Famous Brands nearly halves its half year revenue earning US$122m

SOUTH AFRICA – South African restaurant franchisor, Famous Brands has reported a 48% decline in revenue in the interim period to R2 billion (US$122m) from R3.86 billion (US$235m) registered in 2019.

This is a clear indication of the significant impact the stringent Covid-19-induced lockdown regulations had on the business.

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Its operating loss before non-operational items came to R109.8 million (US$6.7m) down 129% compared to profit of R376.2 million (US$23m) in the prior comparable period.

The half year results of the company show a headline earning share loss of 240 cents.

Leading brands contributed R161 million (US$9.8m), down 58% while Signature brands’ revenue declined 74% to R25 million (US$1.5m).

The group’s vertically integrated business model comprises a portfolio of 23 restaurant brands, represented by 2 838 restaurants across South Africa (SA), the rest of Africa and the Middle East (AME), and the United Kingdom (UK).

Its brands portfolio is segmented into Leading brands and Signature brands, strategically positioned to appeal to a wide range of consumers across the income and demographic spectrum and across meal preferences and value propositions.

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Leading brands contributed R161 million (US$9.8m), down 58% while Signature brands’ revenue declined 74% to R25 million (US$1.5m).

The group recently offloaded its controlling 51% stake in boutique café brand, tasha.

The sale is in line with its three year-strategic roadmap which includes a narrower focus of investment of resources in the Signature brands portfolio.

Performance in SA and wider AME region

At its home market in South Africa, the group known for its Wimpy, Debonairs Pizza, Steers, and Mugg & Bean brands registered 51.2% decline in combined system-wide sales and like-for-like sales decreased by 51.7%.

Independently, Leading brands’ system-wide sales declined by 48.0%, while like-for-like sales decreased 48.7%.

Signature brands’ system-wide sales deteriorated 70.1% and like-for-like sales reduced by 70.4%.

In the AME region where the Group is represented by 283 restaurants in 16 countries, it registered a revenue declined of 6% to R143 million (US$8.7m).

System-wide sales declined by 30.1% (2019: increase of 10.3%). The region contributed 12.5% (2019: 8.3%) to total system-wide Group Brands division sales.

UK operations a mix of gains & losses

In UK where its operations comprise of Wimpy and GBK, the foremer delivered a pleasing result for the six months, with its revenue rising by 7% to R65 million (US$4m), while in Pound Sterling revenue was 13% lower.

However, its GBK operations continued to register losses with the group resolving to no longer provide any further financial assistance to it.

During the review period, revenue in Rand terms deteriorated by 60% to R257 million (US$15.7m), while revenue in Pound Sterling was 67% lower.

Famous Brands placed the loss-making unit under administration which later administrator Deloitte revealed that it has sold the chain in a rescue deal to British fast-food operation, Boparan Restaurant Group (BRG).

Consequently, GBK’s results will henceforth not be consolidated into the group’s results as it has no control of it.

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