Famous Brands reports 6.4% increase in sales boosted by signature brands

SOUTH AFRICA – Famous Brands, South African restaurant franchisor has reported a 6.4% rise in systemwide sales across all restaurants in SA in its year ended February 2020, while like-for-like sales grew by 2.9%.

The owner of Steers, Wimpy and Debonairs Pizza, said on the group’s trading update that the sales growth met expectations even as it battled with the effects of load-shedding and SA’s deteriorating economy.

The group’s signature brands which include House of Coffees and Turn ’n Tender saw growth in sales by 10.6% while like-for-like sales declined by 0.8%.

Independently, Leading brands system-wide sales rose 5.7%, with like-for-like sales up 3.5%.

Notably, while low menu pricing assisted with customer retention, it had an adverse impact on inflationary growth.

“In the SA market, margin pressure increased in the context of an intensely competitive trading landscape and sustained low food inflation,” the group said.

“Furthermore, frequent power outages and the lack of transformational economic and socio-political reforms weighed heavily on economic growth and business and consumer confidence.”

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.”

Famous Brands, which owns Wimpy in the UK, bought the UK chain Gourmet Burger Kitchen (GBK) for R2.1 billion (US$143m) in 2016.

GBK’s results for the review period reflect the difficult and intensely competitive trading conditions coupled with uncertainty regarding the resolution of Brexit which subdued consumer confidence and spending.

System-wide sales in sterling declined by 13.9%, attributable to the closure of restaurants as part of the CVA process, while like-for-like sales increased by 3.7% compared to the previous year.

However, management is satisfied that ongoing and extensive operational improvements as well as the benefits derived from the Company Voluntary Arrangement (“CVA”) restructuring programme continue to impact positively on the business.