A South Africa seafood chain’s international journey
In 1995, when Fats Lazarides opened the doors to Ocean Basket, a seafood-only restaurant in Pretoria, South Africa, he had no idea that in 20 years it would grow into a business with 189 stores in 11 countries.
His goal back then was to serve affordable seafood in generous quantities, and when there were road blocks, he worked around them. His landlord prohibited him from selling salads, various wines and other beverages, for example, so he encouraged diners to bring their own. In those early days Ocean Basket included a small deli, and much of the seafood was sourced locally from South African waters.
The concept caught on quickly and today there are 166 Ocean Basket locations in South Africa alone, with others in Zambia, Namibia, Swaziland, Botswana, Zimbabwe, Kenya, Nigeria, Egypt, Mauritius, Cyprus and Dubai, United Arab Emirates. Restaurant openings in Sweden and Saudi Arabia are slated for September and 2016 will see other locations in Qatar and Amman, Jordan. By the end of 2017 CEO Grace Harding estimates there will be between 250 and 300 locations worldwide.
“It’s an unusual model, our business,” said Harding. “We deliver abundant seafood at an incredibly surprising price in a warm, Mediterranean-style environment. And it’s a model that appeals both to the consumer and to the businessman out there.”
Unlike other seafood restaurants that feature chicken, beef and pork on their menus too, Ocean Basket is focused exclusively on seafood. Its top sellers are hake, calamari and prawns, while mussels, sardines, salmon, tuna, pangasius and selected line fish are prominent, too. As the restaurant chain expanded, it quickly outgrew the ability to source seafood locally. Today local sourcing constitutes just 20 percent of the menu in South African locations and the rest of its products are imported.
“We source hake from Namibia, prawns from India, pangasius from Vietnam, calamari from North America, patagonica from Spain and other products from the Netherlands to name just a few countries,” Harding said. “We’re one of the biggest buyers of patagonica C5, a species of calamari, in the world. It’s unfortunate that we can’t source more seafood locally, because in South Africa there’s a lot of great seafood caught, but it is sold overseas. So we have to go overseas to source our product.”
Going overseas is an expensive prospect given the state of South Africa’s currency, the rand. (In August 2015 ZAR 12.90 was equivalent to US 1 and EUR 0.067.) Ocean Basket is a privately owned company and Harding could not disclose any sales figures. “I don’t know how we deal with the increasing prices of seafood,” she admitted. “But South Africa has been at the mercy of currency volatility for many years now so it’s not a new challenge.”
“Our buying team consists of very carefully selected specialists and we believe that the combination of skill sets underpinned with a deep bond with key suppliers helps us deliver on our customer promise of everyday value for money.”
“We also manage by understanding various species’ seasonality and ensuring we take full advantage when it presents. For example, some seafood prices have come down in the past 18 months and we’ve passed all these savings on to franchisees and customers. Our business is not about making the most money out of wholesale, it’s about sourcing the best product at the right price so that we build a globally loved and respected brand. Being privately owned gives us the advantage of truly focusing on the dream, the global love and the brand. Not at the expense of profit, but as a driver of profit.”
Harding said Ocean Basket’s restaurants present a good value opportunity for new franchisees. “At ZAR 3 million each (USD 231,013; EUR 203,015), our restaurants cost less to build than any other business in South Africa.”
The company’s growth escalated in 2010 and 2011, after locations opened in Dubai and Cyprus. Ocean Basket created an international department, now staffed with 11, and worldwide the company has over 7,000 employees. “We don’t publicize any sales figures, but the Cyprus business, which is owned by us rather than a franchisee, is extremely profitable,” Harding said. “Even through the Greek crisis we found consumers continued to perceive value for money at Ocean Basket, so we were able to manage our way through it. Perhaps we’re not producing profits as huge as some other food brands but our focus is more about building a strong business and being globally admired and adored.”
In South Africa and Cyprus, Ocean Basket has its own distribution centers and trucks. Warehouse and delivery crews are educated about the product and no-one outside of the company is allowed to touch or distribute product on its behalf. “We’re very obsessed with being close to our product, because our product is everything,” Harding said. “What keeps me awake at night is this: when there are 250 to 300 stores, how will we maintain that intimacy and closeness with our clients, franchisees and licensees?”
There are many other challenges associated with doing business in South Africa, not the least of which is the exchange rate and its economic effect on the stores’ day-to-day operations. This is compounded by the erratic electric power supply, the high price of fuel and the difficulties of accessing well qualified, skilled labor due to inadequate education standards and the high rate of unemployment. “But this all we know because we are South African, born and bred,” Harding said. “We’ve always worked with the challenges because adversity and restrictions were part of our brand from day one. It’s taught us to remain agile, alert and productively paranoid. We take nothing for granted and the challenges keep us going – because when things are going well, complacency sets in and trouble starts! We simply remain better than our competitors in all fronts, from buying to serving the tastiest seafood in a warm and friendly atmosphere.”