17 January 2013

South Africa: Famous Brands Benefits As Consumers Reward Themselves

Listed restaurant franchisor Famous Brands (Fbr) said on Wednesday that several of its biggest brands had recorded their highest ever turnovers last month.

CEO Kevin Hedderwick said there was a sense that for the first time in several years, consumers decided to "reward" themselves and their families after a difficult year - both in terms of going away on holiday and eating out.

Record turnovers by Steers, Debonairs Pizza, Wimpy, Mugg & Bean and Fishaways helped grow Famous Brands' sales across SA and the rest of Africa by 13.2% compared to December 2011, while like-on-like sales increased 9%.

System-wide sales in SA alone grew 12.4% in December, while like-on-like sales rose 8.5%. In the rest of Africa, system-wide sales increased 25.6%, with like-on-like sales improving 15.1%.

Stanlib chief economist Kevin Lings said on Wednesday that while the early estimates of December retail trading updates suggested that Christmas sales were "reasonable", food was among the better performing retail sectors.

Famous Brands has been on an aggressive growth plan, and said in October last year it planned to beef up the presence of its brands by adding 134 restaurants over a six month period.

During December, the group opened 21 restaurants in SA and a further 10 in the rest of Africa, equating to about two restaurants opened per day despite builders' holidays reducing the number of working days in the month.

Hedderwick said that given the prevailing "difficult" trading environment, management's expectations for the period were cautious, and the results for the months exceeded expectations.

"The remarkable turnover numbers reported by our leading mainstream brands is particularly commendable given the sheer size of those restaurant networks," Hedderwick said.

The performance was the result of the strength and growing popularity of the group's brands, as well as a range of promotional activities and product innovations, and the exposure the brands received from being situated on key strategic sites in shopping malls, entertainment centres, airports and on transit routes, he said.

Hedderwick said that in contrast to the 2011 December trading period, there was a discernible migration of holiday-makers from Gauteng to the coastal areas.

"Our restaurants in KwaZulu-Natal and the Western Cape outperformed the inland markets, delivering standout results."

Restaurants on transit sites, at casinos such as Sun City and at coastal entertainment centres also reflected this trend, producing record turnovers.

The group's pub division's flagship brand, KEG, reported "solid growth".

The "robust performance" delivered by the brands at the front end of the business flowed through to the group's manufacturing and logistics divisions at the back-end, reflected by improved sales growth of 17%, Famous Brands said.

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