Famous Brands unveils road map to sustain improved performance

SOUTH AFRICA – South African restaurant franchisor, Famous Brands has rolled out a three-year strategic roadmap following an improved operational performance for the year to end February.

The owner of Steers, Wimpy and Debonairs Pizza reported a 6.4% rise in system-wide sales across all restaurants in SA, while like-for-like sales grew by 2.9%.

Operations in other African countries and the Middle East recorded system-wide sales growth of 4.1% in Rand terms which the group termed as, “a pleasing return on investments made over recent years.”

During the period under review, the franchisor reported a 1% increase in revenue to R7.8billion (US$446.9m) while operating profit rose 7.67% to R912m (US$52.2m), positively impacted by an improvement in Gourmet Burger Kitchen and the disposal of Coega Concentrate tomato paste plant, which reported an operating loss of R22m (US$1.2m) a year earlier.

According to the group, the roadmap was accelerated by the global coronavirus (Covid-19) pandemic to right size the business, reduce costs and preserve cash for balance sheet flexibility.

Its key areas of focus would include expansion, consolidation and a capital management as well as allocation programmes to grow its leading brands and retail business and build depth in the rest of Africa and Middle East (AME) footprint.

Chief executive Darren Hele said, “The consolidation programme will include disinvesting from non-core brands, manufacturing and logistics facilities and intensify investment in high-return assets and lastly, a programme to optimise capital management and allocation.”

Hele said that the group planned to remain focused on generating free cash flow, reducing interest bearing debt and non-essential capital expenditure.

The group incurred R63million (US$3.6m) capital expenditure, primarily related to the commissioning of the two new distribution centres in the Western Cape and Free State, reports Business Live.

The group did not declare a dividend. It said in light of the Covid-19, the board deemed it prudent to preserve cash to facilitate balance sheet flexibility and no dividend was declared for the second six months.

Hele said the group anticipated that the operating environment would remain constrained in the post Covid-19 era and evolve with more challenges.

“Accordingly, our business will be focused on adapting and transforming to overcome the challenges and optimise on the opportunities presented,” he said.

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