Leader.co.za - Management, Training and Career Advice for Business Leaders





BizAssist.co.za

Telephone: +27 21 409-7934
Fax: +27 21 409-7935
E-mail: Send us an e-mail
Web-site: Visit our web-site
Postal Address: P O Box 44214, Claremont, 7735
18 SEPTEMBER 2010
The Chicken Licken story
by Tracy O'Brien
If you have moments when standing on the precipice - before you take that leap of faith for your business and question whether it’s really true that capitalism rewards risk - think of George Sombonos.

Chicken Licken founder, George Sombonos, was the son of a poor Greek tea-room owner. Little George had a dream to make it big one day and as he grew older he would tell people he wanted to own a fast food chain. They laughed at him.

He did his apprenticeship in the fast food business in the 1970s managing his father's roadhouse restaurant, the Dairy Den in Ridgeway, south of Johannesburg. He describes it as the apprenticeship of hell.

In 1972, his father bought him an airline ticket to the US on condition he went to see his aunt in Greece on his way home. This trip was the catalyst for George’s dream. It set him on the road to developing the number-one, SA homegrown, quick-service restaurant business and the largest fried chicken franchise outside of the United States.

“I went on the trip to America with mad enthusiasm,” says Sombonos. “I would buy trade journals to learn about the restaurant business, taste 12 hamburgers and 20 pieces of chicken every day until one day, in Texas, I tasted the best chicken ever. I invited the owner of the chicken outlet out for dinner that evening and asked him for the recipe. It took a lot of convincing, but the next morning he agreed to sell it to me for US$5 000. I didn’t have that kind of money and eventually I paid him my last $1 000 in traveller’s cheques for something I hadn’t even tested. It was a huge leap of faith. He could have sold me a salt and pepper mix.”

Back at home, Sombonos mixed the spice recipe under his bed and swapped it for the existing chicken coating recipe at his father's roadhouse. Sales increased and the turnover shot up from R25 000 a month to R200 000 a month over a four-year period. “One day my uncle said to my father: "Your chicken tastes fantastic - what have you done to it? And his father replied in his thick, Greek accent: “That little “b@*&!rd” must have done something – I’ll ‘kill’ him.”

The winning recipe was given to spice giant Robertson’s Spices and they have been mixing it in vast quantities for Chicken Licken ever since.

At the age of 23, George started running the Dairy Den on his own after his father was weakened by a heart attack. It was around this same time, 1972, that KFC opened its first store in South Africa.

In 1975, Sombonos started serving black people in their cars even though it was in contravention of apartheid legislation. He said: “I felt I was giving them back their dignity.” When his father queried it, his grandfather said: “Leave him – you just count the money.” This move earned George the loyalty of the millions of customers who made him what he is today.

“Even Winnie Mandela and Tokyo Sexwale used to come to our restaurant. So it was a logical step, at that time, to expand our business to black areas,” says Sombonos.

In 1978, the Dairy Den was raking in R200 000 per month, which was good money then. “I asked my father for 5% of the profits.” Sombonos’s father replied: “You and me, we don’t share. I will get your cousin up from Bloemfontein to replace you.” George, by now married with a daughter, was not going to hand over his future business to his cousin. So he carried on working for a meager wage.

In 1980, during his father’s absence in Greece, George negotiated and resigned the lease in his own name. His father didn’t speak to him for three months, but he had earned his respect. The two reconciled three months before he died that same year.

In January 1981, Sombonos formed a company called Golden Fried Chicken, which was to be the new name until a waiter came up with a better one - Chicken Licken – which cost only R300 to register. It is a logo that is worth millions today.

Sombonos tells a funny story: “When we grew to five shops in 1982, KFC took us to court because our name was too close to its slogan – ‘Finger Lickin’ Good’. The trademark lawyers told me if I wanted to fight to keep the name, it would cost R10 000. I borrowed the money from my mother, finished my shift and drove to Pretoria with the R10 000 in a Chicken Licken packet. The receptionist was there alone - the bosses had gone for the day. Uneasy about entrusting her with the money, I told her I had 10 pieces of chicken for them and I left. The next morning I phoned to enquire if they got the money? They started running around, literally, like headless chickens,” he chuckles. The poor girl had believed me and put the money into the fridge.”

I won the case and the judge said it was a long time since he read the Chicken Licken nursery book. From then on - the ‘highway’ was open.

In a desperate effort to develop further, Sombonos gave away the first franchises, which were in Soweto and Alexandra. In 1985, he started to sell franchises at R3 000, but helped every franchisee to get going by giving him R15 000 worth of equipment and stock and didn’t charge royalties for the first four months. “As a result, I didn’t make much money,” he says, “but we were expanding nicely and by then we had 21 stores.”

Chicken Licken has since grown to 250 stores. Ten of them are company owned of which six are the most successful of the 250. It sells 100 000 birds a week and was the first fast food restaurant to introduce Hot Wings, selling millions each month.

The current annual turnover is R850 million but George is confident that by end 2010, Chicken Licken will be a billion rand business and he predicts that in eight years it will be turning over R3 billion.

Today, Chicken Licken has grown to quarter of the size of global fried chicken giant KFC. Sombonos says that every time he opens up a new store near his opposition they are like sitting ducks, or in this case chickens, because approximately 30% of their market shift their allegiance to Chicken Licken. “You can see loyalty when the two brands are positioned near each other,” he says.

Sombonos describes drive-throughs, in this case “fly-thrus”, as the future of fast food outlets and says he was the first person to introduce this concept in SA, back in 1976, at the Dairy Den, after seeing it at Wendy’s in the US.

“The country’s demography has changed in the last 16 years,” he says. “People who previously lived in the townships have started to migrate to more affluent areas. To retain the patronage of this new middle-class, we had to move our shops along with them to the suburbs. It’s been a battle, but we are making good headway with stores now positioned in many of the affluent shopping malls around the country.”

However, despite the brand’s success and positive image, there are still some traditionally white shopping centres, like Sandton City, where the management still carry deep-rooted prejudices. I am just waiting for Liberty Life to become black empowered, and then a black man at the helm won’t say we are too black,” says Sombonos.

A R50m marketing budget is dedicated, each year, to positioning the brand. Part of the strategy has been to refurbish the shops to a very up-market style, complete with Louis Vuitton mock-styled packaging. Sombonos says this is working, with some stores attracting up to 50 percent white customers depending on their location.

The menu changes in May each year with the help of menu consultants in the States. “So our menu is the same standard as any of our international counterparts,” says Sombonos.

Rain is an important element in George’s life. He is always praying for down-pours in the maize growing season as the maize price ultimately determines the chicken price. He is also paranoid about running out of chicken. As he says, “I sell chicken – not sorry.”

So what makes this man so successful, even in recessionary times? His modest answer is having the ability to read the market, perseverance and never giving up on your dream. But he has another ace up his sleeve: training. People who work for Chicken Licken don’t leave the way they came in. They become skilled. Sombonos says they have built a culture of profit share. This means on-target bonuses for all staff right down to the chip fryers, who can be frequently heard asking their managers: “How much of the daily takings have we made today?”

Asked when he intends to retire. He jokingly replies, “I am not going to retire – this business and I are like death do us part.”

His succession plan is his daughter, Chantal, who is now 32. “I also have great people, most of whom are under 40. I put aside 15% of profits for the heads of department each year. I am still going to be working for at least another five years and by then; they will all be highly skilled,” Sombonos says proudly.

George Sombonos is a real rags-to-riches story, but for all his material wealth, humility still remains his strongest personality trait. Recently, while cleaning tables to help out dressed in an Armani jacket, he was offered a R12.00 tip from a patron who felt sorry for him. If the patron only knew.

Asked what mantra he lives by, he says it is a quote by Martin Luther King: “If you haven’t found something to die for – it is not worth living”.

So the childhood dream of George Sombonos has become a reality – and there isn’t anybody who’s laughing at him now.
Source:

BizAssist.co.za
The power of the Internet has advanced in quantum leaps and bounds over the last few years. After estimating its impact on future business operations and realising that most businesses lack the resources of large corporations, we created BizAssist.co.za - an intelligent interactive user-friendly site dedicated to small and medium-sized businesses in South Africa. Visit our website.

Share: Facebook
Facebook Twitter
Twitter LinkedIn
LinkedIn Email
Email
Share
Other Print
Print Newsletter
Newsletter



About Us


Features


Tweets


Contacts