Big Macs on Famous Brands menu?

Johannesburg - International fast food chain McDonald's said on Tuesday it will sell its SA operations to a local "developmental licence" holder, because it wants to focus on bigger markets elsewhere.

This licence will give the holder the right to take over assets and operations McDonald's manages in South Africa at present. It does not include ownership of the franchised restaurants, but the buyer will run its franchise network and hold franchise rights for new branches.

McDonalds SA MD Greg Solomon said that in other countries where the development licence model had been used, it was typically valid for 20 years.

"We have an enormous opportunity to grow the McDonald's brand and business in South Africa," said Peter Bush, McDonald's divisional president, Pacific and Africa. "Unfortunately, the corporation has limited capital and at present this is being prioritised to the strategically critical large markets."

McDonald's has 130 franchises in South Africa.

The announcement coincided with the release of a cautionary notice from JSE-listed fast-foods group Famous Brands, the parent company of Steers, Wimpy and Debonairs Pizza.

However, analysts said it's more likely that Famous Brands is in talks with a chicken fast food brand.

Last year Famous Brands promised shareholders 2009 would be the year the group brings a chicken brand to its portfolio. It is already well positioned within the burger and pizza segments.

The strongest players in the chicken fast food space are KFC, Chicken Licken, Nando's and Shoprite's Hungry Lion.

"This could be an opportunity to enter the well-liked chicken category," said Coronation Fund Managers' Quinton Ivan. "Famous Brands has always said it would buy an existing player as opposed to building a brand from scratch."

Solomon said he was unaware of Famous Brands' announcement and the process of identifying a potential licence holder had "only just begun".

- Fin24.com