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Nandos Company

Categories Business, Company, Economics, Finance, Income Tax, State, Tax

Essay, Pages 10 (2259 words)

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Essay, Pages 10 (2259 words)

A beloved South African eatery in Windhoek has closed its doors and left Namibia. Nando’s is famous for its Portuguese style grilled chicken and would surely be missed, but all is not lost. A local eatery Grill Addicts has replaced all Nando’s outlets and from personal experience they have exceeded expectations with their vast array of chicken and meat dishes.

According to local newspapers there was no known reason why Nando’s decided not to renew their license at the end of October 2018.

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In my opinion, the reason why Nando’s left the Namibian market was due to economic conditions in Namibia. Demands for products are not as strong as it used to be and the economy has contracted about nine times since the year 2016. Another reason could be because of double taxation; this refers to income taxes paid twice on the same source of earned income. Double taxation also occurs in international trade when the same income is taxed in two different countries.

This occurs because corporations are considered separate legal entities from their shareholders. Corporations pay out dividends to shareholders and these payments incur income tax liabilities for the shareholder even though it was already taxed at a corporate level. “Perhaps these guys pay dividends to shareholders in South Africa and they have to pay tax here again, that is definitely something they won’t like because it is eroding their profitability.” Said Kamupingene, former economist at Namibian Equity Brokers, in an interview conducted with the newspaper, The Villager.

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As stated on Wikipedia, Nando’s is an international food chain that originated in South Africa, founded in 1987 by Robert Brozin and Fernando Duarte. The founders both exhibit entrepreneurial orientation for various reasons. They took an enormous risk by starting their business with the hope of making a profit and it was a huge success seeing that to date Nando’s operates over 1000 outlets in 35 countries. “I realized how little we actually knew and we didn’t realize how tough the journey was going to be” said founder Bronzin, (2015). The partners acknowledged that they had quite a few setbacks but despite the hardships their perseverance overcame all their obstacles. The founders also exhibit creativity and innovation, the spicy grilled chicken was a unique dish which they thought had to be shared and that it would change the way the world would thought about chicken. Their creativity can be seen starting at their brands name “NANDO’S” all the way to the furniture they use in the restaurants. The Nando’s logo has both the Barcelos cockerel and a “peri”-apostrophe to represent the peri- peri chicken that they are famous for. They incorporated shapes into their restaurants to represent their core values for example; the triangles which represents family. Nando’s is known for its hilarious, unique and proactive advertising. “The advertisements defined and created the brand character of Nando’s” (Brozin, 2015). It was important for them to push the boundaries of advertising. One would think that Nando’s spends large amounts on advertising, but the annual amount spent is about 17 million which is much lower than other big company’s budgets, which makes Nando’s innovative and proactive. Robert and Ferando’s business had the potential to grow and their strategic objective would be that they have market share.

When the Nando’s franchise left Namibia there were a few implications on the workforce. There was about 140 people employed at the three outlets in Windhoek, upon this news many feared their jobs would be lost and they would be unemployed. Fortunately no one was retrenched, because former franchise owner and current owner of Grilled Addicts Mr. Harmse saw to it to employ all 140 employees at the new eatery. One of the possible implications the employees faced was a reduction in their salary when Grilled Addicts employed them. Reason being, Nando’s was a successful international food chain that was able to pay all their employees a decent salary compared to Grill Addicts ,a local business that has just started and still had to build themselves a reputation in the food industry. To avoid unemployment, employees did not really have a choice but to accept the offer of Grill Addicts

Nando’s exiting the Namibian market had both positive and negative effects. A few benefits include; According to an interview conducted by the Namibian Broadcasting Channel with current owner of Grill Addicts Mr. Harmse the benefit of having a Namibian restaurant allows them to contribute towards our economy. “Because with a brand you are obligated to buy all supplies from them which was only six suppliers, but now we can buy everything locally.” Costs are also lower, because they do not have to pay royalties and import duties anymore. All procurement is now local, suppliers of soft drinks and beer. Meat products come directly from farms, while Namib Poultry supplies the chicken, which in turn grows the local economy because money circulates within the country instead of flowing out. Nando’s leaving Namibia gave Grill Addicts an opportunity to become an independent brand as well as boost diversity, because Nando’s is known as a Portuguese chicken brand only, while Grill Addicts added meat to their menu and other local dishes like “kappana”, they also cater for vegetarians as well. Although there are a few benefits of Nando’s exiting the Namibian market there are a few drawbacks too. The speculation for Nando’s leaving is that economic conditions went from bad to worse; this paints a bad picture and makes it difficult to anticipate how potential investors might react upon the news of such a big international food chain leaving Namibia. Grill Addicts owners had to step in when Nando’s decided not to renew their license, he saw it as a business opportunity and grabbed it, but since Grill Addicts had a different approach regarding the new menu it is not guaranteed that the business would be a success, because the community will not always support local businesses due to the fact that everyone is so attached to South African products and many people don’t appreciate change or adapting, and without the support of the community the business still has a chance to fail.

Nando’s is one of the most popular restaurants and Grill Addicts can learn a few things from them. One of the most important key lessons should be to create awareness of their brand, with the help of social media and advertisements. Nando’s has about 4.5 million fans on facebook and 1.5 million followers on Twitter, its social media strategy has contributed to its success by running social campaigns to help generate customer engagement and loyalty. One example was the ‘finger selfie’ campaign to encourage customers to share their experience on social media. As an incentive a gift card was given to the winner of the best finger selfie made from a Nando’s napkin. Grill Addicts can follow this example create a demand for their products and to receive feedback through social media. Another key lesson would be to invest in their employee’s, Nando’s conducts a range of master classes quarterly. These classes cover employee relations, leadership, operational processes as well as finance. Employees are more committed towards their work if a company values and invests in them. On a creativity level, Nando’s avoids the uniformly bland feeling of a restaurant chain by individualizing the design and decor of each outlet, an important lesson Grill Addicts can apply to make their outlets more unique. As stated earlier Nando’s is known for their quirky and unique advertisements which is a very important tool to build a reputation, seeing that Grill Addicts is fairly new to the market they can use different marketing tactics to promote their brand rather than the usual or common radio announcements, something exciting to attract both old and young, they should keep updating specials and promote it with fun advertising. Grill Addicts can also use Nando’s short comings as key lessons to improve where it had failed, from a personal opinion a friendly family atmosphere attracts more customers to come and enjoy a meal at the outlet itself rather than just taking a take away. Many families search for restaurants that can provide a play area for children to avoid them taking over the entire restaurant, Grill Addicts can use this opportunity to transform at least one of their outlets into a family friendly area to accommodate couples with children.

Grill Addicts has the potential to be just as successful as Nando’s if they steer and manage their business in the right direction. If they plan on going international it might take a while but it is not impossible. They should be willing to take risks and expand their business by introducing more outlets in different regions of Namibia before going international. Their business idea is original and unique, with the menu now accommodating meat lovers with local dishes such as ‘kappana’ as well as vegetarian options and the beloved grilled chicken. With this vast array of choices it has the potential to grow. The owner Mr. Harmse also owns Coffee Addicts which shows he is more than capable of opening more outlets, he can rely on his years-long experience and avoid making mistakes that they experienced with Nando’s outlets. Franchises arrive with operational and financial plans proven to succeed.

Furthermore Grill Addicts can apply various managerial success factors to ensure their business will be a success. The most important factor is planning, by setting realistic goals, market analysis and by making good business decisions can prevent their business from failing. A restaurant business can be quite a prosperous business compared to other industries if it is managed correctly. Customer service plays an important role in any business. Grill Addicts can improve their business by listening to their customers and by giving them the possibility to rate their food and customer service. They should also show the customers what they have done as a result of their feedback. They can only discover where they have gone wrong if they proactively consult their customers and read their rates or feedback. Offering better customer service will increase sales and build trust. An essential part of managing a business is having the knowledge and skills about the business. Communication skills is one of them, because they will have to communicate with suppliers, investors and customers which will help them with building good working relationships, it also reflects the business image. Leadership is a key skill, allocate time to mentor and coach their employees which will in return motivate employees and increase productivity. Another managerial characteristic include; financial insight and management. Being able to effectively manage their finances is critical. Financial management will help them to run their business profitably. Knowledge of competitors is just as vital, Mr. Harmse has managed the franchise of Nando’s for several years before they left, so he knew exactly how to manage a food chain and knew who they were competing against for example KFC, he learned a lot from them and his experience helped him with starting his own business.

The return of Nando’s to Namibia should be allowed reason being, an international franchise would increase economic investment and employment opportunities. At first glance it might not seem that franchising would be connected to economic growth, but in reality it creates many local opportunities. With ownership that promotes local communities, franchising creates new businesses that create new or enhanced products into local markets including the addition of new services to local economies. If Nando’s decide to re-enter the Namibian market it would boost small communities, small businesses mean more jobs, larger tax bases and expanded services. According to the Small Business Administration, 50% of new businesses fail during the first five years. With a franchise like Nando’s administrative support is offered and they usually sign a contract of a minimum of five years, which guarantees longevity of the business, job generator and an economic booster. Nando’s offers training courses and workshops to their newly hired employees, investing in employees pays off in the long run by reduction in turnover. Moreover, Nando’s would attract and continually recruit new employees. 140 people were employed at the three Nando’s outlets of which Grill Addicts hired all of them, if the franchise returns to Namibia depending on the number of outlets they are going to open about 140 other unemployed people can be hired. The more jobs there are the better the economy, since income taxes are the main source of revenue for the government.

In conclusion, Nando’s exiting the Namibian market was a blessing in disguise to the owner of Grill Addicts Mr. Harmse, because he got the opportunity to open his own business and manage it his way, after gaining experience from over 10 years as a franchise owner of Nando’s. In contrast considering all the factors Nando’s return would improve the economy with a reduction in the unemployment rate of Namibia which is currently 34%.

Reference list

Behmen, A. (n.d.). 10 ways how restaurants failure can be avoid. [Web log post].

Retrieved from E. (2018, November 5). Nando’s withdrawal from Namibia unexplained. New Era. Retrieved fromChiringa, K. (2018, November 6).

Will Nandos exit trigger investor panic. The Villager. Retrieved from www.thevillager.com.na/attitudes/14192/will-nandos-exit-trigger-investor-panic/Essential business skills (n.d.).

Retrieved March 22, 2019, from Small Business Development Corporation website S. (Reporter).

(2018). Nandos closes its doors in Namibia. Namibia Broadcasting Channel. Windhoek. Retrieved from (n.d.). Retrieved March 21, 2019 from L. (2015, November 25).

Three ingredients for global success. Retrieved from www.fin24.com/finweek/entrepreneurs/nandos-three-ingredients-for-global-success-20151125

Top 6 reasons new businesses fail. (n.d.). Retrieved March 22, 2019, from Investopedia website

Cite this essay

Nandos Company. (2019, Dec 15). Retrieved from https://studymoose.com/nandos-company-essay

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