26 October 2012

Zimbabwe: Innscor Faces Stiff Competition

INNSCOR Africa Limited (Innscor)'s fast food division is facing potentially stiff competition from global brands such as the United States of America's KFC, with information indicating the two have taken up space for drive-in outlets at Ken Sharpe's proposed US$100 million Mall of Zimbabwe to be constructed in the plush Borrowdale area.

In an interview, the manager of West Properties - owners of the property - Mike van Blerk told businessdigest the two will join major brands like Pick'n' Pay at the new mall, now expected to be completed by October 2014.

This comes as market information has linked KFC to a partnership with a local company, where it will open outlets at strategic points across the country.

In the past two years, the local fast food industry has seen the emergence of new outlets in major towns, prominent ones being Tawanda Mutyebere's Chicken Slice and Tawanda Nyambirai's TN Grill.

In September TN expanded its fast food division with the addition of ice cream and pizza outlets across its network.

The growing competition has seen players reducing prices, with consumers now buying a two-piece chicken and-chips combo for as little as US$3,50 compared to US$4,50 previously.

Chicken Inn launched its dollar meal promotion which has seen pieces of chicken or a standard size of chips going for US$1 from the previous US$2.

At Innscor's full year results briefing for the year ended June 30 2012, group chief executive Tom Brown admitted the group was feeling the heat coming from competitors in the fast food division.

To maintain an edge, he said, shareholders had approved a US$50million investment to facelift their products and improve the branch network.

"About US$38 million of that will be spent on our bakeries, fast foods, poultry business, Colcom and some on Capri," Brown said. "We are going to continue with our expansion, improve efficiencies and hope to maintain revenue growth of 15%," he added.

Innscor finance director Julian Schonken said the investment will see the company expand by adding 33 fast food outlets this year comprising Chicken Inn, Pizza Inn and Nandos.

An additional bakery production line with a capacity of 100 000 loaves per day is on schedule for installation this month, to bring capacity to 500 000 loaves per day.

Innscor has emerged as the biggest confectionery company after the collapse of its major competitor Lobels which faced operational challenges at the height of hyperinflation and economic stagnation.

In its financial statements, Innscor reported a 44% growth in operating profit to US$68,5 million after a 21% revenue growth from 2011 to US$627,1 million.

The group's bakeries and fast foods division in Zimbabwe and across the continent recorded a 53% growth in bakery volumes in the period under review. Customer counts in its fast foods operations grew 11% after 13 counters were added to the store network across Zimbabwe in the period under review - eight in Harare, three in Marondera and two in Mutare.

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