Pizza Hut expands into Ethiopia

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Published Apr 26, 2017

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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.

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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.

BLOOMBERG

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