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Inflation hits fast-food sales - Famous Brands

By unknown | Jul 13, 2007 | COMMENTS [ 0 ]

Staff Reporter

Staff Reporter

Wimpy, Steers, Debonairs Pizza and other franchises in the Famous Brands group are feeling the pinch from food inflation, the group said in a trading update.

Famous Brand chief operating officer Kevin Hedderwick said: "The trading environment, al-though robust, is beginning to lag and margins are being affected by increased input prices.

"Double digit price increases have been felt in meat, poultry and dairy products.

"We have recently appointed an external consultant who has been briefed to robustly examine taking costs out of the group's supply chain in order to protect both our own as well as franchisee margins," he added.

Hedderwick said an interest rate hike, petrol price increases and the National Credit Act have begun to put pressure on consumer spending - a trend being evidenced by the group's restaurants situated in major shopping malls where turnover trends have been below the national average.

The group has invested R25million in imported beef, which should enable Famous Brands to avoid price increases until October 2007 at least.

During the March to May quarter, the group reported system-wide retail sales growth of 14,8percent.

Famous Brands expanded by 18 new restaurants during the three- month period, taking its total global footprint to 1492 restaurants with the milestone of 1500 restaurants being passed at the end of June.

The group said its global expansion was doing well. It has seconded Darren Hele to head Wimpy UK.

"Turnover from the UK operation is trending upwards and although marginal at this stage we are well on track with implementation of our plan to turn this network around over the next two years," Hedderwick said.


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