Africa-Press – South-Africa. Releasing results for the six months ended 31 August 2022, the JSE-listed owner of household names such as Wimpy, Steers and Mugg & Bean said a “combination” of the upcoming Soccer World Cup in Qatar, Black Friday specials and the festive season “should boost consumer spending”.
But the group also flagged specific South African challenges such as rampant inflation, rising interest rates and the intensive load shedding the country was experiencing at the moment as concerns, adding that global uncertainty and supply chain challenges would also continue to “drive up food prices”.
Famous Brands said though that economists predicted SA’s food inflation to peak at 10% this year before “receding to more manageable levels in 2023”.
It said that managing food costs would be a key focus for the group in its “menu development and promotions”.
“We will develop menus which offer and provide good quality at a cost that consumers perceive as good value. Famous Brands will continue to invest in delivery technology to enhance our last mile efficiency for own delivery.”
The company, which owns 17 restaurant brands and has a network of 2 850 restaurants, reported a strong set of interim results declaring a dividend of 130c as revenue increased 19% to R3.6 billion. Headline earnings more than doubled to 215c. The company did not declare a dividend in the same period last year.
“These results demonstrate a continued revenue recovery and the successful management of our cost base. This performance is gratifying considering a difficult operating environment with fierce competition and consumers facing increased financial pressures,” said CEO Darren Hele in a statement accompanying the results.
Famous Brands said that since the removal of Covid-19 restrictions in June, the restaurant industry had “seen a positive shift in consumer behaviour as consumers return to restaurants, resume travel and attend sporting events”.
“This has supported improved restaurant turnovers and restaurant marketing spend,” it said.
The group said that with the threat of the pandemic receding, many consumers were “resilient and determined to return to normal life post the pandemic” while others “remained hesitant”.
“While consumers shop online for convenience and safety, they also crave meaningful interpersonal connections.”
FNB portfolio manager Wayne McCurrie said the Famous Brands’ results looked “quite good” but that it was recovering off a low base.
“The earnings seem to be improving quite nicely and they are getting occupancies back with people returning to restaurants. There is still a much higher takeaway proportion of their sales than what there was pre-Covid,” said McCurrie.
In morning trade on Wednesday the firm’s shares had risen 1.4% to R52.64, having fallen almost a third in the year to date. Click here for details on the group’s shares and other info.
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