Cyril Ramaphosa the new Big Mac

McDonald’s Corporation has announced that founder and chairman of the Shanduka Group Cyril Ramaphosa is the Developmental Licensee (DL) for McDonald’s South Africa. He is now responsible for the operation and growth of McDonald’s restaurants across the country.

The “passing of the baton”, as it was frequently referred to during the announcement, took place at McDonald’s Woodmead in Johannesburg. The event was attended by Dave Murphy, division president for McDonald’s Asia-Pacific, Middle East and Africa; Greg Solomon, MD of McDonald’s South Africa; Phuti Malabi, CEO of Shanduka Group, of which Ramaphosa is chairman; as well as McDonald’s SA management, owner/operators, Shanduka Group directors and management, restaurant staff and media.

Murphy says the deal took time to conclude as both parties wanted to get it right, and both are tough negotiators. Both parties have agreed not to reveal the value of the deal. McDonald’s had made clear its plans to go the Developmental Licensee route in South Africa some time ago. This does not mean it is exiting the country, but evolving its ownership.

The DL business model makes up more than 50 of McDonald’s 117 markets worldwide and has existed for over 20 years. The DL owns all the assets in the market, unlike a conventional McDonald’s franchisee, including owning and/or leasing the real estate (restaurants and office buildings). However, there is no visible change in operation of the restaurants for customers.

Murphy says of the deal: “We are excited about the new relationship between McDonald’s and Cyril Ramaphosa. We’re confident this structure will help us better serve our valued customers in South Africa. The market is award-winning within the McDonald’s system and has consistently produced positive results.

“Mr Ramaphosa is the right person to continue that business momentum, and McDonald’s is committed to providing our ongoing support to this new venture.”

Ramaphosa says: “It is an honour for me to have been awarded the Developmental Licence for the McDonald’s South Africa business. We will focus on satisfying our customers, developing our people and maximising business opportunities. This relationship will have a positive impact on jobs, shareholders and ultimately McDonald’s customers.”

MD of the South African group Greg Solomon says of the deal: “McDonald’s South Africa is a strong and robust business, and we’re confident in its future with Mr Ramaphosa as its new owner. We have an unwavering focus on our strategic business goals and most importantly on our customers. For all of our customers in South Africa, it is hamburgers as usual, and for our employees, franchisees and suppliers, it is business as usual, with the benefits of accelerated expansion and responsible growth.”

The transaction is still subject to certain operational conditions being satisfied, including securing approval from the Competition Commission among other requirements.

Shanduka Group was established in November 2000 with significant growth ambitions in South Africa and the rest of Africa. Its vision is to be a leading African investment holding company that creates value and makes a difference. The group has over 20 investments in the beverages, resources, financial services, industrial energy, telecommications and property sectors.

Shanduka sees particular synergy between its Coca-Cola beverages business and McDonald’s South Africa.

Fast facts on McDonald’s South Africa:

- The group has operated in SA for 15 years, opening on 11 November 1995

- There are now 145 restaurants in all nine provinces

- Some 60% of restaurants are owned and operated by franchisees

- Group employes more than 7 500 people

- Over 75% of restaurants have a Drive Thru, which contributes significantly to business

- In 2002, the breakfast menu was launched, available in 95% of outlets

- In 2008, 24/7 trading was launched, now operated in 95% of outlets

- McDonald’s SA is 100% locally managed and partners with local suppliers, the majority of which are sourced in SA

- Winner of the Medium Company Category in the Deloitte Best Company to Work For 2009 and the Large Company Category in 2010

- Industry winner for Consumer Business in the Deloitte Best Company to Work For 2010

- In 2010 McDonald’s South Africa won six regional awards for the McDonald’s Asia-Pacific, Middle East and Africa region, including best overall performer

- McDonald’s was an official sponsor of the 2010 Fifa World Cup. In South Africa this translated into 1200 children being selected as McDonald’s Player Escorts, walking hand in hand with players onto the pitch during the World Cup.