Passing on the torchMugg & Bean, the iconic South African coffee shop brand, finds itself in the hands of new owners. Julia Smith reports.
The success of Mugg & Bean has turned the name of its founder, Ben Filmalter, into something of a legend within the food service industry. Since the inauguration of the brandÔÇÖs first coffee shop on the waterfront in Cape Town in 1996, he has demonstrated an unswerving genius for recognising exactly what consumers want and will pay for.
Filmalter and his wife were originally inspired by a visit to a little boutique coffee shop in Chicago. The unique combination of food, coffee and outstanding service made a lasting impression. To this heady mix, Filmalter was then able to inject marketing and commercial skills meticulously honed during a long career in the food service industry. The result was a new coffee shop proposition that would fill a prize niche in the burgeoning fast-casual dining sector. It would appeal to shoppers and business people during the week and families at weekends. Coffee was to be the namesake, but catering was the financial cornerstone of the business, with fast-casual dining accounting for around 70 per cent of turnover.
Generous portions, fantastic fast food that made no compromises on quality, smiling serving staff and of course, bottomless kegs of great coffee quickly made the first branch a hit with customers. Development of the Mugg & Bean concept as a franchise opportunity began in earnest two years after the establishment of the first outlet. Franchising allowed for rapid expansion of the business in a way that would not have been possible with other models, while allowing Filmalter to retain absolute control over the nurturing of the brand, giving full licence to his creative genius for marketing. 
Over the years, Filmalter has repeatedly stated that the companyÔÇÖs success has been derived principally through a culture of renewal and innovation. Restaurateurs, in his view, have much in common with high fashion retailers. The proposition on offer must be in constant evolution if the restaurateur is to be a trend setter, rather than a trend follower. According to Filmalter, it is a culture and ambience of unrelenting renewal that has retained and consolidated consumer interest in Mugg & Bean.
Recently, for example, Mugg & Bean pioneered the introduction of South AfricaÔÇÖs favourite tea, Rooibos, in the form of tea expresso as a healthy alternative to caffeine-laden coffee. Another trailblazing initiative has seen the introduction of Wi-Fi access in many restaurants.
The brand and the company have been completely re-invented three times in the last 10 years. The menu is changed and renewed every six monthsÔÇöno trouble has ever been spared to ensure that every aspect of the customer experience stays fresh and interesting. However, Filmalter has always been careful to stay true to the core elements that set Mugg & Bean apart in the marketplace. ÔÇ£The reason for the brandÔÇÖs world-class success is because of the cut-above quality and extraordinary value for money. We are always more generous with our portions, offer high quality food and have outstanding signature dishes and baked items. We have meaning in consumersÔÇÖ lives,ÔÇØ he commented.
The Mugg & Bean brand has proved unstoppable. Between 2000 and 2005, the business could point to annual growth in the region of 35 per cent. By this year, there were 99 branches in South Africa, 10 in the Middle East and a number mushrooming in the USA to take advantage of the decline of Starbucks brand. Branches have also appeared in neighbouring Namibia and Botswana.
Careful research has underpinned the expansionÔÇöprior to market entry, each country is meticulously researched, in order to understand the distinct characteristics of the indigenous food service and coffee shop industries and to see how existing offerings could be improved upon.
Not surprisingly, such success has attracted great acclaim within the sectorÔÇöand, ultimately, an ardent suitor. Famous Brands is Africa's leading quick service restaurant and casual dining franchisor. With a global footprint of 1,602 franchised restaurants and a portfolio of premium brands including Steers, Wimpy, Debonairs Pizza, FishAways, House of Coffees and Brazilian Caf├®, Mugg & Bean should become a sought-after addition.┬á┬á
In July 2009, Famous Brands announced the acquisition of the South African and African business of Mugg & Bean for a cash consideration of R104 million. The transfer of the business became effective on 1 September.
Commenting on the deal, Kevin Hedderwick, chief operating officer of Famous Brands, said: ÔÇ£The GroupÔÇÖs stated strategic intent has always been to acquire and grow best-in-class franchised brands and the Mugg & Bean brand fits perfectly into this strategy. This is a brand which, since its inception, has been sought after by potential franchise partners, landlords and consumers alike.
"We have been interested in the Mugg & Bean business for a long time,ÔÇØ he continued. ÔÇ£We are confident of not only integrating it into our existing and unique business model, thereby extracting synergies and adding value as a consequence, but also rolling out the concept further across the South Africa and Africa landscape. We feel privileged to add this premium brand to our portfolio of leading brands,ÔÇØ he added.
Filmalter said: "Since its inception we have nurtured the Mugg & Bean concept and steered the business to the leading position it enjoys today. We are delighted to pass the torch to Famous Brands, whom we are confident will ensure that the concept is further developed and its success continued into the future."
Until the end of the year, Filmalter will remain part of the management team along with Michael Maree, managing director of Quantum International Franchising, the holding company of Mugg & Bean. The aim is to ensure a smooth handover and integration into the Famous Brands business. Thereafter, Famous Brands will focus on developing the brand within Africa. The deal does not include business interests in other parts of the globe.
Elsewhere, the world remains FilmalterÔÇÖs oyster and he still has ambitious plans for the brand. ÔÇ£We are in the process of exploring opportunities to expand elsewhere in the world. We developed a world-class brand and believe that now is the time to share it with the world,ÔÇØ he stated.
