The Alec Hogg Show: Supreme Wealth Creator Kevin Hedderwick – on GBK, Brian Joffe and, of course, Famous Brands. Ep 8

Kevin Hedderwick, Supreme Wealth Creator, is our guest in episode eight of The Alec Hogg Show. Hedderwick has had a spectacular career and in this podcast, he openly discusses what happened with the acquisition of Gourmet Burger Kitchen in the UK, his business relationship with Brian Joffe, how he started out with the iconic Halamandaris family at the family’s small Steers Group and, of course, Famous Brands

Welcome to episode eight of The Alec Hogg Show, a long form biographical podcast where we look behind the scenes at the lives of high achievers. Our guest in this episode is Kevin Hedderwick, a value creator par excellence. 

Listen to this: when Kevin joined the Halamandaris family’s small Steers Group, the company was worth R65m. But when he departed – just over a decade and a half late – its value had soared to R16bn. But a disastrous investment into the UK at R2.3bn – by far the group’s biggest ever bet – has removed the shine from Hedderwick’s legacy as did reports (ill conceived, he says) of a quickie business marriage and divorce with another South African entrepreneurial icon, Brian Joffe

Well, in this wide ranging discussion, we explore those subjects and a lot more, including the drivers that took Kevin from Commercial High School in the Eastern Cape backwater of East London to the pinnacle of South African business success. 

Like other guests on this show, Kevin was selected on the basis that if his story were captured in book form – it would likely be a bestseller. So, let’s start at the beginning. 

As a young man growing up, I mean, I always sort of saw myself in a very military environment. I just loved the military and the discipline that went around it. So, when all of my friends at school were signing up to go and do their two year stint in the army, I actually joined the police force. 

And so my early life was in the police force and I was one of the youngest guys ever to reach the rank of sergeant. But I very quickly realised that, you know, the police force wasn’t going to be a career for me. 

And so I was very fortunate to get involved in the liquor industry at a very low level. I joined Distell – which was called Distillers in those days – as a merchandiser. So, that was my entree into the commercial world. But starting out I very much saw myself as being this military figure long term, but that never worked out.

Did you have family in the police? 

No, not at all. I just like the whole discipline, attitude and focus that went around being in the military. 

Where did you grow up?

I grew up in East London. It was a wonderful place to grow up. We lived quite close to the beach. The beaches were beautiful. I mean, the schooling was amazing down there. It produced some fantastic business leaders over the years, also some outstanding sportsmen. 

Whenever I tell people that I’m from East London and that part of the world, their first question is that you must’ve gone to Selborne. And my response is, no, no, I didn’t go to Selborne. I had to fight for my sandwich at the school I went to: Commercial High School, which is across the road. 

And we always used to tease the Selborne boys about their moms bringing their lunch to the fence, and we had to fight for ours. So, no – not a Selborne boy. I left East London as a young man, 22, and spent time in Port Elizabeth, but the most of my career and working life has been in Johannesburg. So, I don’t have any connections back in the Eastern Cape. 

Also drawing on to a previous guest on this programme – Allen Ambor was telling us how he met George Halamandaris when he was at university and worked for George Halamandaris at the very first steakhouse. Now, you worked for the Halamandaris family sometime after, presumably ‘old man’ George was off the scene. Is that a challenge to be working in a family run business? 

Read also: Meet Allen Ambor, founder of 600-store Spur, yoga teacher, mentor: The Alec Hogg Show

No, it wasn’t for me. I met them at the end of 1999 and joined them in 2000. And I must say that they were a remarkable, remarkable family. And I think you’ve got to give them credit, you know, for having the courage to look at someone from outside to come in and join the business at a time when it was going through quite a rough time. 

McDonald’s just arrived, the mother ship Steers was under significant pressure, and as I say, you know – to their credit, I think they realised that they needed some outside skills. And so, you know, for all the time I was there – they embraced me and over the years we almost became like family ourselves. I became part of their family almost. 

Just recap what it was that attracted them to you? 

Well, I think they were looking for someone from the outside that obviously had some experience in the food service space and franchising. I had joined (in fact, they were customers of mine when I was at SAB) two gentlemen by the names of Derryck Myers and Robbie Mitchell who had started a pub franchise called the Keg

I joined them and was the MD of that business for a while. And then Rob and Derryck had visions of emigrating – it was at the time when Nelson Mandela was going to be released and everyone thought the world was gonna come to an end. And so we put the KEG business on the market for sale.

And, in fact, it’s not commonly known, but that business was almost a signature away from being sold to Allen Ambor and Spur. And at the 48th hour – it ended up being sold to a business called King Consolidated Holdings. And so, I signed a two year contract to make sure that we met our profit warranties. And at the end of the two years, I wasn’t going to renew my contract with King. 

I got a call from the Halamandaris family to say, would I come and have a cup of coffee with them? They were looking for someone to take the Steers brand and revitalise it, because as I said – the Steers brand was under significant pressure. At the time, McDonald’s had just arrived and threatened to wipe them off the face of the earth. 

And this was their baby. Steers was what made them as a family and a business. So, you can understand the anxiety. So yes, they found me at a time when I was coming to the end of my contract with King Consolidated Holdings. 

And Keg – is that the same company that today is within Famous Brands? 

Yes. When I was at Famous Brands, we took it back and tried to revitalise it and re-energise it and the sad story is that it hasn’t worked. But I do think that maybe part of the not-working was about just poor execution. 

And I mean, if we talk later on about the things that I’m passionate about – execution is one of them.

You can have the best people, processes, but if you can’t execute – it’s not gonna work. 

It was a spectacular career. The compound annual growth rate of that period – even today, even after the market cap has gone from a peak of R16bn down to the current just under R5bn – there’s still a 31% compound annual growth rate since the day you started. 

Did you invest heavily there? Did you make fortunes of money as well as the other shareholders?

I wouldn’t say I made fortunes. But I mean, I think that Famous Brands did set me up to where I am today – where I’m financially independent and I’m able to live relatively well. So no, I never made fortunes, but I’m very grateful for what I did make. 

And I mean, money has never been the motivator in my life. I never chased wealth. I was just lucky to be sometimes in the right place at the right time and I worked bloody hard, because you know that industry is unforgiving.

And Famous Brands consumed my life – it was my life. And so I gave it my all. And I loved every minute of it. 

And so, I think at the end of it: in a sense, I suppose I deserved to be rewarded to the extent that I was. But no, I never made the amount of money that some people think I might have. 

But the Halamandaris family (presumably, being the owners of the business) must be very happy with their appointment of you in 2000. 

Yeah, as I said, we became like brethren, and they obviously were very happy. When I joined the business the share price was 85 cents. When I left, it was R167,00. It’s not there today. So, over the years – and they were major shareholders when I got there – I think they owned about 45% or 48% of the equity. 

They never sold the helmet of their shares from all the time that I was there. In fact, very few of them sold down. And so, yeah, they did relatively well out of the business. Some of them are still major shareholders today and perhaps are not as happy as they might have been two, three years ago. But, you know, you’ve got to look at it from a long, long term perspective. 

Over the years, their value has significantly been enhanced. It’s not what it was three years ago, but I really believe in Darren Hele – my successor – and I don’t know if it’ll ever get back to R167,00, but I still think Famous Brands is a great business, a great asset. And Darren is a phenomenal leader. 

So what happened with Gourmet Burger Kitchen? You’ve been blamed. You wrote and set the record straight on BizNews, and I saw you did the same thing with the financial mail. It’s almost like every now and then somebody blames Hedderwick for the disaster that happened with that UK acquisition. 

Famous Brands GBK

Look, I think it’s perhaps not surprising, because over the 18 years or so I became synonymous with the business Famous Brands – and the market all knew me, the analysts all knew me, the shareholders knew me. I was still around at the time, even though I wasn’t the CEO. I was in that transitional period. 

Read also: Bad week for Famous Brands – and Kevin Hedderwick

But, I mean, it was at a time when the ex-president Zuma had just fired Nhlanhla Nene – the finance minister – and, you know what happened. I mean, South Africa was in complete chaos and we just, in fact, had a strategic planning meeting probably two weeks after that, and one of the things that came out of that session was that Famous Brands is a great business, but if you look at the South African landscape and while there still is runway in South Africa – we really need to find an asset which is going to give us hard currency. 

And then fortuitously, I have a wonderful relationship with Robbie Brozin from Nando’s, who I still stay in touch with. I mean, there was this asset in the UK called GBK, which the Brozin family were also invested in. And so we met. 

So, the Nhlanhla Nene episode was in November, and in December, January was the first contact with GBK. Still at the time, it was a great asset, doing phenomenal numbers, a wonderful brand with great equity in the UK. 

And I say over and over again, I would do it all over again. We couldn’t have foreseen what Brexit would bring. Did we perhaps overpay for it? I think we might have, in retrospect. 

Did anyone panic? 

No! There was no panic at all. I mean, we had an army of advisers. I’ve done many transactions in Famous Brands and lots of due diligence in my life. But given the size of the asset, we knew that this one we had to get right. 

We had an army of legal advisors, financial advisers. I mean, we had a very, very strong investment committee that looked at this asset. We turned it upside down. We visited this place. We visited the stores. We met the people. There was not even a notion that this business wasn’t a good business. 

And so, you know, as I said, if I had to do it again – I’d probably do it all over again. But nobody could have foreseen what would happen a few months later. 

That’s right, because Nenegate was December 2015. You would’ve spoken to them in January 2016. And Brexit was, what, June 2016? So it was within months.

Read also: Brexit: Should SA and friends be worried? Expert explains

So we consummated the transaction, I think, in March, April. 

That’s quick then, Kevin, if you only started talking in January. 

Yeah. Well, I think in Famous Brands we always sort of prided ourselves on being very nimble, agile and entrepreneurial. So, it wasn’t a surprise that we were able to do it that quickly. But I mean, when we took the business over – like for like growth was 7.6%. 

I mean, it was a fantastic asset. There was not a notion that this business was tarnished in any shape or form – and it wasn’t. Circumstances just went against us.

When you got underneath the hood, you didn’t find anything funny? 

Look, getting under the hood is my game. I’m a highly operational person. I mean, I’m not one of the guys that could manage a business from a desk or navel gaze. I mean, I got under the hood of virtually every brand we ever acquired in Famous Brands. And this one was no exception. 

I mean, I got to know that business exceptionally well in three months. I spent a lot of time there. And I can assure you and anybody else who’s listening to this podcast – there was no sign of the fact that this business was going to incur the setbacks that it has. And I still say it was just circumstances. 

So what happened with Brexit and GBK? 

We all know that when Brexit came along, the economy in the UK just took a backward step, and that affected spending power. It’s not a cheap brand – it’s a premium offering in the burger space in the UK. So, that obviously didn’t help us. It put the business under pressure. 

But the other significant thing that I think we never foresaw, and maybe that’s why I say we probably overpaid for it, was that at the same time this whole thing about aggregators or home delivery was taking place. 

And so then business had moved significantly towards online ordering. So, you know, we ended up in a situation where: when we acquired the business, there was an exclusive arrangement with delivery, and at the time – Uber were very aggressive. 

And so whilst everybody was using this wide range of aggregators – we were stuck with delivery. After a year, we broke that contract and we did then welcome other aggregators into the business. But that also had an effect on the business in terms of the fact that we weren’t able to get to the consumer other than via Deliveroo

So, if you could have the time again: clearly, there’s nothing you could do about that exclusive arrangement, but you would presumably have been able to spread the delivery relationships with other companies?

Yeah, absolutely. But Deliveroo was a very impressive model. I actually went to go and meet the founder, because we’d bought this brand and our sole delivery partner was Deliveroo. And I went to meet the MD and he is a very, very impressive operator. 

And so, you know, just on the basis of that visit – and there was another case of getting under the bonnet – there was nothing for me to suspect that Deliveroo couldn’t do the job for us. But yeah, I think if we had the opportunity to have spread… In fact, it got to a point where we tried to reverse ourselves out of it and he wouldn’t likely let us out, because he had invested significantly in setting up GBK as part of his network. 

But I think if we had the benefit at the time of having a far greater array of aggregators, it might have been a lot better for us. 

So when that year ended, was it then too far gone for GBK? 

No, it was never too far gone, and you can see more recent conversations where people like Darren have been quoted to say that the business, yes, had to get downsized, right-sized. Some of the rentals weren’t right, and some of the stores were in bad need of refer. 

But at one stage, probably two years ago when chatting to Darren Hele (who I stay in touch with) and also seen in some of the publications in the media: GBK had gotten back to a like for like growth of 5.6%. So, you know, back on its feet again – only then to be really given a knockout blow by Covid

Just before we go into the Covid impact – how are you seeing the food delivery market? It’s very important for South Africans, given that Naspers is about a quarter of our JSE in equity portfolios in this country, and they have a huge bet on the whole food delivery market. 

Yeah, look, I mean, it’s changed the landscape. You know, you can look at aggregators today and say that they’re going to become your strategic partner or otherwise you look at them and say they’re a competitor, because that’s the way it’s panned out. 

I mean, I can remember in the early days of a business called Mr Delivery, which was really a scruffy business. I mean, we wouldn’t dream of putting our brands into Mr Delivery, but the Naspers people have just taken that asset and it’s a different ball game altogether. I mean, they’ve done a phenomenal job. 

And today there are very few food service people that can say they can live without the likes of a Mr Delivery or Uber or any of these other aggregators. And Covid has just simply accelerated that. So, if you’re not with one of the aggregators today – you are really cutting off a big part of your market. 

They are increasingly becoming players in the food service landscape. So, if you don’t go with them – they’re a competitor. If you choose not to be on their menu, well then you’re just giving your market share to somebody else. 

Don’t they take a big slice, though? 

Yeah, they are not cheap, hey. And, you know, in that sense, I mean, you can always try and do it on your own. But I think if you go and run numbers, it’s probably cheaper in the long run to actually go with an aggregator. 

And you don’t have the hassle of acquiring the assets, employing the staff. The one exception is Debonairs Pizza, which, as you know, is built on a home delivery platform. And a business that during Covid has shot the lights out, because what the Famous Brands guys were able to do was turn on home delivery literally by flicking a switch. 

All the Debonairs guys did was bring their drivers and motorbikes back in the fold. So with the delivery business: Debonairs is geared for it. They’ve got critical mass. They can do it. So, in Debonairs’ case – I’m sure they could probably do it for less. 

But I mean, I do know (having had a cup of coffee with Darren not so long ago) is that even Debonairs who have always been sacrosanct about ‘we don’t outsource our delivery’ are saying: ‘Isn’t there a piece of this business that we’re missing by being sacrosanct about doing it all on our own?’ 

When you have a look at Famous Brands itself and the spectacular run that you had – that 31% compound annual growth rate since you began: why was it possible? That’s like Warren Buffett plus 50%. He does 20%, you did 31%. How was it achievable? 

Look, if you speak to like Brian Joffe when he built Bidvest: Brian will tell you that, you know, building Bidvest was a great journey for him. But he would say that, you know, the timing couldn’t have been better. 

If you look at the food service landscape, when I got involved with Famous Brands in 2000 – the landscape was great. The category was growing. It grew even more in 2007, 2008, as you had this new consumer coming into the marketplace. So, I think the timing was great. 

I think that we also were astute about the type of brands that we picked and the places that we wanted to play in or where we wanted to compete.

And, you know, for me, the most important thing was – besides the fact that we had the support of the family and the shareholders, and they believed in us – is that Famous Brands during my time had a phenomenal team. 

The guys that were part of that ExCo, they lived the businesses like I lived it. And when you have people like that, there is very little that you can’t do. Literally, we would get out of bed in the morning with one objective, and that was growth. 

We didn’t believe that it was worth getting up for if you were just going to participate. If you got up in the morning, you needed to get up to win.

You’ve mentioned Darren Hele a couple of times now. Is he made of the same stuff? 

A very astute guy. He’s got a big engine. I’ve never met a man with appetite for work like Darren. He inherited a business which was at the peak of its performance at the time. A lot of things have gone against him. So, none of the stuff that’s happened in Famous Brands of late could be laid at the door of Darren. 

You know, the business couldn’t have wished for a greater successor to myself. He knows the business intimately. He’s a wonderful man, and just give him time. 

Another of our guests on this show was Anastasia Sideris, who says that you used to frequent her restaurant in Bedfordview. Take up the story from there. 

Yeah. You know, one of the things in Famous Brands that gave me great joy – and I mean, we did some remarkable things – but nothing was more satisfying than finding these little jewel of businesses founded by young entrepreneurs that all had a dream and a vision, but didn’t maybe have the wherewithal to unlock that dream. 

Listen: Tasha’s story – in conversation with founder of a growing global empire. The Alec Hogg Show

I was living in Bedfordview. Tash had a restaurant in the neighbourhood where I lived – it was a franchise business, Nino’s. And I would always watch her in action and then I saw the place getting gutted, and she built this thing called Tashas (and I never even knew there was one in Atholl, to be honest). 

And so after three, four months, you know, I said to Tash: ‘I’m marvelled at what you’ve done, here’. And we became friends, because I was a regular there. I said, you know: ‘What’s your vision for this business?’ And she said: ‘All I really want to do, Kevin, is to go national. I believe in what I’ve created’. 

And I said: ‘Well, let me help you. Let Famous Brands acquire a stake in your business. And you do what you’re good at and we’ll do what we’re good at’. And together, I think we make a great partnership. People said to us at the time that we’re crazy, we’ll never franchise this business. Well, we did, and the rest, of course, is history. 

And there are probably another five, six, seven other stories like that of finding young entrepreneurs that just had a dream and with Famous Brands behind them, we were able to help unlock significant value for their businesses and help them to realise what they had at the time.

What did she have that other budding entrepreneurs can perhaps try and replicate in their lives? 

So look, besides the fact that she’s talented in terms of the food service space. In fact, I think she’s got very few peers in this country – Tash has the most remarkable energy that I’ve ever met. She can work 18, 20 hours a day non-stop, and she is fanatical about the detail. 

I have never met an entrepreneur in the restaurant space that is so fixated on the detail.

If she sits in a restaurant with you: her eyes will just shoot to the left, there’ll be an All Gold tomato sauce label which is not straight facing the customer – she’ll jump up and she’ll turn the bottle so that the label is straight. It’s a level of detail that is unprecedented in this industry. 

Is it necessary?

Yeah. I do believe that, you know, business is about operational detail. I mean, I was accused of being too involved in the detail, but the devil is in the detail. If you get that basic detail right, then the rest of it will happen. I used to have a philosophy about businesses and I’m yet to be proved wrong. 

I would walk into a business and I would say very simply, you know, if the housekeeping’s bad – the business is bad.

Show me a business that’s got poor housekeeping – I’ll show you a business with a bad balance sheet. 

What do you mean by that? How do you pick that up? 

You can see it because, you know, you’re taught to look for those things. It’s just the housekeeping generally: is this a place that looks good, smells good, tastes good, feels good? Or does it have the smell of death about it? And I’ll tell you that in two minutes. 

And the one thing is: take me to the storeroom and let me look into the refrigerator. I’ll tell you very quickly if this is a good business or a bad one. 

Because? 

Of the housekeeping. 

What you see in the refrigerator tells you? 

What you see in the store room, what you see in the refrigerators, what you see on the floors. If there’s a serviette lying on the floor and it’s been there for five minutes – this is a problem business. 

All businesses or just food businesses? 

Look, I think retail in general. If you look at the really successful retailers and I mean, I am a real fan of Woolworths. Is it any surprise that Woolworths are successful? Okay, they’ve got their challenges as well with Australia. 

But look at their food service businesses. I mean, have you been into a Woolworths which is untidy? You don’t find them, and the business works – because it’s a role model. The product and everything is beautiful. It’s a pleasure to shop in, and it goes back to the basic stuff. 

Get the housekeeping right and the balance sheet will be right. 

Your attention to detail – is that where the obsession (almost) for execution came through in the whole way that you ran that business? 

Yeah, I mean, we used to run (informally, because we never tried to over-sophisticate the business) what we call organisational climate service at Famous Brands. And what was played back from our people at every level in the organisation was that this is a high performance culture and that’s what we prided ourselves on. It was a high performance culture. 

And you either fitted it in or you didn’t. In fact, you know, we didn’t have to ask you to leave – you realised that this is not for me. And so people would put their hands up very quickly and say: ‘I’m outta here’. But it was relentless and we were relentless as a team. It was very, very high performance.

So what was the transition like when you left – for you? 

For me? Look, nobody can prepare you for that. I mean, I thought it would be easy and it wasn’t.

I can tell you categorically that I went through some very dark times where I thought, you know, life has no meaning for you anymore. 

I mean, you used to have a thing that you used to get up for every day and have lots of fun (it wasn’t always fun – most of the time it was fun). But to get up and and have no place to go to after you’ve had a place to go to, you had all your friends – I mean, Famous Brands was like my family. Everybody knew me. I knew everybody there. 

So why leave? 

I just think it was time. There were a couple of things, but I think probably the trigger for me was that (and I can understand it, Famous Brands had become a big business, it was a R16bn market cap business) the bureaucracy just begins to throttle you and all the fun of being in business, of being nimble, agile, entrepreneurial, talking about the customer, talking about the brands.

Our board meetings, which used to take 2.5 hours, eventually took all day. One committee upon another. And I understand it. I understood it, because if you had a look at what was happening around us in the listed space – it was just too many things going wrong and too many non-executive directors coming to board meetings for the tea and the biscuits. 

So, I understood the fact that the things needed to tighten up, but I felt it was quite throttling. And at the same time, Darren had been my number two guy there for a long time. I thought it was time that he really had a chance to take the business and run with it. 

And I felt – I was tired, to be honest. So, I thought the timing’s right. I have no regrets. I mean, it’s taken a while for me to recover and get back on my feet – mentally, spiritually, physically – again. But I don’t regret now having done what I’ve done. 

I’m disappointed about the fact that Famous Brands has gotten to where it is today, and I hope and pray that it will get back to those glory years of R100 a share.

But yeah, I think the timing was just right. Although, the first twelve months after it felt like anything but the timing was right. 

You did take very long to get involved in your next venture with Brian Joffe. On that one as well, you weren’t together for very long. Did you maybe not do the due diligence properly? 

No. I’d known Brian for a long time because, at one point in time (and it’s also not common knowledge, but I mean, it’s history now) Brian looked to actually take a stake in Famous Brands when he was at Bidvest. And so we’d met and we stayed in touch. And, you know, he’d always said to me that one day, if he was on his own, we should do something together. 

Then with the Long4Life thing: he kind of put this thing together in the background, asked me and I went to meet him, he said to me: ‘This is what I’ve got in mind – don’t you want to join me? Here’s a chance for us to do something again’. And maybe I was a little bit on the rebound at the time after coming out of Famous Brands, but I joined Brian and I was there for (I think) four, five months. 

We did some really lovely things together. I mean, we acquired Sorbet, Wholesport, Outdoor Warehouse, Sportsmans Warehouse. When it became public knowledge that I was going to join Brian: people just said to me: ‘Geez, do you know what you’re letting yourself in for?’ And I said: ‘Yes, I do!’

And I can honestly say that Brian and I never, ever had a bad word with each other. Not one. 

In fact, he was shocked when I said to him: ‘Brian, you know, this is actually not for me. I can’t do this corporate crusade raiding type business where you’re looking for assets. I’m an operational guy. I want to get involved in the nitty gritty of the business’. 

And so to sit in a business and stare out of a window at Rosebank and maybe get five emails a day – I mean, it’s like I say, I can’t do this. But we stay in touch. We stay in touch almost weekly these days to see how things are going. I speak to the team there from time to time. So, yeah, it was a short time there. 

I never had an argument with Brian, and I learned a lot from him. I mean, to watch him in action was remarkable. I went back last year where he asked me to help him with one or two particular projects, which I’ve done. So, no, there was never any bad blood with Brian and I. 

I’m anxious to see what’s going to happen with Long4Life, because, I mean, I think he’s got a great model, he’s sitting with all this firepower, and I just think the man can’t find the right assets right now. 

If you could go back now to your 30 year old self – because you’d have had some experience by that stage and being able to look at various businesses – you did move from the brewing business into the food business. What sector would you be going into today? 

Sjoe… the business for me that was something that you could get deeply passionate about was beer. At SAB, we had 92%, 93% market share. But, I mean, we behaved like we had 9% market share.

I’m a purist when it comes to brands and they don’t come purer than SAB. 

I mean, those guys (I’m not so sure how it is today with the InBev connection and stuff like that), but I mean, at SAB – that was a business that just breezed everything that you could wish for in terms of quality, branding, it was a learning organisation, you had fun. It was great business to be involved in, because you wore those brands like badges on your blazer, you know. 

But I mean, to get into that category today is awfully difficult. I must say, the guys from Heineken: more recently it looks like they’ve done a very good job. So, the beer industry is always a really attractive industry. But I mean, the barriers to entry here are just so, so high. 

In my time at SAB: we would go and visit Anheuser-Busch twice a year, we’d go and visit Miller – and they’d give us all their best practises and we’d bring them back to South Africa. But we asked the guys over there: ‘So, you’re giving us all this information, intellectual property, but how can you do that? Isn’t South Africa on your radar screen?’ And they would tell you categorically: ‘No, because we know we’re going to get a bloody nose in your backyard’. 

I mean, they would come here to South Africa and just look at the business. I mean, the barriers to entry are just so high. So, if I was a 30 year old and there was a chance to get into a beer business – it would be very attractive. But today, looking at the beer space today – no, you’re gonna get a bloody nose. 

So what would you advise a 30 year old that’s coming to you as an icon of South African business and says: ‘Help me, Kevin. I don’t know what to do’.

If someone comes to me and says: ‘I don’t know what to do’, the very first question I’m going to ask them is: ‘What do you love? Because if you don’t do what you love, life is gonna be miserable’. 

And that’s why, I mean, I’ve been very blessed. In my time at Distell – it was a great business (or Distillers in those days). Working in the wine and spirit industry, under the sort of shadow of the Rupert environment – Dr Rupert was still around in my time. Then going to SAB, having the likes of Graham Mackay and working in another category, which is wine and spirit – and I loved that. 

And then, the food service space, I must say, was a wonderful romance. I loved that business.

I loved the franchising side of it – even though people said it’s a tough industry. It is. I always used to say that franchising is character building. 

So, it’s not an easy space to be. Sitting with young people: the first thing you’ve got to ask them is what is it that they are deeply passionate about. 

How do they know, though? 

Well, they should. I mean, you know, if they don’t at 30 years old – then they better realise it very quickly. Otherwise, life is going to be just dreadful.

Say that they are passionate about computer games? 

Well, if that’s what you’re passionate about, well, then I’m happy for you. But I can’t help you because I’m an IT peasant by design. I tell everybody I was born BC: it stands for ‘before computers’.

An IT peasant by design. So, the opposite of a digital native? 

Yeah, absolutely.

So, what do you use then? 

Obviously, I’m literate when it comes to IT, but I get tail feathers pulled every now and again. It was probably only two, three years ago that I started using Whatsapp. Before that, I wouldn’t even use Whatsapp. But I get by. 

So Kevin, what about the next 20 years? 

Look, I still want to be involved in business – not necessarily mainstream business. I have been offered opportunities to go back into corporate in a full time capacity with some really great organisations. And I had to look those people in the eye and say: ‘Listen, I’m not looking for a job’.

And I absolutely am not looking for a job. 

In terms of being in a corporate space – I’ve done that, I’ve done my bit there. It’s been very good to me. I’ve learned a lot. Now really is to do things which are going to give me some fun, and not where I have to bet the farm. 

But do I enjoy getting involved in helping some of the corporates that I do? Yes, I enjoy it. It does come back down to the execution, because you can tell people what you think they should be doing, but they can still just look at you and say: ‘Well, it was nice, but we either won’t do it or we’ll do it next year’. 

Is there a book? 

No. When I was at Famous Brands: the family one day said to me:’Don’t you think we should write a book, Kevin?’ So I said: ‘Yeah, I think as a family – you guys should write a book, because I think you’ve got a story to tell. You know, right back to the George Halamandaris days’. 

And so, they went away and thought about it. And they said: ‘You know what? We think we think we should write a book’. So I said that’s great. So they said: ‘Well, don’t you understand? You’re actually gonna do it for us’. 

So, I spent 18 months working with a journalist writing a book which we published. It was called ‘From Corner Café to JSE Giant‘. I think we sold about 5000 copies. But I mean, writing books – that’s a labour of love. So, I’m not sure that I’m ready to write a book right now. 

From Corner Café? Is that really where they started? 

Oh, yes. I mean, their story is remarkable. I mean, it started with a really small café in Bellevue – south of Johannesburg.

If you could describe the kind of person who’s going to be successful, because you’ve had thousands (literally) of them who’ve come through your hands, figuratively speaking… Many people will be looking for something different after Covid, what attributes do they need if they’re going to be successful in buying a franchise?

I think if they’re going to get into the food service space, they’ve got to understand that it is a very unrelenting business, that they’re going to spend long hours on the floor and the rewards aren’t as great as they used to be.

The food service space is really tough. One of the big challenges for the franchisors is how do you make this model attractive again? Because it’s lost its glamour. It’s lost its ability to generate returns. I mean, the franchisors have also taken a bath during Covid. 

You know, you can only push price to a certain extent. So, in the days when franchisees were getting 10, 15, 18, 20% return on turnover – that’s probably shrunk down to 5, 6, 7%. Do you really want to work 18 hours a day for a 7% return on turnover? So, it’s not a very attractive industry at the moment. 

So, the franchisors too have got to take a hard look in the mirror and say – how do we make this business sexy again from an investment perspective? Because, you know, in the early days, all guys wanted to do was to own their own pub – so they bought a KEG. Then all that most females wanted to do was own a coffee shop – so they bought a Mugg & Bean

Today, if you’re post-Covid and you want to get into business on your own, because there’s no space for you in a corporate space – and I’m meeting lots of those people where they say they’ve got X amount of capital that they want to invest. The main criteria for them now is not about a passion for a pub or passion for a coffee shop – it’s does this commercial model make sense? 

So, whether it’s a Spec-savers, whether it’s a Mugg & Bean – whatever franchise it might be: does this thing make money? And I think that’s a sensible approach to take. You know, if I’m gonna invest all my life savings on this thing now – this thing better make money.

But you better be passionate about it. If you don’t like spectacles and you open a Spec-savers with all your savings, it’s not gonna last. 

Absolutely. So, I mean, it goes back to: (the first thing is) what is it that you’re passionate about and then where do you want to invest your money. Some guys might have all the money in the world, but they’ll never make a restauranteur. Never. I’ve had to look people in the eye and say: ‘This is not the industry for you’. 

What about South Africa to close off with? What’s your feeling about our country? 

Oh, you know, the one thing about South Africans is that we are resilient and we are tenacious. So, we are going through a really, really tough time right now – probably more so than most of the other parts of the world – but there are still people out there that are making good money. 

I think that – given time – we’ll put the country back on its feet again, and it will be a place where entrepreneurs can flourish. But, you know, there’s just too many people leaving the country at the moment. There’s just too much impunity in this country in terms of corruption and stuff like that. It doesn’t send out a very strong message to South Africa, in general. 

So, you know, there’s a lot riding on President Ramaphosa at the moment. Hopefully, we can see some progress in the next two years. I’m staying – I’m not going anywhere. 

Your family? 

Yeah. My family’s here – they’re not going anywhere. It’s a wonderful place. Even with all its challenges, there’s some beautiful places around South Africa. I mean, I’ve moved down to the North Coast now – it’s like living in another world. So, I do think that there’s still scope for growth in this country, but it’s going to take some time.

I think the next 12-18 months are going to be really tough. But if you get through that – there’s light at the end of the tunnel. 

To listen to this remarkable interview, download the link here: The Alec Hogg Show: Supreme Wealth Creator Kevin Hedderwick – on GBK, Brian Joffe and, of course, Famous Brands. Ep 8 (or find the interview on BizNews Radio on the BizNews home page). You can also subscribe to The Alec Hogg Show on Spotify here.

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