Famous Brands focuses on online deliveries

Famous Brands, owner of Steers, Wimpy and Debonairs Pizza, says it is focusing on online deliveries after reporting a “concerning” drop in sales in SA due to coronavirus.

The group said that it had not yet experienced serious disruption of its operations, but since the middle of March there had been a “notable slowdown in store sales activity”.

“Initial indications are that sales have deteriorated steadily over the first three weeks of March as government measures take effect on restricting consumer activity,” the group said.

Markets hit worst by the virus included Britain, Ireland and the United Arab Emirates, the group said

All SA bars, restaurants and shebeens that serve alcohol have been ordered to stop doing so or close, and they are not allowed to host more than 50 people at a time.

“In [the] light of this legislation and the general impact of the virus on customer behaviour, which has seen reduced footfall in shopping centres and restaurants generally, we anticipate that our online and delivery offering will experience higher than traditional levels of usage,” the group said.

The group has intensified its hygiene protocols, and implemented a policy of no-contact delivery for orders paid online.

INITIAL INDICATIONS ARE THAT SALES HAVE DETERIORATED STEADILY OVER THE FIRST THREE WEEKS OF MARCH

Famous Brands said that some of its UK-based Gourmet Burger Kitchen (GBK) restaurants and Wimpy franchised restaurants would attempt to remain open to service the home-delivery market, “but the viability of this option is unclear at this stage”.

Investment analyst Chris Gilmour said GBK was on its way to recovery before the Covid-19 outbreak.

In 2018, the food services franchiser reported a R874m writedown of GBK on tough trading conditions in the UK as uncertainty about Brexit weighed heavily on consumer sentiment.

In the six months to August 31 2019, GBK’s operating loss had narrowed 76%, from the previous R45.4m to R10.7m. In the same period, GBK’s like-for-like sales increased 8.6%. Like-forlike sales are sales recorded by the same number of stores in the previous matching period and exclude sales from new stores opened in the period under review.

“GBK was slowly starting to come around. But now there is nationwide lockdown [in the UK]. That is going to hurt them. We don’t know how long the lockdown is going to be,” Gilmour said.

He said SA could head the same way. “If that happens, it will be a perfect storm for Famous Brands,” he said.

In morning trade on Monday, the share price of Famous Brands was down 11.67% at R24.83.