Pizza Hut Enters Ethiopia in Latest Expansion Into Africa

Pizza Hut Enters Ethiopia in Latest Expansion Into Africa
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  • Three outlets due to open in capital by end of this year
  • Cheap power, labor, lack of competition seen as bonuses

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 U.S. military base in Djibouti, the top performers elsewhere, he said in an interview. He didn’t give figures.

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

Fast Growth

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.

Born and raised in Germany, Michael said he was introduced to Yum! after he asked the U.S. Embassy in Ethiopia last year about opportunities for food franchises. Belayab Foods and Franchise’s owner, Aschalew, said he will return to Beijing, where he’s been based for three decades and acts as an agent for Ethiopian Shipping & Logistics Services Enterprise.

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