Famous Brands eyes corporate catering, evening diners
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,