* Rising interest rates dent disposable income
* Weakest growth forecast since 2009
* Consumers rush first Starbucks
* Dunkin' Donuts to open this year
By TJ Strydom
JOHANNESBURG, May 6 (Reuters) - A fortnight after the first
Starbucks SBUX.O in South Africa opened in a trendy
Johannesburg district, queues still snaked onto the pavement, a
sign of the craving for international brands despite an economic
slowdown.
South African companies Taste Holdings TASJ.J and Grand
Parade Investments GPLJ.J are betting that demand for relative
luxuries such as coffee to go and doughnuts from international
chains will endure, even as disposable incomes are squeezed.
"It's my first time," said student Sheldon Sharma, 22, at
the Starbucks in Johannesburg's Rosebank district on Friday, a
frappuccino in his hand. "I'm not saying I'll be regular, but
I'll come back again when I'm in the area."
Taste Holdings reckons South Africa can support as many as
150 Starbucks stores and it has opened a second in the new Mall
of Africa, one of the largest in Africa's most advanced economy.
Grand Parade, which has opened 65 Burger King BKCBK.UL
outlets in South Africa, plans to open the first of 250 Dunkin'
Donuts DNKN.O stores across the country in Cape Town within
two months. Queues snaked onto the street too when Krispy Kreme
opened its first doughnut store in Johannesburg last year.
At first sight, the rush to launch international fast food
chains seems at odds with the prevailing macroeconomic backdrop.
Growth is set to be its weakest since 2009, interest rates
have climbed two percentage points since 2014, food prices are
on the rise after the worst drought in South Africa on record
and unemployment is hovering stubbornly around 25 percent.
And the lines of poor and elderly South Africans queueing
each month for government-sponsored social grants at retailers
such as Shoprite SHPJ.J are far longer than those for a $2
flavoured latte at Starbucks.
GRAB AND GO
But analysts reckon there a couple of factors which could
help the international fast food brands survive, even if the
overall retail sector is unlikely to grow anytime soon.
South Africans are flooding to cities with Gauteng, the
richest and most urbanised province which includes Johannesburg
and Pretoria, becoming 30 percent more populous in a decade.
Analysts say urbanisation goes hand in hand with a move to
convenience as South Africans put in longer hours and forego
home cooked meals to eat on their feet, while other
cash-strapped consumers opt for takeaways over restaurant
dining.
"The hectic urban lifestyle is driving the growth in fast
foods over the long term," First National Bank retail sector
analyst John Loos said.
"For the sector as a whole, there is not much room for
expansion with low growth and real disposable income going
nowhere, but that is not to say a specific brand can't do well,"
he said.
Grab a bite when you can seems to be the plan for Grand
Parade's Dunkin' Donuts stores. If they price similar to Krispy
Kreme at 50 U.S. cents a doughnut, they will be relatively
cheap, but Grand Parade is also hoping to feed a new category of
consumption, notwithstanding the economic challenges.
"We are not going for a flagship destination store, more for
grab and go stores on every corner," Grand Parade Chief
Executive Alan Keet told Reuters. "Our growth and development
targets were modelled for this economy."
At Starbucks in Rosebank, engineering student Shaun van Zyl,
who travelled 40 minutes from Pretoria to stand in line for his
first Starbucks coffee, is planning to pick up a Krispy Kreme
doughnut as well from the nearby outlet.
That is what Taste Holdings Chief Executive Carlo Gonzaga
hopes will happen, that international brands will attract
customers and make the cake bigger for everyone.
"Whenever Starbucks enters a country, it grows the coffee
market in that country," said Gonzaga.
(Editing by David Clarke)