Nando’s Restaurant Franchise Management

1.0 Executive summary, Overall feasibility and Risks.

Executive Summary

        Nando’s is founded by Robert Brozin and Fernando Duarte in South Africa in year 1987. The first Nando’s restaurant was in Rosettenville, Johannesburg in year 1987. After few years, Nando’s is expanded to South Africa and the business is growing well and become franchise restaurant over multiple countries. In year 1995, Nando’s entered into Malaysia market. In this research, we analyse the industry by using PEST and Porter’s Five Forces to better understanding of Malaysia market.  We need to analyse the macro environment such as political, economic, social cultural and technology factors in Malaysia.

        Furthermore, the purpose of develop marketing plan is to better understanding about the 4Ps, marketing strategy, pricing strategy, competitor analysis, segmentation, target market and customer needs and wants.  First of all, the product that offered by Nando’s is the flamed grilled peri-peri chicken. Besides that, Nando’s also serve starter, sides, salads, wrap and burger. Nando’s also served soft drink and dessert.  Next, the pricing strategy that used by Nando’s is value-based pricing strategy, promotional pricing and psychological pricing in order to maximize their profit.  Other than that, distribution channel used by Nando’s is selective distribution which is operating in limited number of outlet in a geographical area. Nando’s has several promotion methods such as offer loyalty program and conduct public relation activities.

        In addition, Nando’s segment their customer based on demographic and psychographic segmentation. The target market of Nando’s is young population which aged between 18 - 35 years old, both male and female. The target market can be a teenager and working adult who want to enjoy casual dining restaurant at a nice atmosphere.  Most of the target market falls under middle income level category in a range of RM 2,500 to RM 4,000.  Furthermore, the competitor of Nando’s includes Kenny Roger Roaster, McDonald’s and KFC. Nando’s need to study their competitors in order to gain the competitive advantages.

        Nando’s operation process consists of three main part which are ordering, preparing and serving, and cleaning part. Furthermore, Nando’s operation also includes the Accounting/Financial Department.  Besides that, Marketing, Advertising and Promotion Department will also be discussed in the operation plan.  Lastly, we will discuss the management process which has four functions in Nando’s

Overall Feasibility

Nowadays there are more and more people in Malaysia prefer to eat outside compare to cooking by themselves, so there will be the higher chances for Nando’s to increase sales. And the taste of food provided by Nando’s also are very attractive for the customer in Malaysia and there will be easier to get customer also. The price of the food provided by Nando’s also can consider acceptable by the public because the meals serving is worth for the price. The estimation profit that we will earn in the first year of our operation will be RM1,583,540 ,and second year we will get more profit and estimate will be RM 2,023,702 , and for the third year we will earn around RM 2,551,038. We really hope that Nando’s can give us a chance to join as a franchisee.

Risk

        The risk that Nando’s will be facing is there are many competitors in Malaysia. For example McDonald, KFC, Kenny Rogers, Burger King, Shushi King and more and more. All of these competitor have their own strategy to attract customers and Nando’s have to compete with them also, it is really challenging because currently Nando’s are using the similar strategy too that’s mean the competitive part is not really strong. So all of these will be some of the risk that setting up a new Nando’s outlet will face.

Most of the people think that buying a franchise is a sure way to become millionaire, but in reality there are a lot of risks that need to be considered before buying a franchise. First of all, franchise requires huge capital. To start up a franchise business will requires capital to pay for your start-up costs and royalty fees, it can be anywhere up to $3million or even more.  Second, being a franchisee are inflexible.  Though you’re earning profit but you have no right to say anything as you need to directly follow the franchisor, even just a small little thing you will be kicked out of the business if you do not follow the rules and regulation. Moreover, selecting the location is also important to the franchisee, same brand but different location can cause huge differences of sales and revenue. Apart from that, mistake made by other branches may destroy your business. Even if only one franchise branch made a mistake, customers will assume that every branch is the same and it will probably drag you down.

2.0 Market/Industry Analysis

PEST Analysis

When Nando’s wanted to move in their business in Malaysia, they have to study about the political, economic, social cultural and technology factors of the Malaysia. PEST analysis is used to study about the external environment factors of the Malaysia that can affect Nando’s business.

Political

The political factors are affecting a lot on a business. All organisations must follow the law of the government as government policy can affect business. Nando’s must be very clear in start-up their business in Malaysia. HALAL certification is one of the certificates that need to be applying which is a recognition that shows that is a halal restaurant. A “Halal Certified” stamp on a label is usually seen by the Muslim customers. With the Halal certificate, it means the restaurant has been thoroughly investigated by Islamic organization. Therefore, Nando’s has halal logo as they only serve halal chicken and it is suitable for Muslim customer. Besides that, every restaurant in Malaysia will be issued a “Permis Bersih” sign with grade A, B or C. These sign represent the hygiene status of the restaurant that is under Food Hygiene Regulation 2009.  These grades are used to inform the customer about the level of cleanliness of the restaurant and to ensure the operators keep to the standard of hygiene. Nando’s must ensure that their restaurant is on the standard of hygiene as giving trustfulness for their customer as their food is hygiene and safe.

Economic

Economic factors play an important role in operations of a company. If an economy of a country is doing well, the business will develop rapidly and successfully but if an economy faces recession these business will face negative impact on their sales.  According to our research, Malaysian economy increased to 6.2 in the September quarter of 2017, compared to the past 3 months which is 5.8 (Appendix 1.0).  Nando’s sale is dependents on the economy of the country.  If Malaysia economy is doing so well, citizens will earn more disposable income and willing to spend more in such restaurant. In December 2016, Gross National Disposable Income of Malaysia was reported at RM 1,176851 and this shows that the record is keep rising from the previous year (Appendix 2.0). Therefore, the disposable income of Malaysia is increase and it can help company in increase the sales.  Other than that, the unstable currency rate of Malaysia will affect the operation of the company. Nando’s imports its raw material from South Africa therefore currency rate will affect operation and expenses of the company.