Fa­mous Brands eyes cor­po­rate cater­ing, evening din­ers

Finweek English Edition - - IN THE NEWS - BY LIESL PEYPER

FA­MOUS BRANDS IS IN EX­PAN­SION­ARY MODE, THANKS TO A SOUND CASH FLOW, A STRONG BAL­ANCE SHEET AND ZERO DEBT.

Food ser­vices fran­chisor Fa­mous Brands is in a very en­vi­able po­si­tion. The group, best known for its ca­sual dining out­lets such as Wimpy, Mugg & Bean, tashas and Europa, and quick ser­vice brands, such as De­bonairs Pizza, Steers and more re­cently Wak­aberry, re­ported a record turnover in the year ended 28 Fe­bru­ary.

Rev­enue rose by 16% to R3.3bn, op­er­at­ing profit in­creased by 19% to R672m and the busi­ness gen­er­ated a 20% higher cash f low of R713m, com­pared to the pre­vi­ous fi­nan­cial year. This places it in an ideal po­si­tion to fur­ther di­ver­sify and grow its op­er­a­tions in the food, man­u­fac­tur­ing and lo­gis­tics arena.

In the fi­nan­cial pe­riod ahead, Fa­mous Brands has its sights on ex­pand­ing into the cor­po­rate cater­ing space and the fast-mov­ing con­sumer goods (FMCG) in­dus­tries. “We’d be able to use the benefits de­rived from the cor­po­rate cater­ing op­por­tu­ni­ties to f low back to the man­u­fac­tur­ing and lo­gis­tics busi­nesses,” says Fa­mous Brands CEO Kevin Hed­der­wick in an in­ter­view with Finweek. “We’ve al­ready tested our met­tle in re­tail with a busi­ness like Thrupps.”

In Septem­ber l ast year, Fa­mous Brands formed a part­ner­ship with the Thrupps gro­cer busi­ness, orig­i­nally a fam­ily-owned su­per­mar­ket es­tab­lished in 1892, that now op­er­ates from Illovo in Jo­han­nes­burg.

“The best way to de­scribe our strat­egy and put it into con­text is that we think Fa­mous Brands has the abil­ity to be­come like An­gloVaal In­dus­tries [which has brands across a range of in­dus­tries, such as bev­er­ages, food prod­ucts, cos­met­ics, shoes and ac­ces­sories].

“But we’ l l mai n l y f o c u s on man­u­fac­tur­ing, lo­gis­tics and food and bev­er­ages. That’s where we want to be long term,” says Hed­der­wick.

An­other area of growth for Fa­mous Brands is in the ta­ble ser­vice evening dining space. “We’re look­ing at ex­tend­ing the trad­ing hours of our ex­ist­ing tashas and Europa brands into the evening,” he says. “In some re­tail spa­ces it won’t be pos­si­ble, but where we have con­verted trad­ing hours into the night the re­sults have been very pos­i­tive.”

As for the ac­qui­si­tion of other brands in the evening dining space, Fa­mous Brands will con­sider names that tick the boxes in terms of eq­uity and value. Spur and Ocean Bas­ket, as an­a­lysts sug­gested pre­vi­ously, are not an op­tion, though. “They meet the cri­te­ria,” says Hed­der­wick, “but they’re not on the mar­ket”.

In the f inan­cial year un­der re­view, Fa­mous Brands opened 213 restau­rants in South Africa alone and in­tends to open an­other 202 in the fi­nan­cial year ahead. The group is rep­re­sented in 16 African coun­tries, in­clud­ing a re­cent of­fer­ing in Benguela, An­gola, where it has part­nered with su­per­mar­ket chain Sho­prite.

Fa­mous Brands’ De­bonairs Pizza stores will trade along­side Hun­gry Lion, Sho­prite’s fast-food chain, and will also be man­aged and op­er­ated by Sho­prite. “Benguela is not a high-den­sity area, but we’re also ex­pand­ing to Viana in An­gola and this holds a lot of prom­ise,” Hed­der­wick says.

On the African con­ti­nent Fa­mous Brands is best rep­re­sented in Nige­ria, where it has 152 out­lets. The com­pany plans to open 35 new restau­rants in Africa, in­clud­ing “a maiden en­try” into oil-rich Ghana.

Since the be­gin­ning of April this year, Fa­mous Brands has in­cor­po­rated Cater Chain – a dis­trib­u­tor of red meat across Africa, which fur­ther en­ables the group to do away with out­sourc­ing man­u­fac­tur­ing. Cater Chain is ex­pected to have a pos­i­tive im­pact on Fa­mous Brands’ in­come stream, but the ben­e­fit, says Hed­der­wick, is only ex­pected to trickle down over two years.

In ad­di­tion to man­u­fac­tur­ing,

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.