SOUTH AFRICA – JSE-listed food services franchiser Famous Brands, has reported strong sales and revenue performance for the year, despite facing challenges.
According to the owner of well-known restaurant, takeaway and retail brands such as Wimpy, Steers, Debonairs Pizza, Mugg & Bean and House of Coffees, the 12 months ended February 28 were a challenging period, with operations impacted by various levels of Covid-19-related restaurant trading restrictions.
Trading conditions were further exacerbated by widespread civil unrest in July 2021, it notes, with this having had a major impact on certain of its franchisees.
Overall, the impact was mainly lost franchise revenue resulting from lost franchisee trading days.
Despite this, the group achieved increases across the board as it continued to respond to market conditions with resilience, focusing on value propositions, convenience solutions and payment options.
Moreover, close collaboration and partnership with the franchise network enabled it to take the required corrective action.
Continuing with its three-year roadmap and accelerated by the pandemic, Famous Brands’ focus for the year was to manage margins, reduce costs and preserve cash to facilitate balance sheet flexibility.
The group’s brand portfolio is categorised into Leading (mainstream) and Signature (niche) brands.
In South Africa, Leading brands’ system-wide sales increased by about 35.8%, while like-for-like sales increased by about 33%.
Signature brands’ system-wide sales improved by about 55.1%, while like-for-like sales increased by about 59.3%.
In the context of less stringent trading restrictions, the Africa and Middle East region continued to improve its results. System-wide sales in this region increased by about 19.8%. Wimpy UK’s revenue increased by about 19.5%.
Meanwhile, the manufacturing and logistics business, which supports the front-end brands division in South Africa, improved in line with increased restaurant revenue, says Famous Brands.
Compared with the prior financial year, manufacturing revenue increased by about 30.8%, while logistics revenue increased by about 35.3%.
Famous Brands’ retail division, which supplies third-party retailers and wholesalers in South Africa with branded licensed products, reported a revenue increase of about 46.9%.
Meanwhile, its competitor Spur Corporation has increased headline earnings by 119.4% to R59 million (US$3.93m) in the six months to December 2021.
Group revenue grew by 40.3% to R441 million (US$29.35m) due to improved franchised restaurant turnovers, higher sales in the five company-owned restaurants and increased sales from the manufacturing and distribution division.
Comparable profit before income tax, excluding once-off and unusual items, increased by 96.3%.
Franchised restaurant sales grew by 28.3% over the prior period when significant restrictions on sit-down trade were in place.