SOUTH AFRICA – Famous Brands, Africa’s leading branded food services franchisor, has reported a 31% system-wide sales increase in its African operations, for the year ended February 28.
While the company recorded an uptick in its operating profit to R861-million, from R630-million in the prior year, the operating profits in Africa decreased by R10-million to 5.7% (R24-million) in the period under review from 9.9% in the prior fiscal year.
Famous Brands said its revenues are now exceeding pre-pandemic levels, after the group focused on improving cash generation from operations and controlling its cost base tightly, despite high inflation, input cost increases, and loadshedding.
Notably, the Brands division, with its 17 restaurant brands, reported a 21% year-on-year increase in revenue to R1.1-billion, with Leading Brands accounting for R904-million of revenue and Signature Brands contributing R203-milliSouth on to revenue.
This contributed to the groupwide 15% increase in revenue to R6.5-billion in the year under review. Famous Brands’ vertically integrated Supply Chain division comprises manufacturing, logistics, and retail divisions.
The divisions had mixed results in terms of profitability, with manufacturing operating profit increasing by 0.8% year-on-year to R302-million, but the Retail division’s operating profit decreasing by 91% from R2-million in the prior year.
The logistics division reported an operating profit increase of 89% year-on-year to R114-million. In the year under review, the Leading Brands portfolio expanded by 85 new restaurants and 143 restaurants were revamped, and 31 closed.
“While the marketplace remains highly competitive as brands fight to retain market share, we continue to experience good brand growth, revamp activity, and demand for our brands from potential franchise partners,” CEO Darren Hele said.
She noted that trading conditions in South Africa remain challenging, with the restaurant industry being highly exposed to loadshedding.
All brands have had to manage menu price increases carefully to balance protecting franchise partner profitability while offering value to consumers in a high-inflation environment, Hele pointed out.
Debonairs Pizza opened its first restaurants in Oman and Saudi Arabia, while the Steers brand was introduced to the United Arab Emirates.
Looking ahead, Hele expects South Africa’s weak economy and severe loadshedding levels to continue weighing on consumer spending in the coming year.
Nonetheless, the company sees many opportunities for growth and innovation in trading formats, technology, and product development. “
Our diverse menu options, strong brands, and resilient franchise partners will support our continued growth in the 2024 financial year,” Hele said.
For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.
