they have quite recently, about a year ago, moved to Dallas..Oh, okay. So, that's a bit of an upgrade, I guess..Yes, and no I haven't been there just recently..But I suppose KFC: you've got to be in Kentucky somewhere..Well, you should be, yes and I do think they have some regional offices there to just keep it going but the actual main office is in Dallas..And the whole Colonel Sanders mystique?.Yes. That's really quite interesting. There was a real Colonel Sanders – Harlan Sanders. He was 65 years old in 1952 when he opened a little restaurant on a highway in the USA. He was cooking Southern-fried chicken but what he did differently was he did it in an oil pressure cooker and he developed his herbs and spices and became very well-known and people would visit from all over. He then decided to franchise the business. His first franchise was in fact, in Canada and then in Mexico and of course, in the United States. Then it started expanding and then in later life, with his white suit and his black string tie, became a roving ambassador for KFC..So, there really was a Colonel Sanders who really did all of that. Extraordinary..He really did..Obviously, he would have passed by now. .Yes..The world has changed a lot, though. Food today, the whole food market is becoming quite politicised and quite controversial in many ways. Is this a threat at all to KFC – to your businesses?.I think any of these things are a threat but you must be able to handle it and fortunately, KFC and particularly KFC in South Africa, have done a really good job in trying to keep up with any potential threats like using the proper oils for cooking and also, we're extremely strict on all the products that come into our stores, particularly the chicken. But everything, including serviettes, has to be done according to their star rating and if it isn't, then we wouldn't use it and we do not import any chicken..And you've got particular suppliers no doubt. I was just thinking about the whole Listeriosis debacle at Tiger Brands. It didn't have anything to do with your product but presumably; if something similar to that happened, it would be almost existential for a business like yours..It would be terrible and so, we have to be really careful. For one, we really do check people like Rainbow Suppliers with a vast amount of our chicken but there are three others as well. They are audited on a monthly basis and then we do have the advantage that we deep-fry everything in pressure-cooker oil so that pretty much kills everything that could have been nasty..So, 41 franchises and you've won the Best Franchise store of the year in South Africa. Is it four times?.Yes, four times..What's next? .Well, I'd like to carry on this way. It's really a family business that I've got. I've got my two sons in the business and also my son-in-law. It works quite well. It has its challenges because each one's got his personality but I wouldn't have it any other way and what we do particularly in my company – Gunning Foods – we have a system of benching. It's very much like soccer. So, for every manager we've got, we have another one sitting on the bench ready to take over from him in case he gets ill, goes on leave, or gets promoted and so we have it for our area managers and now, someone benching for me so I think that's the next chapter. I think that's the next challenge..Is that causing trouble in the family – which of the sons will actually step up?.A little, but it's resolvable..We saw today the financial results from Famous Brands, which shows that turnovers are flat at the moment. Are you having a similar experience, that the economy is pretty tough?.There's no doubt about it.The economy is pretty tough but we've managed to (as KFC as a whole and our group) be in positive so that's been very good news for us..If you have a look at parallels between divesting when you first came into the business and the negativity toward South Africa at that time and today, where we see so many people emigrating. Are you seeing that as well among fellow entrepreneurs – that more KFC franchises are becoming available – because of people leaving the country, or is that not inflicting itself on your market?.I haven't really seen it because people are leaving the country but there have been a few sales of stores, quite substantial ones, to outside enterprises over the last year or so, but nothing more serious..When you say 'outside enterprises' do you mean more corporatised than the individual entrepreneurs?.Yes, more corporatised – one or two happened – but only about two or so, but it's also the first time it's happened in many years..Why would that be?.I think they see some stability in the franchise market and particularly in KFC in that it's got legs. It's been here for 40 years. I go to restaurants quite often and if they're there three years later, it's quite good news for me and it is something that you can invest for the long term..Why do you think – just to close off with – South Africa is so successful for KFC? Is it the local palate? Because if you think of our country, we're about half a percent of global population, yet we have the fourth most KFC's of any country in the world..I think it's a taste that was unique. It's very popular amongst South Africans and now it seems to be proving to be popular in Africa as well, so I think it has the taste that local people like..So, you could see Africa perhaps becoming an even bigger market into the future for KFC?.I think it can be. If you take a place like Nigeria, which I think has got about ten times the population of South Africa, it must go big there in time to come. I think it's a bit of a difficult thing at the moment but it's taking hold and it's going..And would you invest in another part of the continent?.It's my family business. I'm not doing that at the moment. I could look at that in time to come, but I'd have to do it in a country that I'm comfortable with and can handle..Which is not that easy in this day and age..No, because also, you have to import everything (more or less) and then also, you have to try and get a chicken supplier that meets the standards as set by KFC..Bert Gunning, South Africa's most awarded franchisor – 41 KFC's. I remember a friend of mine telling me that if you had one, it was like having a gold mine. Well, having 41 gold-mines is quite a business that Burt has built up over the last 35 years.

SA’s KFC entrepreneur Burt Gunning: How to build a business from zero to 41 stores

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