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I built a 7-figure, multi-location, retail gelato brand in Africa - Now what?

A detailed account of a Fastlane process...

KnockTheHustle

New Contributor
Sep 20, 2018
5
18
My story for how I built a 7-figure, brick and mortar, retail gelato brand in Africa is the antithesis of "Fast Lane". I was one of the early online poker boom millionaires by the age of 23, then wanted to transition into business, as poker is a massive, unfulfilling grind, with no residual or passivity to the income. It's fantastic "hustle money", but as soon as you stop playing, you earn nothing. I figured I would be happy with making so much as $30k-$40k a month in business, provided that it was passive, despite it being a lot less than I had made previously in poker. I also felt business had a more long-term positive trajectory, whereas poker had a lower ceiling and worse trajectory.

I'm reluctant to even open pandoras box by beginning to tell the story of how I ended up in Africa alone, as a foreigner, no family or friends, not speaking the language, with no background in gelato, business, nor Africa, as it would turn into a full-on novel and readership would drop-off. In spite of that, I'll try to give the short version to give context.

So the cliffnotes (trust me, this is the short version) are:
(TLDR added at the end)

April 2014

decide to just open a small kiosk gelato business as a "simple and easy" way to get my feet wet and learn how to do business. I figured it should be inexpensive and easy enough to dabble in, before I can then move onto the bigger opportunities, putting real money at stake.

- I start with an investment of about $60k of my own money, open a small kiosk as the first location, and right out the gate the customer response was explosive. The small kiosk from day one was generating about $250k a year in revenues. About $180k more was reinvested during the first year into a bigger kitchen, more machines, equipment, renovations, a second location, and various things.

2015
By this time, my goal was to first focus on locking down the prime real estate across the major city, since there were limited malls to begin with, and I wanted to get the best locations. I figured I would flesh out the systems, processes, and other elements of the organisation later, as the main priority was expanding the face of the brand, locking in good locations, and growing sales.

2015-2017
I spent the next 2 years going on to open a total of 6 more locations. 1 was upgrading the original kiosk into a full flagship storefront shop in the premiere mall of the country, and the other 5 were in other malls throughout the business capital of the country. I did this while simultaneously firefighting all the government, legal, customs, HR, maintenance, management issues of the company and carrying the weight of the operation on my back.

November 2017
I begin to realise that the very thing I got into business for (financial freedom) seemed to be that much further than when I began. I now had less freedom, with about 100 employees, 6 retail parlors, 1 head quarters office, a central kitchen, and a full-on operation completely depending on me. The company was grossing a substantial amount in sales yearly, but I decided nothing is more valuable than my freedom. I made a commitment to myself to not open a single other shop until the operation was able to function 100% in my absence. I prioritised my freedom and wellbeing over additional sales and growth -- at least temporarily.

November 2017 - May 2019
My schedule each and everyday was to wake up and write down any, and every question, problem, or challenge I received a phone call about that required my input. From there, I would spend my entire day, 16 hours a day, writing SOPs, processes, or developing google sheets that could automate away these phone calls. It literally felt identical to just programming software that could be run, and then using the phone calls as beta testing and debugging to see lines of code that needed to be altered.

You create one series of systems for a certain department, then see it doesn't give you the desired output, so you have to revise until it works smoothly and effectively. I spent this entire period each and everyday just writing SOPs, checklists, and processes until the phone eventually stopped ringing. This entire process takes longer than you can imagine. Systems are needed for everything and anything. Accounting, cash handling, recruiting, training, inventory, production, manufacturing, deliveries, painting -- the list is a mile long.

May 2019 - February 2020
I take a very long break doing much of nothing -- basking in the newfound freedom. Traveling and leisure.

March 2020
Corona hits like a wrecking ball. 3 of the malls we are in close down taking 3 of our shops with it. We're bleeding red. We have to layoff half our staff. There's no government bailout in Africa.

March 2020 - September 2020
Our business is basically on fumes with only 2 locations open.

November 2020 - February 2022
I spend about a year and 3 months opening 2 new locations in other malls to rebuild, as well as hiring new people, building our team, and refining systems in the operation as well to grow back even stronger. I was thrown back in the trenches on the front lines. Lots of fires, government battles, massive setbacks begin left out of this summary. The battle to grow this business from the beginning were the darkest, most challenging years of my life. I often told people the millions I made in poker were put into perspective when trying to grow a gelato QSR retail operation in Africa alone. By February I had finished automating the business again to be hands off and went back to leisure, relaxing, and playing a bit of poker again on the side - which is what I've been doing until current day as the business continues to run.

Long journey, but if corona and periods of leisure are removed, it's a total of about 5 years to grow a brand from absolute scratch, and then to automate it to run independent of me. I have a complete office team with operations, human resource, sales, finance, people managing the day to day, as well as a full team in the central kitchen managing production. I mostly just pass by shops and get updates through whatsapp at my own convenience.

TLDR:
I build a 7 figure gelato brand in Africa that is the most recogsized/known brand in the country, with over 100 employees, 9 total shops opened over the years, a main office, and central kitchen for production. The first 3.5 years were spent expanding rapidly to grow the brand. The next 1.5 years were spent trying to automate the business to free myself from the living nightmare of carrying the operations on my back. I eventually accomplish that goal, then spend another 2 years dealing with corona before getting back to the point of automation.
 
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Last edited:

KnockTheHustle

New Contributor
Sep 20, 2018
5
18
Current Challenge
So despite now having the most popular retail gelato brand in the country, with very high revenues, and what I presume to be a 7 figure valuation on paper, I struggle with deciding on an exit or growth strategy. Admittedly, I haven't spent the most time networking to try to find out how to capital raise or get PE/VC money involved, but the impression I've gotten is that it's quite difficult and illiquid in this market.

My first option would be to try to sell the business if getting a decent offer, so I could at least pull some of the risk/cash off the table, but if that's not feasible, I would then want to pivot the business model into the pre-package / FMCG route. The retail brick and mortar business model for a gelato operation is just a very poor ROI as far as the headache : profitability ratio.

Yes, I've managed to automate it and free myself, but there's always the risk of breakdowns whereby you get pulled back in. The government comes to shake you down, you lose key managers, your most profitable outlets raise your rent, your landlord doesn't want to renew your lease, etc. The prepackage/FMCG direct to customer model would allow us to concentrate just on production and distribution. Chopping out the retail monster alleviates a substantial number of headaches and challenges. This business model would essentially be pivoting to do something similar to Talenti. With enough investment, I could see this having massive potential as the brand is already huge in the retail space.

Franchising in Africa would be a massive headache in the making. Gelato specifically is extremely labor and equipment intensive, as well as very sensitive to quality control, product management, hygiene, and presentation. Very specialised and challenging of a concept, limiting the scalability. Not something I'm interested in.

What would you guys do from here? I'm guessing the play is focus full time on finding a private equity investor that's a player in the Africa QSR space to come in to provide funding to explode us from here. Just looking for any feedback and advice.
 

Kevin88660

Platinum Contributor
FASTLANE INSIDER
Read Unscripted!
Speedway Pass
Feb 8, 2019
2,346
2,815
Singapore
Franchising in Africa would be a massive headache in the making. Gelato specifically is extremely labor and equipment intensive, as well as very sensitive to quality control, product management, hygiene, and presentation. Very specialised and challenging of a concept, limiting the scalability. Not something I'm interested in.

What would you guys do from here? I'm guessing the play is focus full time on finding a private equity investor that's a player in the Africa QSR space to come in to provide funding to explode us from here. Just looking for any feedback and advice.
Seeking VC advice is good way.

They probably advise you on what to improve on to what the business investable from VC point of view.

They probably want a good roi return number on a single shop, that is not too location dependent, with few SKU (top selling)and a idiot proof system that is scalable through franchising.

They will probably teach you how to hire salesforce and managers to build the franchising system (to train and build a good incentive program) as they have done before but first they need you to modify your business to be suitable for franchising, that is easier to copy and paste.

This means that they would need you to close down shops that have bigger space area, focus on smaller area shops, remove products and focus on no more than five sku to build the perfect high roi (revenue per square meter) small shop model that could be copied pasted by people with less experience in the business.

There is no escape around franchising from vc point of view. As for them franchising is the final end game to build something big enough to have liquidity for ipo for the food service business. They will not be interested to help you run ten more shops under you directly.
 

Jeix

Contributor
Oct 1, 2018
54
85
28
Milan, Italy
Great job! I don't have much to contribute other than a similar, albeit smaller, success story from a guy I know who moved from Italy to Ecuador and started their gelato franchise there. He's opened his second location on year 2. The secret? They make it fresh every day in a workshop and deliver it to their stores. Their competition is less advanced and stores it over multiple days, lowering the gelato quality.
 
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Miha99

Contributor
Read Fastlane!
Read Unscripted!
Apr 21, 2022
57
42
May I ask where did you sopen the Gelato shop first, What country?
And why did you decide to move to Africa specifically and move the Business there?
 

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