Pick n Pay converts 14 franchise stores to company ownership

Pick n Pay converted 14 franchise supermarkets into company-owned stores over the past 12 months, including 10 in the first half of its 2027 financial year. The retailer says further selective acquisitions remain possible, while maintaining that franchise partners are an important part of its business.

A smaller franchise supermarket footprint

The ownership changes were disclosed alongside Pick n Pay’s results for the six months to August 2026, reported on 26 October. They follow the completion of its store estate reset, which addressed loss-making locations as part of the retailer’s turnaround programme.

Over the past year, Pick n Pay’s franchise supermarket count fell by 21 to 207. Its company-owned supermarket and hypermarket estate increased by two to 313, leaving a combined footprint of 520 stores in those categories.

The retailer also closed 19 stores over the year. Separately, two Pick n Pay supermarkets were converted into Boxer Superstores during the first half of the 2027 financial year.

These figures describe several different changes rather than a single programme of closures. A franchise-to-company conversion changes the ownership model of a supermarket, while a conversion to Boxer changes the retail format. The 14 ownership conversions therefore do not account for the entire decline in the franchise supermarket estate.

Although the formal reset has ended, Pick n Pay said it continues to optimise its store estate on an ongoing basis.

Further acquisitions remain selective

During the results call, management was asked whether the conversions signalled a broader move towards company-owned stores.

Chief executive Sean Summers said franchising remained a very important part of Pick n Pay’s business and its route to customers. However, he also described pressure on franchise operators, including tighter margins.

Summers pointed to opportunities in major metropolitan areas where established franchisees make their stores available. He referred to owners who may have operated a supermarket for 15, 20 or 25 years, with family circumstances among the considerations influencing their decisions.

Where suitable opportunities arise, Pick n Pay intends to continue buying stores. Chief financial officer Tina Rookledge similarly said the retailer would consider franchise acquisitions that made sense for the business.

The position outlined by management is therefore selective acquisition rather than a stated withdrawal from franchising. For South Africa’s franchise community, the distinction matters: the declining store count sits alongside an explicit commitment to retain franchise partnerships where they offer strengths for the retailer.

Franchise sales improve, but pressure persists

Pick n Pay’s franchise business recorded sales growth of 1% in the first half, compared with a decline of 0.2% in the second half of the previous financial year.

That represents an improvement in the sales trend, but not an end to trading pressure. Reporting on the results put franchise supermarket volume growth at negative 0.5% after allowing for price inflation.

Management said it was working closely with franchise partners to strengthen the customer proposition and improve both sales and profitability. Those priorities remain relevant even as selected stores move into company ownership.

Across the group, turnover rose 2.4% to R60.5 billion and trading profit increased 58.1% to R490 million. These group figures should not be read as a measure of individual franchise performance: they cover a wider business that includes Boxer.

Pick n Pay’s South African sales fell 0.5%, while like-for-like sales increased 1.4%. Management said the difference largely reflected changes to the store estate.

Capital plans include ownership conversions

Pick n Pay retained gross capital investment guidance of R1.7 billion for its 2027 financial year, with spending expected to be weighted towards the second half.

Strategic store revamps, critical repairs and maintenance, and selected franchise-to-company conversions are among the planned uses of capital. Management said conversion investments would be made where they were strategically and financially appropriate.

The retailer also kept its long-term break-even target for the 2029 financial year unchanged. Ownership changes are thus one part of a wider turnaround, alongside investment in existing stores and efforts to improve trading performance.

Practical takeaway: Franchise owners and prospective buyers should assess local sales, margins and investment needs rather than rely on group-level growth. Pick n Pay’s latest update shows continuing franchise support alongside selective opportunities for established owners to sell.