Mac Brothers - August 2019

MAC BROTHERS

MAC BROTHERS

All the Ingredients for

Continental Success PRODUCTION: Karl Pietersen

Bakery equipment, bulk cooking equipment, coffee machines, dishwashers, fryers and pasta cookers, flat tops and grills, kitchen and restaurant design and much more is the expert offering brought by South Africa’s Mac Brothers. Established in 2002 to bring a vastly improved service offering to the restaurant industry, Mac Brothers has grown to become a full turnkey solutions provider. CEO Craig Roff talks to Enterprise Africa about how the business is going out and grabbing new continental opportunities.

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INDUSTRY FOCUS: MANUFACTURING

// TOVER THE YEARS, AS WE GREW, WE TOOK ALL OF THE EARNINGS FROM EACH YEAR AND PLOUGHED IT BACK INTO THE FACTORY SO THAT IT WAS STATE-OF-THEART. WE INVESTED IN ABSOLUTELY FANTASTIC EQUIPMENT WHICH IS SOME OF THE BEST IN THE COUNTRY //

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//

In the early 2000s, a group of restauranteurs sat together and talked about their frustrations in the industry. While competition, pricing and differentiation were all key concerns, one of the most important worries was the quality of equipment that was being delivered to restaurants as well as inefficient kitchen designs. After some discussion, this problem was identified as an opportunity. The group, many of whom remain in the restaurant industry today, pooled resources and established Mac Brothers, a South African company that manufactures catering equipment, designs kitchen layouts and provides other professional services.

Craig Roff was a part of the group and today he is CEO at Mac Brothers.

“The idea when we started was to offer a service to clients that we were looking for from equipment suppliers of the time. We thought we could change things and do it better,” he says, like a true entrepreneur.

When the company was established in 2002, standards in the industry were different. Kitchen equipment suppliers had become too comfortable. “Up until then, the customer would order a bunch of equipment that would get delivered to the pavement and the customer would call the plumber and electrician to connect things up,” says Roff.

At the time, GDP growth in the country was reasonably strong. Business confidence was good. People were happy to invest and open new outlets.

Mac Brothers saw the gap in the market for a player that could deliver quality.

“We started with a manufacturing facility in Johannesburg and we started designing the restaurant and the kitchen for the customer, and that wasn’t being done in South Africa at the time,” details Roff.

“We invested a lot of money into software to design kitchens and show the customer what a kitchen could look like before ordering. We believed we could take all of that hassle away, design it to order in advance, come and install for the customers and remove

MAC BROTHERS

headaches and problems. The idea was to half the amount of time it takes to open a restaurant.”

As the company grew, its advanced skillset and experience became obvious for all to see and the Mac Brothers brand became one of the industry front runners in the production and supply of high-quality catering equipment.

Growth catalysed the addition of a service team and further investment into the company’s manufacturing capability, ensuring that its abilities became truly world class.

“We added our own service department in which we had a team of technicians on the road in different areas and we built that up over the years,” says Roff. “All training happens in the warehouse first, and then teams go out and handle repairs on all equipment. All of our competitors were outsourcing to third parties so we wanted to keep it in house, offering a better service, and carrying the stress for our customers.

“Over the years, as we grew, we took all of the earnings from each year and ploughed it back into the factory so that it was state-of-the-art. We invested in absolutely fantastic equipment which is some of the best in the country. Our Salvagnini panel bender, from Italy, was the first in South Africa. Our factory was used as a showroom to display this piece - a new one today would cost around €1.2 million,” he adds.

GPI DEAL A milestone moment for Mac Brothers came in 2014 when a deal was struck with Grand Parade Investments (GPI) – the JSE-listed empowerment company which owns a number of international brands in South African hospitality – to acquire a majority shareholding in the business.

This move positioned Mac Brothers as a provider of catering equipment and kitchen solutions to the likes of Burger King, Spur and several others. “They also own hotels and casinos, and they thought they could integrate into all of

their brands and casinos by purchasing Mac Brothers. Since then, I have been CEO and I have been driving the company forwards for 19 months. We have been restructuring, redirecting and refocussing our activities,” says Roff.

The company has started on a diversification programme which will see it enter new market segments in new industries but always remaining focussed on manufacturing of stainlesssteel products.

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INDUSTRY FOCUS: MANUFACTURING

“We are the second largest stainless-steel manufacturer in South Africa within our category, says Roff.

“We’ve aggressively done a lot of R&D over the past two years and we have spent almost R2 million doing it. We are now seeing the sales come through and it has already paid for itself – we are blown away by that.

“We have introduced a new medical range which is all stainless steel and lends itself to our factory. It has taken off very well and has been very well received. There isn’t anyone else in South Africa doing it right now and, on the pathology and mortuary side, we have made great inroads. I believe it is going to be a fantastic growing part of our business going forward.

“We have also become involved with ventilation and extraction canopies. We have bought in

a product called Amerex Fire Suppression Systems from America.

We have the sole rights for Africa and we are rolling our extensively in the mines, on extraction canopies in restaurants, and in hotels. It’s doing very well and it lends itself to the full turnkey solution that Mac Brothers offers as a company in industrial catering equipment and industrial kitchens.”

Diversification is an important strategy to ensure growing technical capability, cross selling opportunities and a reduction in risk exposure. For Mac Brothers, the result has been a sustainable business with more than 2000 products, 3000 satisfied clients, four branches and more than 250 employees.

“Growing into the medical industry and focussing on bespoke

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products and solutions has been a change for us in the past two years. Limiting what we do and concentrating on a set market rather than trying to be everything for everyone has also been a different approach,” says Roff.

AFRICAN RECIPE Diversification at Mac Brothers does not only mean entry into new industry sectors, but also new geographic markets. For 17 years, the company has built a reputation in South Africa as a quality service provider for its clients and now Roff is keen to develop that reputation on the continent where there are major opportunities for growth.

“Our key focus is to align ourselves with partners in Africa and extend our growth into Africa,” he

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says. “Currently, we have nine different countries that we sell into across Africa and we want to grow that to 13 or 15 in the next two years. We want to establish the Mac Brothers brand in Africa and the Indian Ocean islands.

“Kenya, Rwanda and Ghana are strategically important for us now. We were engaged in Angola previously

// CURRENTLY, WE HAVE NINE DIFFERENT COUNTRIES THAT WE SELL INTO ACROSS AFRICA AND WE WANT TO GROW THAT TO 13 OR 15 IN THE NEXT TWO YEARS //

but when the oil price dropped we had to pull out as there was no business but Angola is starting to flourish again so those four countries are definitely on our radar.

“Those countries are ones which we have identified with massive growth potential but also with limited risk,” he adds. “We need an environment where it is conducive for a South African company to do business alongside a local partner. The rest of Africa is still slightly less conducive and it can be difficult to trade. We need regions where the economy and government are stable, corruption is dealt with, businesses are wanted, and infrastructure is in place.”

There is already a Mac Brothers branch in Harare and the company has expanded in Africa alongside its clients that have sub-Saharan African presence. Over the past year, the

company’s success in Africa has been significant and has relieved pressure on the South African operation which has been trading against a difficult economic backdrop, with slow GDP growth and fewer restaurant openings.

“Our strategic objective is to limit our exposure in South Africa in terms of manufacturing for local companies and rather concentrate on the African market to keep our factory sustainable,” details Roff. “I believe the South African economy will turn, and is turning, but I believe we have another 12 or 18 months before the full turn materialises. While that is happening, to keep us running sustainably, our drive has been into Africa. We started with that strategy 12 months ago and we have executed really well. Our growth into Africa in terms of revenue has grown 100%

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INDUSTRY FOCUS: MANUFACTURING

// CURRENTLY, WE ARE WORKING ON A R1.4 MILLION UPGRADE TO OUR R&D DEPARTMENT WHICH IS A KEY PART OF OUR BUSINESS // year-on-year and we are targeting 70% growth in the next financial year.

Our diversification into new areas such as medical and fire suppression, and also cutting down our stock holding, has helped us to streamline and develop efficiencies.”

Beyond Africa, Mac Brothers will wait for the right opportunity.

While the company has already

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demonstrated its capability operating in foreign markets, there remains big opportunity in South Africa and Africa.

“We have been in Australia a couple of times, and New Zealand, and the reason for that is we have been following local South African brands that have expanded there,” Roff explains. “We containerised kitchens in South Africa and shipped over, installing very successfully. As for marketing our product and selling into those areas, it’s not something we are looking to do right now and I think we have a massive job to do in Africa where there is a lot of potential to make a lot of money before we look at other countries which are much further away from us.

“All our product is IEC certified and that is the global certification on catering equipment so we can ship to any country.”

COMPETING ON QUALITY Away from its core of catering equipment, Mac Brothers now has divisions focussing on design, technical services and professional services. Across all business units, the company has dedicated itself to quality service and quality products. It is this dedication to quality that sets the company apart as, according to Roff, competing on price is not an option.

“There are three large payers in our market and we feel the pressure all the time,” he says. “I would say our competitive edge is the world-class manufacturing facility that we have which our competitors do not have.

Also, the service that we offer in the industry and the flexibility that we have in terms of modifying something special helps to give us a competitive edge. Everyone in South Africa plays in the same pricing range and works

MAC BROTHERS

// THE IDEA WHEN WE STARTED WAS TO OFFER A SERVICE TO CLIENTS THAT WE WERE LOOKING FOR FROM EQUIPMENT SUPPLIERS OF THE TIME // with the same pricing structure so our choice is to compete on quality.

“We invested in all new machinery including new press stakes, punching machines, lasers and welding lines. Currently, we are working on a R1.4 million upgrade to our R&D department which is a key part of our business.”

These investments into quality will help to separate the company from the rest going forward, and this will be extremely important if Mac Brothers is to reach its ambitious targets.

“With our world-class fabrication facility, we have the capacity to double

our turnover from where we are now, with little added cost. We will fill that capacity with the growth that we are searching for in Africa. In four years time, I might have a different opinion.

There have been many South African companies that have headed into Africa and tried to do something but they don’t always succeed,” says Roff.

After starting the business during a shift in the industry, Mac Brothers is now at another turning point. If it can go on to succeed further in Africa, this ambitious and quality focussed organisation can easily pitch for the continent’s industry leading position.

Firstly, the company must continue to delight its local customers and build its brand in new markets by displaying the entrepreneurial spirit which helped establish it 17 years ago.

“There has been a big downturn in the past two years and there has been a lot of uncertainty. It’s been very tough for us to gage, judge and plan with the economy the way it is.

That is why we have gone into Africa.

Africa has a number of large longterm projects,” Roff concludes.

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