Consumer Pain Hits Wimpy, Steers And Debonairs Owner.
Famous Brands—the franchisor for Steers, Debonairs, Wimpy, Mugg & Bean, FishAways, Milky Lane, Turn n Tender, and more—has seen its profits drop amid the financial strain facing South African consumers.
“South African consumers face several challenges, including political uncertainty, water shortages, an electricity crisis, elevated food and fuel prices, and higher interest rates,” the group said in its financial results for the year ended 29 February 2024 (FY24).
“Despite this background, consumers are more resilient and spend time at restaurants or order take away meals.”
“Restaurants and takeaways offer affordable indulgent moments as a reprieve from their daily challenges. The landscape favours established networks over independent operators.”
Overall, the group’s revenue increased by 8% to R8 billion.
However, operating profit dropped by 7% to R812 million, primarily due to the Gourmet Burger Kitchen liquidation dividend of R75 million received in the prior financial year. When excluding the liquidation dividend, the group’s operating profit would have increased by 3.3%.
When including the liquidation dividend, headline earnings per share dropped by 5% to 465 cents (2023: 488 cents), and basic earnings per share declined by 13% to 457 cents (2023: 523 cents).
The group’s total dividend also dropped by 17% to 302 cents per share.
“Our Leading Brands (Steers, Wimpy and other “fast-food” brands) portfolio continues to perform strongly, with good performance from our Casual Dining Restaurant brands,” said the group.
“However, our Brands’ overall performance was below our expectations as lower consumer spending dampened demand.”
“This lower demand at the front end flowed through to our Manufacturing and Logistics results. Our Retail division continued to gain scale with a 35% growth in revenue.”
The group’s key financials can be found below:
| Financials | FY23 | FY24 | Change % |
| Revenue (Rm) | 7 444 | 8 024 | 8% |
| Operating profit (Rm) | 861 | 812 | -6% |
| Basic earnings per share (cents) | 523 | 457 | -13% |
| Headline earnings per share (cents) | 488 | 465 | -5% |
| Total Dividend (cents) | 363 | 302 | -17% |
Outlook
The group said it will implement its Leading Brands restaurant rollout, which includes boosting its drive-thru presence as new sites become available.
The group will also invest further in consumer-facing technology and improve its own home delivery capability.
“In the medium term, we will evaluate opportunities to divest from non-core assets. We seek optimal disposal options of such assets to unlock value for shareholders,” said the group.
“In 2025, we are planning to optimise our Logistics footprint. This final phase includes relocating our cold storage facilities from Crown Mines to our redeveloped and fit-for-purpose Midrand Campus.
“Furthermore, our focus now turns to delivering a similarly significant project in our Manufacturing division. Our plants are ageing, and some need to be refurnished or even relocated. We are also exploring exciting manufacturing technologies that will offer us a competitive advantage.
“We are developing a roadmap for Manufacturing, with investments carefully staggered over several years.”
