Chicken chain takes retail route to U.S.

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While the nation's biggest fast-feeders turn to international expansion for growth, a feisty South African chicken concept is doing the same here in the U.S., except it's giving consumers a taste of what's to come.

Nando's Chickenland, the San Diego-based unit of Nando's Group Holdings, in Johannesburg, is making its debut in the Western U.S. through its line of sauces and marinades built around the African peri-peri pepper as a way to gain acceptance by Americans before attempting to open a single U.S. restaurant.

Founded in 1987 by South Africans Fernando Duarte and Robert Brozin, Nando's started as a Portuguese-style restaurant called Chickenland that served fire-grilled chicken basted with sauces made with the hot pepper named for the Swahili words for "spice of fire." The two bought the eatery and recast it as Nando's Restaurant, playing off Mr. Duarte's first name.

There are now 483 franchised units and another 50 company-owned stores in Africa, Australia, New Zealand, the U.K., the Middle East and Canada. Another 400 restaurants are slated for expansion in the U.S. and Canada in as early as 18 months, said Nancy Mammorella, CEO, Nando's Chickenland. By starting out at retail, Nando's avoids the "absolute expense of starting a restaurant chain in the U.S.," she said. "Also, we think the flavor and personality will lead people to the restaurant through another medium."

Nando's four Peri-Peri Pepper Sauces sell for $2.99. Its three marinades, priced at $3.49, come in traditional BBQ, lime and cilantro, and sun dried tomato and basil varieties. Four cooking and grilling sauces sell for $3.99.

Ms. Mammorella wouldn't outline sales goals beyond "more than $1 million" for its startup year.

going local

Since its retail entry at Western grocery stores nearly a year ago, Nando's marinades have sold $212,789 in supermarkets, drugstores and mass merchandisers (not including Wal-Mart), according to Information Resources Inc. The pepper sauces have sold just over $90,000.

Considering the costs associated with building a restaurant chain, starting out at retail makes sense to Frank Roth, VP-marketing of GE Franchise Finance. Going retail "is a solid way to enter a market and you can do it on a local level. It's more a tactical marketing play and you can replicate that model into other markets."

Right now, money is an issue for the company. Despite an aggressive expansion plan, Nando's struggled in recent years and went private in April after it delisted from the Johannesburg Stock Exchange. The company is spending less than $5 million on media, but a TV spot backing the launch could ruffle a few feathers. Created by Hunt Lascaris, Sandton, South Africa, the spot opens in a barn with a chicken clucking away and then barking as a voice-over describes the spicy sauces. The end frame says, "No Animals Were Harmed During the Filming of This Commercial. They Were Eaten." Swat, Del Mar, Calif., handles media buying and planning.

"We have sort of a cocky attitude," said Ms. Mammorella. "With the ad budgets we'll be able to come up with, we're not afraid to push the envelope." Overseas, Nando's has developed a reputation for advertising as bracing as its sauces, including a radio ad using a Bill Clinton impersonator who waxed on receiving oral gratification from a "chick."

Doug Armantrout, publisher, Food Beat's Chain Account Menu Survey, said Nando's is entering the U.S. at the right time, since the chain's spicy grilled chicken works off current health and bold flavor trends. "It's out with the bland and in with the bold."

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