FIFI PETERS: David Shapiro from Sasfin Securities and I could be a laughing about the vegan trend, but it’s certainly not without promise of really great returns. Famous Brands this morning came out with an interesting statement. This is the franchiser whose brands presently include Debonairs, Steers and Fishaways. Famous Brands was announcing its foray into the vegan and the vegetarian market. It is a popular trend right now, and has become a lot more popular with more and more of us becoming health conscious. As I said, it seems to offer lucrative returns.
How Famous Brands is doing this is it has bought a majority stake into a company called Lexi’s Healthy Eatery. This is a vegan-focused restaurant, a group that also supplies plant-based meals to other restaurants, as well as other retail stores. We have the co-founder of Lexi’s, Ezio Nichele, with us on the Market Update.
Ezio, congratulations on the deal. Tell us more about this business that Famous Brands is taking a bite from.
EZIO NICHELE: Okay. Thank you very much, Fifi, and I appreciate your invitation. Lexi’s Healthy Eatery was started by myself and Lexi [Monzeglio] in 2018. We got together at the beginning of 2018, and we discussed a few ideas about creating a plant-based vegan restaurant. I wanted to go full vegan restaurant, and Lexi convinced me not to go full vegan but be more open to everybody, like trying to attract people that aren’t necessarily 100% vegan.
FIFI PETERS: Like me and David [Shapiro].
EZIO NICHELE: Exactly. Well, David is a handful. [Chuckling]. We have a couple of options that are not vegan, and so we are not strictly vegan, and we don’t ever say we are vegan, but we do like to be as vegan as possible and we like to attract the vegan clientele obviously. We are doing this for the vegan, to open everybody’s mind to the vegan lifestyle and habits.
FIFI PETERS: Sure. Talk to us about this clientele and how many more of us, particularly here in South Africa, are considering this route – just based on the number of people walking in into your restaurants.
EZIO NICHELE: Well, the clientele is quite small, but you’d be surprised how the spectrum actually goes across quite a few fields. We know it’s not only [for] the vegan, but it’s also [for] people who are trying to live a healthier lifestyle. So people who go to gym, who run, who cycle, who play sports, we attract them as well because they know it’s like clean food. It also attracts people who are gluten-intolerant. There are a lot of gluten-challenged people. Most of our menu is gluten-free, so it opens up to them as well.
And then people who are diabetic or have heart conditions. It opens up to a lot of people who have certain ways that they want to eat. So it’s not only the vegans, but it’s a wider spectrum of people.
FIFI PETERS: All right. Got it. You clearly caught the eye of a larger player in the market, in the form of Famous Brands which has bought a 51% stake in your business. Tell us why you said yes to that deal, and what Famous Brands is bringing to the table.
EZIO NICHELE: In 2018, when Lexi and I met, one of the first conversations we had was like, ‘Where do we want to be in five years’ time or 10 years’ time?’ Both of us we want a plant based eatery all over South Africa, nationwide. We don’t want one restaurant. We don’t want two restaurants, we want multiple restaurants. We want to expose this kind of eating-habit lifestyle to many people all over Africa. That was our first conversation.
From the start we wanted to grow, we wanted to go big.
Immediately what comes to mind is Famous Brands because they are the experts in this field. They are the biggest food group. They know all about franchising, they’ve got the infrastructure, they’ve got the know-how, they’ve got the finance, the HR, the distribution chains. So immediately we thought they would be the best partner.
Obviously we were a bit scared because they are very meat-orientated, but for us it’s also an opportunity to say, okay, let’s try and partner with Famous Brands, even if they are very meat-orientated, and let’s show them that there’s food other than meat and chicken and cheese. Hopefully we can open up their minds as well and change a bit the way they are doing business.
FIFI PETERS: Quite inspiring.
EZIO NICHELE: It goes to more than just food. It’s the plastic, it’s the carbon-neutral sustainability.
FIFI PETERS: Quite inspiring, the power of a vision and the importance of knowing where you’re going from the get-go. Since 2018, give us a sense of the revenue and the profit growth that you’ve experienced.
EZIO NICHELE: Okay. This is an interesting one, because we’ve been through some interesting times.
FIFI PETERS: Lockdown – not being able to go to a restaurant?
EZIO NICHELE: That was terrible for us. We went through a lot of pain. In 2018 we opened up and within the first three weeks that we were open we had queues outside our restaurants at lunchtime during the week, Monday to Friday, running queues. It was going very well. The profits weren’t exactly there, because we were still trying to create the name and we weren’t looking at the expenses that well, but we were going nicely. Eventually we caught some people’s eyes and we managed to open up the second branch in December of 2018, in Modderfontein as a franchise, and we involved as a joint venture a very small minority partner.
Then at the beginning of 2019, we saw The Zone at Rosebank, and we loved it. We applied for a shop there and we opened that one in July, 2019. That just took off. The numbers we were doing there were unbelievable. It was a real hype. People were loving it. We were [doing] basically full breakfast, lunch and supper. The Zone was amazing. [Pre-]Covid was amazing as well. So it was a really great area and things were really booming.
And then March 2020 came and that cut our legs hugely. We went through a lot of pain.
We still managed to open up a franchise store in June 2020, in Pretoria, which was behind the ‘boerewors curtain’; everybody said it’d never work in Pretoria. It actually worked out so well, because it’s such a good shop. It’s actually our busiest store at the moment. It’s really beautiful. It’s big, double story, it’s amazing. It’s in Hazelwood, it has this container vibe. It’s really great. That’s a franchise store, a 100% franchise store. We’re not partners there at all. Then in December, 2020, we opened up in Sea Point, Cape Town, which also took off really well.
So we’ve been on upward trend, even through Covid. We’ve managed to stay alive, and whatever there is, but we fought hard and the landlords have been very good to us. The banks have helped us out as well. But I’d say more the landlords really did help us out.
FIFI PETERS: How much did the 51% stake cost Famous Brands?
EZIO NICHELE: Well, if you ask Famous Brands, it cost a lot, and if you ask us it didn’t cost enough.
FIFI PETERS: [Laughing] I see you are well trained to answer that question. Wow. Good on you.
Just a parting shot – what will your role be? Yours and Lexi Monzeglio, who my producer Kaldora has told me actually used to work at Moneyweb. So congratulations to her. But what will your role be in this new structure with Famous Brands as a partner?
EZIO NICHELE: We are still the directors, together with other directors from Famous Brands. We’ll take on the lead. We’ll take on the strategy. Lexi will still develop the menus. She’s the face behind the brand, the menu development, and the creative around the brand. I’m more on the operations/admin side of things, but we’ll both be very, very involved with the whole strategy of the centre kitchen, opening new stores, developing the QSR [quick service restaurant] concept. We really want to take this into retail as well, make it affordable for everybody.
FIFI PETERS: All right. I’ll look forward to trying you guys out. I certainly will make a visit to one of your eateries. But congratulations to both of you. We will have to leave it there. Ezio Nichelle, the co-founder of Lexi’s Healthy Eatery, joining us on the story regarding Famous Brands’ acquisition of a 51% stake in the business.