Pizza Hut expands into Ethiopia

Addis Ababa – Pizza Hut is set to open three outlets in
Ethiopia this year, becoming one of the first international restaurant chains
to enter Africa’s second-most populous country.

The restaurants are scheduled to begin serving in the
capital, Addis Ababa, by November, franchisee Aschalew Belay said in an
interview Monday. Aschalew’s company, Belayab Foods and Franchise, will run the
local outlets of the Yum! Brands Inc. pizzeria and will have invested $5.5
million in the operations by next year, according to his partner, Michael
Ghebru. The agreement allows for as many as 10 outlets, he said.

Ethiopia is an attractive destination because of its
cheap labor and electricity, said Michael, who will run the franchise and
initially hold a 15 percent stake. There are “no major” food franchises in
Addis Ababa, making competition “non-existent,” he said.

Ethiopian openings are part of a wider expansion under
which Pizza Hut plans to boost its number of sub-Saharan Africa outlets to 100
by end-2017 from about 70, according to the company’s incoming general manager
for Africa, Ewan Davenport. About half of Pizza Hut’s business on the continent
is in South Africa, where it opened in 2015, with outlets in Angola and at Camp
Lemonnier, a US military base in Djibouti, the top performers elsewhere, he
said in an interview. He didn’t give figures.

Read also: Pizza Hut back with new strategy

Ghana, which has three Pizza Huts, is “absolutely
firing,” with the partner looking to expand to neighboring countries such as
Togo, Davenport said.

Ethiopia’s economy is forecast to grow 7.5 percent this
year, the second-fastest pace in sub-Saharan Africa after Ivory Coast,
according to the International Monetary Fund. The government’s growth plan
seeks to turn Ethiopia into a lower-middle income country by 2025. The World
Bank says per capita income of $590 is substantially lower than the regional
average.

A well-performing Pizza Hut restaurant will have “well in
excess” of 1 000 weekly transactions, according to Davenport. Michael said he’s
targeting 2 200 per week, equivalent to about $1.1 million a year, from each
outlet.

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