Quick-service restaurant group Famous Brands is confident of experiencing enough sustained demand to open 80 new restaurants per year on average across its franchises over the next three years, the company said in its 2005 annual report, published on Tuesday.
Famous Brands’ franchise portfolio comprises Steers, Wimpy, Debonairs Pizza, FishAways, House of Coffees Coffee Shops, Brazilian Coffee Shops and Whistle Stop restaurants.
Besides these, subsequent to its February 2005 year-end, the group has also acquired Trufruit, a fruit-juice manufacturer, and ice-cream vendor Baltimore Foods.
In the past year, the group added 107 new restaurants to its franchise network, giving it a total of 1 011 shops in South Africa and 90 in the rest of Africa, for a grand total of 1 101 by financial year-end. This is evidence of the strong demand for the group’s products, it said in its annual report.
“Management is confident that sustained demand for the offering will ensure that on average, 80 restaurants are opened per year across the total network over the next three years.”
Management also recognised that, to optimise capacity to existing customers and provide additional capacity for new customers, including the Wimpy business, investment is required in terms of manpower, management information systems and facilities. In this light, R34,7-million has been allocated to fast-track modernisation of the group’s meat-processing plant, bakery and sauce-production facilities.
Famous Brands added that the aim of its acquisition of Trufruit, which supplies Steers, Debonairs Pizza and FishAways, is to grow its revenue by supplying juices to other brands in the franchise network, as well as to external food-services vendors in the hospitality and leisure sector. It is anticipated that the acquired business will contribute approximately 2% to the group’s operating profit.
As for Baltimore Foods, which the group bought in April this year for R14-million, it expects the business will contribute 5% to the group’s operating profit, with favourable potential expected in the medium term.
Famous Brands’ Wimpy franchise network currently contributes 40% to Baltimore’s turnover. With the uptake of additional business from Famous Brands’ other brands, it is expected that turnover could be boosted by about 25%.
For the year to the end of February 2005, Famous Brands reported a 28% rise in gross revenue to R464,7-million, while operating profit increased by 100% to R81,7-million. Headline earnings per share rose by 48% to 58,6 cents. This was attributable to two key factors — the continued buoyancy experienced in the retail sector, and the full-year inclusion of earnings attributable to the Wimpy and Whistle Stop brands. — I-Net Bridge