Johannesburg — FAMOUS Brands was counting on weak consumer spending to make potential acquisitions cheaper, CEO Kevin Hedderwick said yesterday.

While the purchase price of the R27m pub group it added to its portfolio yesterday had come down "marginally" from when he first started talking to the owner last year, weak spending might still lower the valuation of other possible acquisitions, Mr Hedderwick said.

"The honeymoon's over. There's going to be some stress in the system to deliver top-line growth ... that's a function of value," he said.

"We've looked at some things, though we say: 'You're wanting too much of a premium and hopefully sanity will prevail.'"

Consumer spending is treading water even with signs of a recovering economy. In the first six months of the year, SA shed 232000 jobs on top of last year's 870 000 losses. With less expenditure on luxuries such as fast food and eating out, businesses are suffering. With lower turnover, profit is lower and going concerns become cheaper.

This was the case with yesterday's purchase. Famous Brands started talking to the owner of the Keg and McGinty's brands, Tony Cotterell, last year. The price came down over that time, albeit slightly.

"We started in November and got to a point in time where, about May, we'd had a number we both agreed. There was ... not a big drop," Mr Hedderwick said.

It is a good time to be buying, an industry analyst agreed yesterday.

"It's a buyer's market. Things are not being snapped up. You've got a lot of negotiating power."

Famous Brands, whose other operations include Steers, Wimpy, Mugg & Bean and - as of last week, a four-outlet grilled-chicken business Giramundo - has money in the bank. The food business does generate cash, particularly at the scale of a company with 1779 outlets in southern Africa and elsewhere. Yesterday's acquisition - for which it paid cash - only raised its ratio of net borrowings to equity to 32% from the 28% it reported in February.

The company would keep looking for purchases, but they would not necessarily be cheap, Mr Hedderwick said. "Not everything is going to be a bargain. There are some brands you might want to look at that for which you would pay a premium."

He did not say what these could be, but said the company would not look outside the food service industry. The move into pubs and restaurants is already a step away from the company's focus on fast food.

Any further acquisition would not necessarily need to be of a franchised business, Mr Hedderwick said. He once engineered the franchising of a portfolio of 14-15 corporate-owned stores in an Australian operation he was involved with.

"We bought the brand and the intellectual property and (the owners) signed franchise agreements with me." He said he would be willing to do it again.

"If a group of corporate stores came my way and I could convert it to a franchise, I would look at it."