In the year to February, Famous Brands, which also operates in the UK, Kenya, Ethiopia, Sudan, Botswana, Namibia, Angola, Zambia and the Middle East, opened 118 restaurants, 86 of which were in SA.
During the same period it closed 69 restaurants and 54 of those were in SA. Famous Brands has 2824 restaurants in Africa, the UK and the Middle East.
Hele said Famous Brands would continue expansion and in some markets would be more aggressive than others.
“We are not looking at exiting, but will be more aggressive in our expansion in some markets.”
Part of the expansion will include drive-through sites.
“Drive-throughs were heightened by Covid-19 ... and even before Covid-19 our presence wasn't where we wanted it to be. We need to elevate our presence. We are seeing opportunities in that market.”
In April Famous Brands acquired a 51% stake in Lexi's, a niche restaurant business that offers plant-based food.
Famous Brands said the acquisition is “aligned with its three-year strategic roadmap, which includes acquiring brands that have the potential to lead in their category and which offer growth prospects based on opportunities to improve existing operational efficiencies in the target business.”
Hele said the acquisition of an interest in Lexi’s indicates an appetite and interest for more acquisitions.
“We continue to look, but will be conservative. We have a clear strategy and we don't want to be distracted from that. We want to be number one or two in the categories we trade in.”
Casparus Treurnicht, portfolio manager and research analyst at Gryphon Asset Management, said: “I am surprised they are still buying smaller businesses [Lexi’s]. I do not believe in this business model of running a few big brands and then doing smaller add ons. This also causes the logistics and manufacturing arm of the business to run suboptimal. Also, this tells you management does not see their big brands growing much over the medium term.”
Famous Brands’ signature brands were still making operating losses.
“After what happened with GBK [(UK-based Gourmet Burger Kitchen] one would think they would return to their roots,” he said.
Famous Brands fully impaired the struggling restaurant in 2020 for R1.6bn after buying it in 2016 for about R2.5bn.
In the year to February, Famous Brands reported a profit after tax of R355m from a loss of R105m in the previous financial year. The group reduced its interest-bearing debt to R1.1bn by repaying R358m. It also declared a dividend payment of R200m to shareholders.
Chris Gilmour, an independent investment analyst with Salmour Research, said while Famous Brands reported “excellent rebound from an exceptionally low base, this pretty much takes them back to where they were pre-pandemic”.
However, it shouldn’t have reinstated the dividend “just yet. The future is still far too uncertain”.
Treurnicht said: “I think it is fair to say investors were pushing management to resume dividend payments, but cost inflation will definitely put a lid on drastic margin expansion over the coming months.
“I believe the business is not offering much value at the current share price and SA disposable income is going backwards on a daily basis. Strong commodity prices provided much support to the economy over the past year and if that would disappear we would certainly fall into a spiralling debt trap as a country. Everyone will be affected and inflation is already inflicting damage,” he said.
Famous Brands' share price is trading at about R61.
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Famous Brands eyeing entry into Ghana
Image: File
SA's Famous Brands — the owner of Steers, Fishaways and Wimpy — plans to open restaurants in Ghana to grow its footprint in the West African region.
The group, which already operates in Nigeria, sees new growth opportunities for some of its popular restaurants.
CEO Darren Hele said expansion talks were still in the early stages.
The group would enter the market with potentially one restaurant, but “ultimately the brands we take to the rest of the continent are Steers, Debonairs Pizza and Mugg & Bean”.
In addition to restaurants, Famous Brands has a manufacturing business that produces products such as juices, spices, and coffee. It also runs a logistics business that delivers products to clients, including its franchisees.
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In the year to February, Famous Brands, which also operates in the UK, Kenya, Ethiopia, Sudan, Botswana, Namibia, Angola, Zambia and the Middle East, opened 118 restaurants, 86 of which were in SA.
During the same period it closed 69 restaurants and 54 of those were in SA. Famous Brands has 2824 restaurants in Africa, the UK and the Middle East.
Hele said Famous Brands would continue expansion and in some markets would be more aggressive than others.
“We are not looking at exiting, but will be more aggressive in our expansion in some markets.”
Part of the expansion will include drive-through sites.
“Drive-throughs were heightened by Covid-19 ... and even before Covid-19 our presence wasn't where we wanted it to be. We need to elevate our presence. We are seeing opportunities in that market.”
In April Famous Brands acquired a 51% stake in Lexi's, a niche restaurant business that offers plant-based food.
Famous Brands said the acquisition is “aligned with its three-year strategic roadmap, which includes acquiring brands that have the potential to lead in their category and which offer growth prospects based on opportunities to improve existing operational efficiencies in the target business.”
Hele said the acquisition of an interest in Lexi’s indicates an appetite and interest for more acquisitions.
“We continue to look, but will be conservative. We have a clear strategy and we don't want to be distracted from that. We want to be number one or two in the categories we trade in.”
Casparus Treurnicht, portfolio manager and research analyst at Gryphon Asset Management, said: “I am surprised they are still buying smaller businesses [Lexi’s]. I do not believe in this business model of running a few big brands and then doing smaller add ons. This also causes the logistics and manufacturing arm of the business to run suboptimal. Also, this tells you management does not see their big brands growing much over the medium term.”
Famous Brands’ signature brands were still making operating losses.
“After what happened with GBK [(UK-based Gourmet Burger Kitchen] one would think they would return to their roots,” he said.
Famous Brands fully impaired the struggling restaurant in 2020 for R1.6bn after buying it in 2016 for about R2.5bn.
In the year to February, Famous Brands reported a profit after tax of R355m from a loss of R105m in the previous financial year. The group reduced its interest-bearing debt to R1.1bn by repaying R358m. It also declared a dividend payment of R200m to shareholders.
Chris Gilmour, an independent investment analyst with Salmour Research, said while Famous Brands reported “excellent rebound from an exceptionally low base, this pretty much takes them back to where they were pre-pandemic”.
However, it shouldn’t have reinstated the dividend “just yet. The future is still far too uncertain”.
Treurnicht said: “I think it is fair to say investors were pushing management to resume dividend payments, but cost inflation will definitely put a lid on drastic margin expansion over the coming months.
“I believe the business is not offering much value at the current share price and SA disposable income is going backwards on a daily basis. Strong commodity prices provided much support to the economy over the past year and if that would disappear we would certainly fall into a spiralling debt trap as a country. Everyone will be affected and inflation is already inflicting damage,” he said.
Famous Brands' share price is trading at about R61.
TimesLIVE
Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.
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