Famous Brands says sales at its UK chain, Gourmet Burger Kitchen, are picking up despite a constrained environment.
Famous Brands, the casual-dining group that has been hobbled by its struggling Gourmet Burger Kitchen (GBK) business in the UK, says it will resume dividend payments to investors thanks in part to better sales from that chain.
After buying GBK for £120m (R2.2bn) in 2016, Famous Brands has already written down the value of that business by more than R1bn. GBK has been struggling amid Brexit uncertainties, the rise of online food delivery and intense competition in the premium burger segment.
But Famous Brands said on Wednesday GBK’s sales were improving, even though the chain’s operational losses widened in the 52 weeks to February 24. “Despite the constrained consumer-spend environment, GBK started to perform better as remedial measures implemented during the year gained momentum,” Famous Brands said.
GBK’s like-for-like sales in the UK in the first six months fell by 9.7%, though in the second six months it recorded positive like-for like-sales of 1.4%. In the 12 weeks following the year-end, the chain produced like-for-like sales growth of 8.1%, “trading ahead of the market”. GBK’s network was reduced from 106 restaurants to 80.
Famous Brands said it would resume dividend payments, starting with a dividend of 100c a share for the financial year to end-February. The company said group revenue in the year rose 2% to R7.2bn, but headline earnings per share fell 19% to 319c. The group aims to open 187 restaurants in the new financial year, and 308 revamps are planned.
“The board and management are committed to restoring the profitability of the UK business and improving the returns for our franchise partners,” it said. “We have made good progress in both our local and UK operations to ensure they are optimally structured to capitalise on opportunities when conditions improve in our trading markets. “The board is satisfied that we have the right leadership and strategies in place to continue to deliver sustainable growth for all our stakeholders.”
Source: Business Day – www.businesslive.co.za