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By Adele Shevel | Jun 22, 2009 | COMMENTS [ 0 ]

FAMOUS Brands - the listed fast food company that owns Debonairs Pizza, Wimpy and Steers, among other brands - is believed to be in discussions to buy Galito's, the flame grilled chicken operator.

Galito's, which commentators liken to the Nando's brand, has 54 stores around the country.

Though Famous Brands continues to perform well in a tough economic environment, the business does not have a chicken offering - a glaring hole in a country that clearly likes this protein.

The group released a cautionary earlier this month saying it was in discussions about a transaction.

The fast food market has proved resilient in tough economic times, while many consumers choose less expensive eateries to restaurants.

The KFC brand is investing more than initially reported last week - up to R2,5billion in upgrading existing buildings, opening 200 to 300 new stores and broadening the menu over the next three to five years.

This will create up to 9000 jobs in South Africa in addition to the existing 570 stores and 19000 employees.

Keith Warren, managing director of KFC Africa, said this was part of a longer term strategy to build up the brand "to what we believe is the optimal capacity for South Africa".

The two-pronged strategy involves opening more stores and broadening the offering to capture more business during the day.

Breakfasts will be offered as well as innovative beverages such as slushes, smoothies, shakes and krushes.

KFC is cash flush and has 42percent of the total branded restaurant chain usage in the country.

Warren said the group, which is part of Yum! Brands, is also reviewing bringing Taco Bell to South Africa.

Meanwhile, McDonald's is considering handing control of its South African operations to a local partner.

Peter Bush, the firm's divisional president in the Pacific and Africa, said the group had not been able to take full advantage of the opportunities in South Africa and have been looking to achieve the best results in the market.

Greg Solomon, managing director of McDonald's South Africa, said the fast food company is investigating an opportunity to appoint a development licensee.

The group has three ownership models around the world - about 20percent involve a local licence being given to an individual or business entity which gives them the right to operate for a period, normally 20 years.

Solomon said McDonald's had been operating in South Africa for 14 years and the last year had been the group's best performing period.

"We want to grow the market more aggressively with a credible local business-person who can run this market possibly even better.

"Our decision to seek a local partner reflects our confidence in the country."

The group currently employs more than 7000 people in South Africa.


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