You wouldn’t think George Sambonos is a multi-millionaire. He may drive a Porsche, but he spends his Fridays helping clear the tables in the rush of Friday lunchtime at his flagship store. Hence, two words describe him: ‘humble’ and ‘shrewd’.
The son of a Greek entrepreneur, Sambonos was born in Hillbrow, South Africa. His life has been filled with doses of luck and bucket-loads of hard work. It all began with his father’s business, started by his mother to pass the time. The Dairy Den was a franchise, from the US Dairy Queen, selling ice cream and fried chicken to customers in their cars. He worked at the Dairy Den from the age of 18 and would stay until the wee hours every day.
He uses words like “awful” and “horrible” to describe working for his Jekyll-and-Hyde father. Sambonos recalls days when he’d have to go outside and cry for five minutes in his determination not to quit. Another time, his father threw a bread knife at him for dropping a glass—the knife stuck into the skirting board. He remembers his father as a good businessman but an awful boss. Sambonos is the opposite with his daughter, Chantal. He considers himself strict but fair, believing that you catch more flies with honey than vinegar.
It was the benign side of Sambonos senior that threw tickets to America across the dining room table and gave the young man a chance to make a discovery that was to change his life. The condition of these trips was that he visit his aunt in Greece on the way back.
The overseas trips allowed him to soak up everything he could about the US restaurant business. Sambonos would spend his days walking from one outlet to another, trying out the food and taking photographs of the menus. He claims that he still does this, but is now more selective and secretive. When he takes a picture these days, he gets his wife to hold the menu, while he pretends to take a picture of her.
It was on one of these trips, in 1972, that Sambonos tasted the fried chicken which would change his life. He asked the business owner in Waco, Texas, to give him the recipe. He wore the owner down to making a deal but did not have the $5,000 asking price. The chicken shop owner took pity on Sambonos because he was young. Further negotiations brought the price down to $1,000—all the money he had for the rest of his trip.
Sambonos came back too afraid to tell his father what he’d done. He began mixing the spices under his bed and adding them to the chicken at his father’s roadhouse, from a recipe he hoped was right. Chicken sales grew. The Dairy Den went from taking in R25,000 a month to a staggering R200,000 a month in the course of a year: a fortune in those days.
It was a good three months before Sambonos came clean, if you can call it that. It was a visiting relative who asked Sambonos’s father what he’d done to the chicken and the old man said: “That little ‘bastard’ must have done something—I’ll kill him.” The secret recipe for the addictive chicken is safely in the hands of Robertsons Spices, and its chemist was made a director in the company to safeguard the company secret.
With business doing so well, thanks to Sambonos’s bold move, he thought it the right time to ask for a 5% profit share. This did not go down well with his father, who told him to either be happy with what he’s got or his cousin would be called in to replace him. So when the opportunity came up to sign the store’s lease in his name while his father was in Greece, Sambonos jumped at it. It was a move motivated purely to save the lease, but his father didn’t speak to him for three months and died three months after their reconciliation.
Rebranding was next. In 1981, Sambonos wanted to name the store ‘Golden Fried Chicken’, like the name of the company he’d just formed, but was turned down because the name was too descriptive. A despairing Sambonos had his head buried in his hands when one of his waiters suggested the name, Chicken Licken, from the children’s book, Chicken Little/Chicken Licken. The waiter received R300 for his idea.
The Chicken Licken signs went up and by 1982, Sambonos had taken over the business and was franchising into the townships. The first franchise was in Zola, Soweto. Sambonos admits to giving away the first franchises. By 1985, he began selling them for R3,000 and giving the franchisee R15,000 worth of equipment to get them started. A television commercial featuring a well-known black actor drove up sales in 1989 with the jingle “It’s good, good, good, it’s good, it’s nice.” Sambonos found out what his customers liked and used it to make money.
Setting up in the townships of South Africa during apartheid was another risky move by Sambonos and in 1984, things took a turn for the worse. The growing turmoil in Soweto meant that delivering chicken to the township was nearly impossible. Business suffered.
Sambonos has come a long way since then, with 245 outlets and franchisee payments of 12% of their turnover, up from the pre-2012 payments of 10%. These consist of 6% for royalty fees and 6% for the advertising share. The group is said to turn down five people a day. This is all testament to how much the brand has grown. There is an outlet set-up cost of at least R2.8 million ($354,670) and an initial franchise fee of R120,000 ($15,200). The flagship store in northern Johannesburg cost R5 million ($633,240) to set up, excluding the R500,000 ($63,330) for the generator. Unlike the 1980s, a lack of electricity is a concern these days.
Sambonos is still at the helm, ensuring stringent quality control. All the outlets receive their ingredients from the same licensed suppliers; use the same specs; are furnished with identical equipment; and have access to the trademarks.
This rigorous approach has led to problems when expanding in the continent. The company opened two stores in Mauritius, with a three-year royalty break. The country only had two chicken producers, one of which supplied Kentucky Fried Chicken (KFC); they had no choice but to use the other. The outlets did well, but when the royalty break ended, so did Chicken Licken in Mauritius.
Zimbabwe’s capital, Harare, had four outlets which were doing extremely well; one of them was a top performer in the entire group. That is, until the country ran out of foreign exchange to pay for ingredients.
Nigeria’s five outlets in Lagos closed down due to issues with the franchisee. According to Sambonos, the franchisee wanted to refranchise to others at a lower rate and loosen quality control.
Chicken Licken plans to invest in the rest of Africa, beyond their 12 stores in Botswana. Sambonos says this is provided they get the same quality chicken in those countries. The company is awaiting expansion into the continent by Rainbow Chicken, South Africa’s main chicken supplier. Sambonos feels that the key to success is to control the chicken and the advertising. In Nigeria, the cost of fuel to run generators has to be thought about as no business can rely on the electricity supply.
Sambonos says: “Nigeria’s only got 30 million chickens, that’s all. The big producer is the former president and he won’t let you import chicken, so you’re finished.”
As if going into the rest of Africa is not hard enough, Chicken Licken has had to battle the image of being a township brand in its attempt to enter wealthier malls. There is an apparent fear that the outlets will bring in the wrong element of people.
Sambonos was annoyed when O.R. Tambo International offered to slot them in the back. He believes his brand will win over the sceptics.
The company’s annual turnover is close to R1.4 billion ($177.4 million) and is powering its way towards its R2 billion ($253.5 million) target for 2014. Sambonos says that the company reaching R3 billion ($380.2 million) by 2017 will be his cue to step down from handling the suppliers and the advertising. “They can’t mess it up after that,” he chuckles.
The 2012 budget is R64 million ($8.1 million) for advertising and Sambonos oversees the ideas right down to attending the photo shoot.
The group is also a firm believer in taking care of its employees. Every three months, the best performing manager receives a R6,000 ($760) to R12,000 ($1,520) bonus and the rest of the outlet, about R600 ($75) each.
Sambonos says: “If the manager is right, then the rest of the outlet is right.”
Kind to his employees, but merciless to his competitors, Sambonos has seen his fair share of battles, or caused them, as some might say.
The first legal battle, in 1982 with KFC, was over the name. Sambonos opened up an outlet in Lenasia, south of Johannesburg, not far from a KFC. The new store took half of KFC’s business in just two weeks. The battle lines were drawn.
KFC claimed Chicken Licken’s name was too close to their ‘Finger Lickin’ Good’ slogan. Sambonos says the trademark lawyers told him he could change the name or fight in court. He chose the fight, dropping off the R10,000 legal fees in a Chicken Licken plastic bag that ended up in the office fridge. Chicken Licken won both the case and the appeal. The proud Sambonos says KFC offered him R250,000 to change the name, a sum he clearly refused, adding a sly: “Harry Swartz (of KFC) said, ‘Hell or high water, I’ll see you in Bloemfontein [High Court]’.” They never made it there.
The second battle was born of Sambonos’s usual trips to the US in the early 1980s. Walking down 6th Avenue in New York, he saw a KFC banner advertising KFC’s popcorn chicken. Loving the idea, he called his lawyer to put in an application with the South African registrar. A while later, back home, he saw a KFC advert for KFC Pops in the paper and did some digging into how this was even possible.
Apparently, his paperwork was not pushed through due to clerical forgetfulness. Sambonos demanded due diligence as he had placed his application first. The matter was settled at the registrar; KFC lost again.
By the time the hotwings saga began in 1992, Sambonos was already a thorn in KFC’s side. KFC held a convention in Swaziland for its franchisees, who were served fried hotwings. A friend’s phone call prompted Sambonos to call up his lawyer and say: “Hotwings! See if we can grab the name quickly.” The lawyer found out that a company called County Fair owned the name in South Africa, but had failed to use it. Sambonos’s lawyer offered them R750 ($300 at the then exchange rate) for the name, pointing out that their ownership could easily be expunged and they’d get nothing from it. The lawyer signed a check on the spot.
Sambonos describes how he quietly went to Rainbow Chicken and asked them to supply him with his wings, even drawing a diagram as to where they should be cut. In the meantime, the creative entrepreneur would buy normal chicken wings and cut them himself. He sold them at one outlet—six ‘hotwings’ and chips for R2.95 ($1 at the then exchange rate)—and had the manager keep all the receipts just so they could use the name for the minimum required period. This paid off because KFC decided to start selling the hotwings its sister company in the US had introduced, only to be informed by Rainbow Chicken that Chicken Licken had beaten them to the order and would use the same name.
Since the name legally belonged to Chicken Licken, KFC offered Sambonos about R85,000 ($29,460 at the time) for it. “No deal,” said the man who had already paid R750.
According to Sambonos, his company sells an average of 12,000 cases of hotwings a week and is now importing XL wings to keep up with the growing demand. The original ‘six hotwings and chips’ meal now costs R21.95 ($3).
Sambonos attributes his business savvy to his constant need for something new. He still reads trade journals every week and travels as much as he can. He says that the US isn’t as secretive as the South African market. There, when a company creates something new, they test it and it becomes common knowledge.
Sambonos says: “If somebody has got something good and you’re not going to go to jail for it, use it.”
Wise words from the humble millionaire who owns the trademark “Soul” in the food category, and probably has his eye on a few more words.
Packing Light In School Bags
Former South African rugby star John Mametsa provides alternative energy solutions for the state. With his wife Tumi, he says their future in the business is bright.
In his prime, former Blue Bulls winger John Mametsa had rugby fans screaming in delight at his try-scoring exploits at Loftus Versfeld Stadium. Between 2001 to when he retired in 2010, he had brought smiles on people’s faces.
Hidden beneath the rugby bravura on display on a weekly basis were Mametsa’s entrepreneurial exploits, which led him to co-found Soltech, a solar technology company he started with his wife Tumi.
Soltech has bridged the gap between solar technology and user-friendly consumer products by creating school backpacks, outdoor umbrellas and lifestyle bags custom-fitted with solar power.
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The smiles are back but Mametsa has brought them in a different form.
Soltech’s main aim is to help companies achieve their corporate social investment targets and make a real difference in the lives of school children who might not have electricity at home, or whose access to electricity is limited.
“Generally, I love giving back. Just to see the kids smile brings joy to me,” Mametsa says.
“It is the best space I could have asked for. Other than when I was involved in rugby, this is the best thing I could have ever been a part of.
Putting smiles on kids’ faces is the best thing. Because we are dealing with children, we have aligned ourselves with people that want to make a difference.
“We don’t stop at just giving them the bags where they can charge phones and study at night but we also educate them about the social ills that come with roaming on the internet and social media.”
During this period of Eskom blackouts, uncertainty about South Africa’s energy and a widening chasm between the haves and have-nots, he says Soltech’s products make a difference in the lives of ordinary citizens.
In a sense, they’ve taken the might of solar technology and put it right in people’s hands. The school bags come with a solar-powered battery, which has a night lamp and cellular phone battery charger installed.
“With everything that’s going on at Eskom now, they (citizens) are using millions of liters of diesel per month, just to keep the lights on,” Mametsa says.
“Hence, it’s coming back to hit our pockets and they (Eskom – South Africa’s national energy provider) are raising the electricity prices again. Such things we have to read about so that, as we grow, we educate the people that we are selling the bags to.
“At some point, you need to convert [to reusable energy sources], you need to start using solar energy. We are still fortunate that there’s an Eskom in the first place. What about those countries that don’t even have electricity at all?
“Yes, we have power cuts but the people that really need the bags are people in the rural areas.”
Admittedly, Mametsa was the pretty face and Tumi conceptualized the idea when they started. But their partnership was perfect in more ways than one. Tumi, just like her husband, had a massive entrepreneurial drive.
While Mametsa was playing rugby, he would dabble in taxi and printing businesses – an uncommon trait among sportsmen and sportswomen who are at the peak of their powers. Tumi was no different. As a student, she would sell hair and cosmetics products, something that sharpened her business senses.
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And despite a successful 11-year career in corporate as an accountant and financial manager for companies such as Alexander Forbes and the Film and Publication Board, Tumi took a bet on herself and dedicated her time fully to building Soltech.
The result was that, in just the company’s second year, they have signed a memorandum of understanding with Finland solar technology company Tespack. Tespack founders Caritta Seppä and Yesika Robles were last year named in Forbes ’s 30 Under 30 Europe.
The joint venture will see Soltech come out, among other things, with a solar-powered, fast-charging power bank, which should totally disrupt the smartphone accessories market.
“There’s going to be skills and knowledge transfer,” Tumi says.
“The DTI (Department of Trade and Industry) is also backing us on the partnership because we need them and their funding to assist us. We will be hiring South Africans to work the machinery, which was something that was very attractive to the DTI.
“The Tespack partnership confirmed my belief that our company could grow from a small tree to a forest someday. Once we manufacture in-house we can streamline the process. And there are so many other ideas for products I have, such as ladies’ handbags and stuff.”
Here at home, Soltech has partnered in CSI projects with Liberty and Exxaro and they hope to grow their client base in the next couple of years. It is a huge endorsement of their products and should see them salve some of the hurt from the country’s electricity crisis, especially to those who need it the most.
‘Worth Millions And Billions’
Terence Terenzo, the award-winning South African hairdresser and founder of hair salon group Terenzo Suites, on his biggest investment decisions and blunders.
What is your investment philosophy?
One of my philosophies is to really analyse ‘is this an investment or is it a money pit… Are you sure you got a good investment and not a liability?’… Over the last 10 years, I’ve tried to invest in things that don’t absorb all my time and energy.
So if someone were to say to me, ‘you can work your butt off seven days a week and we will give you a million rand a month, or you can take it super easy and do the absolute minimum but you can have R400,000 ($27,700) a month’, I would rather take the R400,000 because that would free me up so much more.
I would have time to do things that are important and other projects. So, for me, it is about setting up passive income businesses instead of creating businesses that need huge amounts of management.
What are some of the big investments you have made over the years?
Most of them were in property but this, Terenzo Suites, is one of the biggest investments I have ever made. It was many many millions. And then on the stock market, I’ve played around on the Johannesburg Stock Exchange where we have invested quite heavily. I would use it, then look at the market and sometimes pull the money out and move it. I have also invested in Naspers.
Have you had any regrets?
If any entrepreneur tells you that he hasn’t had that [an investment blunder], he is lying. So, what happened was I bought a property in 2008, just before the [recession]. I was stuck with it for years and even when I sold it, I sold it many years later at the same price I bought it.
I bought it in an absolute inflated stop end, and it was really at an all-time high and I had to sell it at an all-time low… But the main thing for me about those kind of things is that you learn from them and you must not beat yourself up for too long.
Try and see what you learned from them.
Why did you invest in the hair business?
I think the hair industry is going to explode in South Africa and the whole continent, if you just think of the possibilities of wigs, hair pieces, hair colors and relaxers. Millions of women before weren’t so worried about their hair but as the world has changed so much, all of them want to look amazing and they want to look current, fresh, sexy, and that is all a part of the hair industry.
What should you consider first before you invest in your hair?
I think the one thing is to have a professional conversation with someone instead of just doing your own thing and, usually, hairdressers are quite happy to consult with you without charging you before you make a serious investment in hair pieces or wigs.
How big do you think the hair industry is in Africa?
I think it is worth millions and billions… and I think it is an undiscovered industry that is still going to explode. I don’t think we have scratched the tip of the iceberg with this.
A Germ Of An idea
The microbiologist-turned-entrepreneur Babajide Ipaye started making good-looking shoes to fit his size 48 feet but decided to create them for others as well.
Selling shoes was probably the last thing Babajide Ipaye, a microbiology graduate, envisioned doing. But when by the age of 10, he was already wearing his father’s shoes, a size 44, he knew that some day that he would step in that world.
The only child of his parents, who passed away in a car accident when he was only 11, Ipaye was raised by his grandparents and extended family members who shaped the early years of his life.
“I had a lot of people who were trying to nurture me and they had different professions. So for example, one was an artist and I was endeared to him, another one was a medical doctor, so my granddad wanted me to study medicine and another uncle was a computer scientist, so I was kind of confused growing up. I wasn’t sure what I wanted to do, so I kind of lived the life of almost everyone that influenced me,” says Ipaye.
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That confusion helped Ipaye cut his teeth in various industries early on in his career. His medical doctor uncle influenced his career as a microbiologist where he worked with Ideas International Bio Technology Services, spending his days cleaning up oil spills and bacteria.
Then followed a stint in Information Technology (IT), a move also inspired by another uncle, where he worked with Tranter IT Infrastructure Services and Computer Warehouse as an analyst deploying managed technology services for multinationals like Guinness, Total and KPMG.
“At this point in time, IT was very hip and we happened to be one of the early pioneers in the tech space which was a very exciting time and considering where I was coming from in microbiology, it was a new field for me, I was working with multinationals and the exposure was amazing, it gave me a very broad sense of how organizations function.”
But Ipaye soon became dissatisfied with being put in a silo. There was too much structure and rigor due to the size of these multinationals and he became bogged down with a lot of systems and processes, which ultimately stifled his creative juices. His solution was to start his own IT company, Torque Technologies.
The company began providing IT equipment and technology services in its early days to multinationals before quickly creating a niche for itself in the fiber optics space. In early 2003 to 2005, the Nigerian telecoms era had just started booming and Ipaye and his partner saw a first-mover advantage in fiber optics by providing training to firms in Nigeria, which they did for the next 10 years.
By 2015, Ipaye decided he wanted a new challenge outside the IT world. After parting ways with his partner, he began to ponder about his life-long struggle with footwear.
“So I said to myself ‘why don’t I make my own shoes?’ So I went on the internet, did a bit of research and came across a school in the Netherlands called SLEM. I called them up and found out about the shoe-making course and I said since I was on holiday, why don’t I take some time off the business and explore how to make my own shoes and I went to the Netherlands.”
Keexs was born. The goal was to make shoes that fit Ipaye’s size 48 feet but also looked aesthetically pleasing. But making shoes for him alone would prove to be too costly.
Ipaye decided to make shoes for others as well. He would focus on the athleisure market, which is a portmanteau of ‘athletic’ and ‘leisure’, a market that has grown to the stage where it is no longer a trend but a mainstay in Nigerian fashion.
To stand out in the competitive footwear market, Ipaye decided to add some African elements to his innovative footwear brand and focused on outsourcing the production to a factory in the Netherlands while he focused on the product and design to save on cost.
The aim in the long run was to move production to Nigeria where he could fulfill the brand’s social mission of providing employment and skills training to unemployed youth. However, to make the business viable, he had to make a minimum of 1,000 pairs of shoes to achieve economies of scale. Next came the challenge of securing startup funding.
“From my previous experience of starting my technology business in Nigeria, I came to realize that the cost of funding in Nigeria is very high and also there are a lot of businesses chasing funding and the risk level of most potential investors in Nigeria is very conservative and they don’t want to invest in stuff they are not sure about.
“So I read about crowdfunding and consulted a company in the Netherlands and I came across a site called kick-starter which is a US-based platform that offers a global crowdfunding platform to innovative ideas and projects, hence we started the first innovative and social focused brand in Africa,” says Ipaye.
In just over two years Ipaye has managed to grow the business through leading e-commerce sites like Jumia and Konga as well as via its own website which receives orders from countries around the world. The shoes sell for anywhere from $40 to $60, with over 8,000 pairs of shoes sold till date.
Keexs has about 18 outlets in Nigeria with retail partners in Kenya, South Africa and Guadeloupe and Nairobi.
The company also sells through social media channels where they boast over 15,000 followers on Instagram. The long-term goal for Ipaye is to secure enough funding to set up a factory in Nigeria, which he is looking to raise through an amalgamation of funding sources including grants and loans.
“We realized very quickly that economies of scale is critical to drive the growth of this business therefore there is a need for a lot of capital. There are four sides to this chain; production, design, distribution and retail. The problem with a lot of businesses in Africa is that they are expected to do everything from start to finish along that entire value chain and what that does is, it stifles the growth of the business,” says Ipaye.
The big-time hit when CNN profiled Keexs on its African Voices show. Since then, they have managed to establish themselves as an innovative social brand focused on empowering unemployed youth in Nigeria. Next on the to-do list for Ipaye is establishing a production line in Nigeria, and then taking his brand global.
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