From drivers to owner-entrepreneurs

21 July 2010

In a first for South Africa’s food service industry, JSE-listed Famous Brands has launched a black economic empowerment owner-driver initiative aimed at developing entrepreneurs.

The programme, which has been in the making for the past year, is the product of extensive input from industry experts, and is based on a compelling financial rationale for both the company and the owner-drivers.

Famous Brands – which owns the Steers, Wimpy, Debonairs, Fishaways, Black Steer, Mugg & Bean, House of Coffees and Brazilian Cafe franchises – currently owns 105 vehicles, and the intention is to convert half of the fleet to owner-drivers within the next three years.

Key to the model is optimising fleet use and productivity, resulting in enhanced earnings’ potential for the drivers, and improved customer service.

“A crucial supply chain strategy is to grow critical mass by reclaiming business which was previously outsourced,” Famous Brands supply chain manager Tony Stephens said in a statement last month.

“Significant investment has been made in upgrading our fleet and facilities in KwaZulu-Natal to accommodate greater volumes and a broader range of multi-temperature products,” he said. “As a result, we have selected this region to pilot our owner-driver programme.”

Significant income contributor

The pilot version of the programme currently being implemented in KwaZulu-Natal will be rolled out to the Eastern Cape by the end of 2010, followed by the Western Cape and Free State early in 2011, with Gauteng province to follow in the longer term.

Famous Brands CEO Kevin Hedderwick said the supply chain operations was a significant contributor to the company’s financial performance, with the division earning revenue of R1.1-billion and operating profit of R33-million for the year ended in February 2010.

“We are constantly focused on improving our margins; this programme will contribute to that goal, whilst simultaneously producing a new crop of entrepreneurs with stable, long term businesses.”

Hedderwick added that owner-managed businesses were inevitably more productive and more lucrative than company-owned operations; he said the company had experienced this in their franchises, and anticipated that the model would transform their proficiency in logistics to first-world levels of performance.

“Prudent investment in training and mentorship will increase the success rate of this programme and we are confident that there is significant upside benefit to be gained for the drivers and the company,” he said.

Developing new skills

The programme focuses on developing a new skills set for the owner-drivers, including business skills, financial competence, time management, employee training and understanding of industrial relations and legislation.

The owner-drivers are selected from among Famous Brands’ existing employees and undergo a stringent interview process. They must meet key prerequisites in terms of health and ITC credit rating and display a strong record of attendance, discipline, customer service and responsibility.

Business advice

The conversion of employees to owner-drivers comprises two phases. In the first phase, Famous Brands will guide and mentor the driver over a one-year period. During this time, the company will own and continue to insure and service the vehicle.

In the second phase, the driver will purchase and insure his or her vehicle, be responsible for running costs, and operate the business independently from Famous Brands, but still under the guidance of a business adviser.

At the outset, each driver will be responsible for employing three crew members for his or her business. These employees are typically sourced externally.

“The goal we share with our owner-drivers is for them to own their R800 000 vehicles within five years,” said Stephens. “We are confident that with efficient management of their businesses this is achievable.

“We are tremendously optimistic about the opportunities this programme affords these new entrepreneurs to achieve their aspirations.”

SAinfo reporter