Tuesday, 31 May 2022 18:32

Famous Brands reports triple-digit financial year profit surge.

Business Reporter.

Restaurant group Famous Brands says South Africa's post-Covid-19 restaurant environment will look entirely different from before, and for the better.

Famous Brands reported a 568% rise in headline earnings per share (Heps) to 365 cents for the year ended February 28, coming off a low base in 2021 marked by Covid-19 lockdown restrictions, supply chain challenges and alcohol bans.

The owner of well-known fast food brands Steers, Debonairs, and Fishaways also posted a significant recovery in other key metrics. Group revenue increased by 38% to R6.5 billion, whilst operating profit climbed 428% to R630 million compared to the previous year.

Presenting its annual results on Tuesday (31 May), Famous Brand said that this will include establishments that are both cleaner and safer than before. However, it noted that financial constraints have changed how and where people are eating out.

"Customers are eating out less due to financial constraints and increasingly look for value purchases. We strive to limit our menu price increases to remain competitive. Our promotional activities focus on value for money propositions, including sharing meals. We use our loyalty programmes to incentivise regular purchase," the group announced in a Sens statement.

"Customers are looking for simplicity in their lives, and we need to respond with simple, good value offerings. At the same time, they want to try new things. While we continue to operate with reduced menus for many brands to simplify restaurant operations, we have also introduced selected innovations to retain and attract customers."

Famous Brands added that social media appears to be driving an increase in environmentally conscious and socially connected customers, with the group also noting 'growing consumer mindfulness' for ethical and sustainable sourcing and production, vegan and vegetarian menu options, and better, more environmentally friendly packaging solutions.

Technology shift

Famous Brands noted that  Covid-19 accelerated the adoption of specific technologies, including contactless technology, third-party ordering platforms, and delivery applications.

The group said it is embracing takeaway and delivery, including kerbside pick-up, and third-party delivery, order ahead options and increasing drive-thru capacity.

It is also moving away from more traditional menus in some of its stores. "Our order and pay at table technology allow customers to order and pay for the meal from the convenience and safety of their own device. This also improves table turn times and hospitality while providing valuable data to understand customer behaviour better."

Inflation and pricing 

Over the year, South Africa has seen significant food inflation, peaking at 6.9%.  Famous Brands said its basket price pressures were mainly from beef, green coffee beans, milk and whey powders, oil and spices.

"The stronger rand has helped soften some significant increases in commodity prices. Covid-19 continues to disrupt supply chains with a global shortage of vessels and containers, resulting in higher shipping costs, higher costs of imported goods and longer shipping timelines."