Welcome to the latest edition of the Hot Potato Newsletter! Now guys, I am not complaining but it's a little bit hot at the moment, isn't it?

Speaking of things that are hot, we're going to be deep diving into one of the spiciest success stories in the restaurant world today. Ever wondered how a "grubby little takeaway" in Johannesburg became a global peri-peri empire worth billions? Well, grab your napkins because we're about to dive into the story of the peri-peri powerhouses that are Nando's.

We'll be exploring how two friends with zero restaurant experience turned a handshake deal into 1,200+ restaurants in over 20 countries. From their genius marketing moves to the strategic partnerships that changed everything, let's unpack what made Nando's the success story that has everyone saying "fancy a cheeky Nando's?" As always, let's dive in!

In today’s email: How Two Friends Turned £25k into a Billion-Dollar Peri-Peri Empire

Read Time: Approx 3-4 mins

How the Journey Started

Source: Business Leader

Picture this: 1987, Johannesburg is in political upheaval, and two best mates, Fernando Duarte and Robbie Brozin, stumble into a Portuguese takeaway called Chickenland in rough-and-tumble Rosettenville. Neither had run a business, neither had cooked a meal outside of their families, but after one bite of that flame-grilled peri-peri chicken, one of them said: "Let's take this chicken to the world."

They were so inspired by the meal that they actually bought the place! For 80,000 rand (about £25k), they acquired not just a restaurant, but a recipe that would eventually conquer the globe. They renamed it after Fernando's son, Nando, and suddenly they were restaurateurs running on pure adrenaline and youthful exuberance.

But here's the harsh truth, they were burning cash fast. Three sites, zero business experience, and bills piling up quicker than orders on a Saturday night. That's when destiny stepped in via a kitchen employee, Bruce McInroy, who said he wanted to introduce them to his brother's boss, Dick Enthoven, who he thought could take the business to the next level.

The Handshake Worth Billions

Source: Business Leader

Cue one of the most important business meetings in restaurant history. Dick Enthoven, an insurance tycoon building his own multinational empire, sat down with the founders at a Nando's. His verdict? "It was the best chicken I had ever tasted. I was gnawing it off the bone."

This is the moment that changed everything: no contracts, no corporate BS, just Enthoven writing a cheque based on a handshake for a 70/30 equity deal. He deliberately took the smaller share, keeping the founders in control and letting them get on with running the business.

His masterplan? Keep them hungry! Enthoven "didn't want them to become nochschleppers" (Yiddish for someone who just goes along for the ride). His golden rule: "if the operators made money, so too would the investors." This is how you turn funding into empire-building.

Even more remarkably, they never signed a contract. Ever. This handshake deal underpinned the creation of a business spanning 20+ countries. Talk about trust in business!

The Three Moves That Changed Everything

Source: Fabric Academy & LinkedIn Marketing Analysis

Nando's has focused their efforts on being authentic as a brand, using localised marketing strategies and leveraging customer loyalty to help them grow.

• Authenticity at the heart of everything: While competitors were going mass-market, Nando's doubled down on their roots. In order to stand out when they were just starting out, they knew they needed to embrace their South African heritage. They source peri-peri peppers from Southern Africa, support hundreds of small farmers, and recently ordered 9,000 pairs of jeans for their global team, made by a designer next door to their original Johannesburg kitchen!

• Cultural Relevance: Nando's marketing adapts brilliantly to local markets. Their UK campaigns differ significantly from those in South Africa, where they focus on local culture and humour as central elements of their localised strategy. Rewarding celebrities like Ed Sheeran and Example with a Nando's Black Card (free Nando's for life) has helped cement the brand in UK pop culture. The phrase "Cheeky Nando's" has become a well-known part of British slang, further embedding the restaurant in the national consciousness.

• Leveraging Loyalty: Nando's has pioneered customer loyalty since their inception. I don't know if any of you remember the OG Nando's stamp card, but Nando's has understood the importance of rewarding their customers from the beginning. Their recent shift to a digital-only card has seen a huge impact, saving £200,000 a year in plastic card costs, with 1 in 5 orders redeeming a reward and 87% of customers likely to visit again after their first visit.

A Business Model that works

Source: Osum Strategy Reports

As a brand, Nando's has done things differently from their marketing positioning, service model, multiple revenue streams and company-owned philosophy.

• Premium Positioning and Offering: While fast-food chains compete on price, Nando's positioned itself as premium casual dining. They charge more than fast food but justify it with quality – fresh, never-frozen chicken with 100% natural, preservative-free marinades.

• Hybrid Service Model: When Nando's first launched, customers were initially taken aback by their model. Ordering at the front, served at table was unusual, but it just works. It combines the speed and affordability of fast food with the comfort of a casual dining experience. This model increases operational efficiency and customer satisfaction, setting Nando's apart from traditional fast-food and full-service competitors.

• Revenue Diversification: Nando's isn't just a sit-down restaurant anymore – it's grown its revenue beyond their four walls. They've become retail powerhouses, with their sauces and seasonings in supermarkets across the UK. Food delivery is also an important channel too. Multiple revenue streams = business resilience.

• Company-Owned Model: In the UK, Nando's has a whopping 450+ restaurants and what's even more impressive, unlike competitors of a similar size, is that none of their sites are franchised. They are all company-owned, which means complete control over quality and standards in their restaurants.

So there you have it, from a £25k takeaway purchase to a global peri-peri empire, Nando's proves that with the right story, strategic partnerships, and unwavering authenticity, you can absolutely take your vision to the world.

What's the one Nando's lesson you're going to apply to your business? Drop me a message – I'd love to hear how you're spicing up your strategy!

Get ready to unlock the numbers that matter most. In our next Hot Potato edition, we're diving deep into the essential metrics that separate successful operators from the rest. From the financial indicators that predict growth to the operational signals that prevent disasters, plus the customer insights that drive retention, we'll reveal exactly which numbers you should be watching and why they're game-changers for your business. Don't miss this data-driven deep dive that could transform how you measure success.

Ready to dive deeper into the numbers that matter most? Subscribe now to have our next edition delivered straight to your inbox!

Bon appétit,

Max Shipman, Founder, Hot Potato

P.S. Don't forget to add us to your safe senders list to ensure you don't miss out on any of our tasty content.