Operational reports

Captain DoRegos

It’s All Good

Captain DoRegos serves quality, quick-service food at an affordable price. We are experts when it comes to whipping up value-for-money meals that you can enjoy as a takeaway or in a comfortable sit-down environment.

Captain DoRegos outlets delivered R164.8 million in turnover in their second full year of trading in the group, compared to R191.1 million in 2013. Turnover fell by 13.8% and profits were below expectations as the challenging economic environment hit the lower LSM target market particularly hard.

Franchise revenue for the year was R8.2 million compared to R9.2 million for the year to June 2013. The division contributed R2.2 million (2013: R3.8 million) to group profit before income tax.

The Captain DoRegos distribution centre was closed in November 2013 and distribution has been incorporated into the group’s outsourced distribution model. Benefits to franchisees include more frequent deliveries, which minimises the investment in inventory holdings, while still benefiting from the group’s procurement infrastructure in terms of quality and pricing.

Steps have been taken to improve the division’s profitability. From a corporate perspective, these include rationalising the division’s cost structure and increasing efficiency by sharing infrastructure with the group’s other brands. Increasing franchisee profitability is essential to improving franchisor profitability. In this regard, we have increased focus on ensuring adequate owner involvement in restaurant operations, managing inventory theft and ensuring that menu pricing remains competitive while maintaining gross margins. We have also upgraded the brand look and feel – this has included employee uniforms, decor and store signage – and we have refined our marketing efforts to better reach our target markets.

Better point of sale infrastructure is being installed at outlets to allow for accurate sales analysis and provide improved business intelligence for marketing and operations. Menu boards are being upgraded to LCD monitors, which will allow an element of animation and supplier involvement in our new look menus. Liquor licences are being implemented and seven outlets now have licences.

Employee training has been a key area of activity in the financial year and has been integrated into the group with the establishment and accreditation of three training franchised outlets.

During the financial year, 15 existing outlets in unprofitable locations were closed and four new outlets were opened taking the total number of outlets trading in South Africa to 61.

Reviewing the entire brand’s offering from a fresh perspective will be a key focus for the year. By streamlining the brand’s menu we can reduce the size and set-up cost of a store, reduce inventory levels, increase ease of operation and improve efficiencies to make the franchise model a more attractive investment proposition.

Goals for 2014 Achieved in 2014 Goals for 2015
Open 11 new restaurants Closed 15 restaurants and opened four Open eight restaurants
Revamp/relocate seven restaurants Two restaurants were revamped Revamp/relocate five restaurants
Enhance our value-added campaigns Focus changed to site-specific marketing initiatives N/A
Increase focused regional media exposure Focus changed to site-specific marketing initiatives N/A
Further entrench group disciplines and procedures Ongoing Further entrench group disciplines and procedures
Upgrade and standardise the brand’s look and feel Ongoing Upgrade and standardise the brand’s look and feel
Train employees to enhance customer experience Accredited three dedicated franchised outlets as training stores Continue to train employees to enhance customer experience
Improve business intelligence Started implementation of new point of sale system to facilitate improve business intelligence Continue to roll out new point of sale system to improve relevance of business intelligence
Increase community involvement Not progressed Further investigation required to identify the best way to involve communities for this particular brand
    Simplify brand menu and offering (set-up cost, store design, ease of operation)

Full details of our historic performance and goals are available in the key performance indicator table.