If you have moments when, standing on the precipice before you take that leap of faith for your business, you question whether it’s really true that capitalism rewards risk, think of George Sombonos. The story of how this son of a Greek tea-room owner grew a roadhouse on the outskirts of Johannesburg into a R600 million business that boasts the biggest fried chicken franchised brand outside the United States, confirms that big rewards can follow big risks.
Although he was serving customers at the age of seven and knew the difference between a close corporation and a Pty (Ltd) by the time he was 11, Sombonos never expected a cushy rise to the top of the family business; he always knew he’d have to work very hard for a small salary. “The only thing that kept me there in the beginning was the fact that my father and my uncle sent me to North America once a year. I would go to Brazil for a wonderful holiday and then on to the States,” he recalls. Determined to improve the business that he was eventually tasked with managing, Sombonos spent this time in America exploring the fast-food industry and tasting every type of fast food he could afford to buy. “Wherever I was, I’d find the fast-food strip and make my way along it, sometimes eating ten hamburgers a day,” he says. It is not surprising that he was frequently ill.
But the exercise paid off. One day in Waco, Texas, Sombonos tasted fried chicken that was so good he knew he simply had to learn how to make it. Presenting himself to the business owner, he begged to be given the recipe. “I showed him my passport and explained that I wasn’t from the States so that he knew I couldn’t go into competition with him.” The owner asked for $5 000, a hefty sum in 1975 when a cup of coffee cost eight cents, but after much negotiation, Sombonos got the price down to $1 000. It was all the money he had and he gambled it on a recipe that he had no guarantee was even genuine.
“I had just enough money to get to the airport for my flight back to Brazil and then nothing for the week before my flight back home. But I couldn’t tell my father what I’d done because he would have gone berserk,” relates Sombonos. It was while sitting homeless and penniless on a bench in Brazil that his first big risk met with a little bit of luck, albeit from an unlikely source. He smiles as he remembers the story. “There was a kind girl who saved me, a prostitute who was looking for business. But I had to explain to her that I was in more dire straits that she was. I guess she felt sorry for me because she took me back to the brothel where she worked and got me a job for a week serving drinks to clients.”Sombonos got home, but his worries were far from over. “I was terrified that my father would find out about this crazy thing I’d done buying a recipe for $1 000,” he recalls, so he mixed the chicken recipe and hid it under his bed before secretly introducing it to the roadhouse menu. “At about that time Kaizer Motaung of Kaizer Chiefs fame and his gang started eating at the roadhouse. When people saw Kaizer eating at our place they wanted to eat there too. And regardless of the Apartheid laws, we served everyone, no matter who they were. My father thought I was mad and that we’d lose our licence but my grandfather told him to keep quiet and count his money and leave the selling of the food to me.” The results were nothing short of astonishing.
As Sombonos relates: “By changing the recipe and giving people some dignity, we went from taking R25 000 a month in 1972 to taking R200 000 in 1978.”
To what his father attributed the sales growth we’ll never know, but it certainly wasn’t to his son’s genius. Sombonos’ request for a 5% profit share was abruptly turned down with a reminder that if he wasn’t happy with his lot, Dad could always bring up a nephew from Bloemfontein to run things. Living in a tiny flat in Doornfontein, he struggled on but the threat planted a seed. “The thought of someone taking over everything I had worked so hard for was terrible,” he recalls. So when the owner of the property offered him the lease while his father was away on holiday in Greece, Sombonos jumped at the opportunity. It was another big risk but as Sombonos explains, “I didn’t know it then but I wanted that shop so badly that I was prepared to die for it. This is perhaps the difference between an ordinary person and an entrepreneur – that you want something so badly you’d do almost anything for it. I never told people how I felt because I was afraid they’d think I was mad, until I heard a Martin Luther King quote earlier this year that if you don’t find a cause to die for, you’re not fit for living. Then I realised I wasn’t abnormal in wanting something so badly.” His father was so angry on his return from Greece that, as Sombonos relates, he didn’t speak to his son for a full three months.
On 1 January 1981, the signs for the old Dairy Den were taken down and replaced with the now-famous Chicken Licken signs. A legend was born and Sombonos was on his way. He started franchising soon after even though he admits he knew nothing about it and that his father, who saw the business opportunity, thought it was far too risky and advised against it. But Sombonos went ahead anyway. “I had a friend who had a Golden Egg franchise and I borrowed his franchise agreement and copied it from start to finish. The first franchise owner was in Zola, Soweto, but we needed to build a shop and I had no architects, nothing. I asked the sign painter who had done the Chicken Licken rooster head to draw what the shop would look like and we built the second Chicken Licken from those drawings,” he explains.
It would be nice to relate how the business went from strength to strength, but Apartheid politics raised its ugly head and the townships spiralled into a state of unrest. Sombonos remembers this as a very bad time for business. “You couldn’t take anything into the townships because the people were burning all the delivery vehicles. We got a panel beater to beat up some small trucks for us so that they were inconspicuous and we took supplies to the shops at night.” Sombonos had sunk all his money into two township stores but as the unrest grew and people were afraid to venture outdoors at night, sales plummeted. “All of a sudden where under normal circumstances the shops would be thriving, I had major cash flow problems.” It was time for another leap of faith.
Sombonos’ attorney put him in touch with a group of private farmers who could loan him the cash needed to make the repayments to the bank. “I gave them everything,” he remembers, “I pledged my house, all my shares, even the jewellery on my wife’s fingers. At Christmas time in 1985, I couldn’t even buy a toy worth R5 for my daughter. We lived hand to mouth, just working and saving but the unrest continued and there was no peace.” Again the risk paid off and the business started improving in 1991.
Looking back on that time, Sombonos says he pulled through for two reasons: “Firstly, I had no alternative and secondly, I was fortunate in that some kind people, including my bank manager, took risks on me and put themselves on the line to give me time to pay back.” Although some of his competitors might beg to differ (he drives a hard bargain and is a frequent thorn in their side), forging good relationships with people is something Sombonos has done well. This is particularly evident when it comes to staff; many of his managers started out as chip fryers and have benefited from his guidance and investment in their development. “The people can make you or break you in this business,” he says, a statement that refers to both staff and customers.
And Sombonos has been in touch with his customers from the word go. “It’s what has differentiated us. We did things differently by giving the market what it wanted. When KFC first came to this country, they didn’t serve chips, only mash and gravy, which was the American standard. But, coming from my background, I served chips. If you are in the shop every day, you know what the customers want. You know what sells and what doesn’t,” he says.
He believes his customers were also loyal because they knew they would be served good quality food: “I was told initially that because my customers were black, I must take smaller pieces of chicken. That was the mentality in those days – that black people must get inferior quality and off-cuts and left-overs. But I insisted on the same quality for everyone. And once, when I banned Kaizer and his gang from my place for misbehaving, they went to eat at our competitor but came back after two weeks and promised to behave if they could only eat our food. That’s when I realised the power that good quality gives you.”
As the company grew, this connection to customers was to prove vital in building and strengthening the Chicken Licken brand. Although he knew nothing about marketing, he approached an ad agency to shoot a range of television commercials for Chicken Licken. “We decided to use Joe Mafela who played S’dumo from the television series ‘Sgudi ‘Snaysi so we went to the producers but they wanted a lot of money for the rights. I didn’t have it all so I agreed to pay them in three instalments.” That was three instalments of R180 000 each – a lot of money in the late 80s. But again, Sombonos went with his gut and took the risk, and again it paid off. The advertising campaign with the now legendary “It’s good, good, good, it’s good, it’s nice” jingle aired in May 1989 and was a marketer’s dream. Sales went up by 47%. “It was like wild fire, the response was unbelievable,” he remembers. “I wasn’t sure, to be honest, that the advertising campaign would work as well as it did but I liked the idea and everyone was watching the programme at the time. Even Nelson Mandela while he was in jail said it was his favourite programme.” Suddenly, suppliers like Rainbow Chicken sat up and took notice, as Sombonos relates. “They used to tell me I was Mickey Mouse but suddenly the joke stopped and they were saying, ‘Your sales are up, George.’” Today, Chicken Licken has some 230 stores across Southern Africa, a serious competitor to global brand KFC.
Although it has established itself as one of the biggest fast food brands in South Africa (it was rated second biggest in the Sunday Times Markinor 2004 Brands Survey), the company still faces some uphill battles, the most recent one being with shopping malls. “Getting into the malls is vital, vital, vital,” says Sombonos. But time and again his applications for store space have been rejected. Explaining the reasons why, he gets first indignant and then angry, “People think Chicken Licken is a downmarket business that sells downmarket food to downtrodden black people. Their idea is that we are going to bring ‘undesirables’ into their centre. They hide behind LSMs but in reality it’s a race issue.” He’s been told on at least one occasion that Chicken Licken is ‘too black’ for a particular mall and explains what he thinks is the cause of such responses: “A lot of the shopping centres are controlled by pension funds which are controlled by people who don’t understand or don’t want to see that South Africa is changing. Malls are seeing customers from all race groups. Our customers have disposable income. A Chicken Licken store costs R1,8 million to R2 million to set up.”
But slowly, the company is winning the battle, getting space in upmarket shopping malls, and Sombonos is well on his way to achieving his goal of making Chicken Licken a R1 billion business by 2010. When asked if he ever imagined success of this kind, he answers: “I always believed in Chicken Licken but in the beginning I just wanted ten shops. I discussed it with my father a few months before he died and he said, ‘Georgie, if you have ten shops you’ll be the richest Greek in Johannesburg!’ What I didn’t realise was that I was in the right place at the right time with the right product. And as the townships were liberated and people had freedom of movement, Chicken Licken just grew.” About the tough times, he says, “Determination was my biggest success factor. I would rather have died than give up.”
It’s something to remember. So the next time you’re faced with the decision to take a risk, step off the edge of the precipice. Take the leap. Think ‘Chicken’.
The three most critical factors that have determined the success of Chicken Licken:
- Flanking the opposition by going into the uncontested townships first and expanding fast. If you’re the first to get into a market, you have the opportunity to create a strong foothold, develop customer loyalty and ‘own’ that market. This is what Chicken Licken did.
- The determination to build a brand from day one. Without any formal training, Sombonos understood the value of a brand. He has fought court battles with KFC, who accused the Chicken Licken brand of capitalising on its ‘finger licken’ good’ pay-off line but each time he has won. His vision for the first Chicken Licken adverts paid huge dividends and built a brand that South African consumers could relate to.
- A unique chicken taste that has never been changed and attracts new customers every day. The old Texan chicken recipe, originally hidden under Sombonos’ bed, has stood the test of time.
Sombonos’ advice on:
- Starting a business:
Have a simple business plan and develop a thorough knowledge of the business you want to start, preferably practical knowledge.
- Franchising a business:
You should own the first franchise and it should be successful before you even consider franchising. Then become an expert in your field in order to lead the franchisees to success. Your franchisees must be successful for you to be successful.
- Staying focused and motivated in the face of challenge:
Believe in yourself; believe in your concept and idea and believe in the power of focus.
- Competitors: Competition is good for you. It pushes you to keep improving with research and gaining new knowledge. Strategy will keep on changing as circumstances change and new trends emerge. Your burning desire to keep on moving will ensure your continuous success.