South Africa’s favourite guilty pleasure is to see a selection of its stores shut down.
Say it ain’t so? Famous Brands – who own Wimpy, Steers and many more South African staples – have announced some major cutbacks to the business.
In total, 76 of their main brand outlets will close this year as corporate officials look to save money and raise capital by any means necessary. Business Times report that further 20 “niche” stores, including Vovo Telo and Bread Basket, will also see the shutters brought down for good.
How many Wimpy stores are left in South Africa?
Now, don’t be too panicked about getting your Wimpy fix. There are still 478 restaurants open and functioning in South Africa. But Famous Brands’ move shows that not even the biggest names are safe from their new fiscal strategy.
The brand has seen its stores underperform overseas, and they were forced to withdraw operations from both Nigeria and Egypt earlier in 2018.
Why are Famous Brands making cutbacks?
However, it is the turmoil in the UK which is taking the biggest toll on the organisation. Famous Brands acquired Gourmet Burger Kitchen (GBK) in 2016, but the R2.1 billion investment is yet to yield a positive turnover.
Further to that, the 78 Wimpy stores in Britain have failed to compete with the likes of other fast-food and diner-style restaurants in the country. Nolwandle Mthombeni, an investment analyst at Mergence Investment Managers, claims that these cuts will eventually benefit the business.
“One of the most important strategic decisions a management team can do is exit underperforming regions or businesses, as this allows resources to be reallocated elsewhere so they can generate required returns.”
“The brand itself is still dominant in the UK. However, it’s just not meeting the growth projections, especially in light of how much they paid for it. It’s more likely that it will take two to four years longer than initially planned to generate the return on the investment, but it can be achieved.”
What stores and restaurants do Famous Brands own?
- Mugg & Bean
- Giramundo, Bread Basket, Juicy Lucy,
- Brewers Guild
- Vovo Telo
The company have 2 853 outlets in total across the world. The UK failure has had the biggest impact on Famous Brands, who must now decide whether to stick or twist. They believe that GBK will become profitable in the next year, and will pin their hopes of a revival on this franchise.
Source: The South African – www.thesouthafrican.com