Food services franchisor Famous Brands has achieved a 568% year-on-year increase in headline earnings a share to 356c for the financial year ended February 28.

The company declared a dividend of 200c for the year.

Operating profit increased by 428% year-on-year to R630-million, from R119-million in the year ended February 28, 2021.

CEO Darren Hele attributes the company’s solid financial performance to a strong Covid-19 recovery, as restrictions eased further and customers returned to restaurants.

Particularly, the South African Brands business recorded a 62% increase in revenue to R918-million, while the Leading Brands business’ revenue was up 58% year-on-year to R773-million.

The Signature Brands business delivered revenue growth of 91% in the reporting year to R145-million.

Famous Brands has a network of 2 824 restaurants across 17 restaurant brands.

Hele says the South African restaurant industry faced headwinds related to a slow economic recovery, customer apprehensiveness to eat out and persistent Covid-19 restrictions, especially in tourism-dependent regions, throughout the financial year under review.

These challenges were amplified by the civil unrest and mass looting experienced in parts of the country in July 2021.

“Where required, Famous Brands provided ongoing financial support to franchise partners in the form of royalty and marketing fee breaks,” Hele notes.

Nonetheless, like-for-like sales for South Africa – across Leading and Signature brands – grew by 35% year-on-year, while system-wide sales (including new restaurants opened) improved by 37% year-on-year.

Leading Brands opened 81 new restaurants in the year under review, revamped 122 restaurants and closed 40 restaurants. Brands in this business include Steers, Debonairs Pizza, Fishaways and Milky Lane.

Signature Brands opened five new restaurants and closed 14 restaurants. Brands in this business include Wimpy and Mugg & Bean.

Further, the impact of Covid-19 in the rest of Africa and the Middle East (AME) gradually subsided in the reporting year, with most markets recovering to trading levels just before the outbreak of Covid-19 started.

AME revenue increased by 9% year-on-year to R346-million, and system-wide sales in the region grew by 20%, which is slightly below pre-pandemic levels. The region saw 31 new restaurants open and ten closing in the year under review.

Famous Brands continues to grow its footprint in AME, through a mix of company-owned stores and franchises.

Meanwhile, in the UK, Hele says, the financial year started with the nation in a state of lockdown, where restaurants could only offer delivery and take away services, before restrictions started easing in May 2021.

The UK restaurant industry faces challenges including significant utility price increases, rising food inflation, supply chain disruptions, fuel cost increases and poor labour availability.

The UK operations reported an operating profit of R17-million before impairments, with one restaurant opening and five closing during the year under review.

SUPPLY CHAIN
Famous Brands’ vertically integrated Supply Chain business comprises manufacturing, logistics and retail divisions.

Manufacturing revenue improved by 31% year-on-year to R2.7-billion, but felt the effects of significant food inflation during the reporting year, peaking at 6.9% during the year.

The performance of logistics improved owing to the easing of Covid-19 restrictions; however, this was offset by more Covid-19 waves later on and, to a lesser extent, the civil unrest experienced in July 2021.

The logistics revenue increased by 35% year-on-year to R4-billion.

The retail division noted a 47% increase in sales to R222-million, in the reporting year. Famous Brands launched 16 new product lines, including dressings, sauces, private label and own-brand coffee blends, and a meat patty.

Famous Brands is focusing on sustaining its revenue and achieving positive cash generation, while the medium-term focus involves recovering margins and further reducing interest-bearing debt.

The company’s interest-bearing debt stands at R1.1-billion as at February 28.