Simbisa streamlines portfolio to focus on core brands
SIMBISA Brands says as part of re-organisation efforts, the group has streamlined the brand portfolio to focus entirely on the best-performing core brands and markets in the region.
The restructuring entailed the closure of several under performing outlets and the decision to convert the three smallest markets to a franchise structure.
Group chief executive, Basil Dionisio, said the decision’s strategic intent is to allow Simbisa’s executive management to focus time and financial resources on growing and optimising the largest contributing brands in Zimbabwe and Kenya and to grow and enhance the operations in Eswatini.
“While focusing on fewer markets and brands, the group remains committed to growing its footprint,” he said in a statement of financials for the half year ended December 31, 2023.
The statement reads that in 1H FY 2024, between July 1 and December 31, 2023, the group rolled out 31 company-operated counters.
“With a further 37 counters in the pipeline for the second half of 2024, to be opened between January 1 and June 30, 2024, this brings the total new store openings for the financial year to 68,” said Dionisio.
He added that included in the latter are 14 casual dining outlets, including Rocomama’s, Spur, Ocean Basket, Nando’s, Galito’s, and Steers as casual dining brands, with the new Steers Drive Thru format launched in the Zimbabwe market to cater to the growing demand for fast, on-the-go food service.
Dioniso said Simbisa remains committed to offering customers a class-leading ordering and dining experience through continuous investments in brand and product development and technological improvements.
“In line with global trends, Simbisa plans to introduce in-store customer self-service kiosks to enable customers
to place orders through an interactive screen.
“This initiative is currently in the pilot phase and, once rolled out extensively, is expected to improve operating efficiencies and the overall customer experience,” he said.
Simbisa said that to hedge against high inflation and exchange rate weakness, the group will continue to carefully monitor and adjust menu prices as necessary to maintain real returns while remaining sensitive to customer affordability.
In terms of individual market performance, the Zimbabwe operations achieved revenue growth of 10 percent for the half-year period under review, largely driven by an increase in average spend, which increased 9 percent compared to the prior year, and new store rollouts.
Dionisio said customer count growth was subdued, increasing just 1 percent in 1H FY 2024 compared to the prior year, a result of the challenging operating environment putting pressure on consumer disposable incomes.
“To counter the inflationary pressures on gross profit and operating margins, management has been leveraging the brands’ economies of scale to negotiate competitive prices from suppliers and service providers, engaging landlords to negotiate favourable rentals, and aligning staff numbers to shop size to manage staff costs.
“The results have been favourable, and margins improved on the prior year, resulting in increased profitability,” he said.
He noted that the group remains focused on increasing revenue contribution from delivery channels and in Zimbabwe, the total number of deliveries increased by 24 percent in 1H FY 2024 compared to 1H FY 2023.
“To continue growing sales through delivery channels, Simbisa Zimbabwe will expand the number of stores with delivery services to expand its geographical reach to as many customers as possible,” said Dionisio.
Simbisa said the new Chicken Inn and
Pizza Inn apps were launched in January 2024, to be followed in 2H FY 2024 by the remaining brand apps for Rocomamas, Ocean Basket and Spur.
The group said the new brand apps will improve brand visibility and be used to launch exclusive in-app promotions to drive delivery sales growth.
“An intensive marketing plan will be rolled out in 2H FY 2024, targeting existing and new promotions and value offerings to counter the decline in customer spending power without compromising gross profit margins,” said Dionisio.
He said Zimbabwe opened 31 new counters between December 31, 2022, and December 31, 2023, 20 of which were opened in the half-year under review, and there are an additional 27 new counters in the pipeline for FY 2024 to bring the total number of new store openings for FY 2024 to 47.
In Kenya, customer counts grew 5 percent compared to the prior year in 1H FY 2024, on the back of 27 net new store openings between December 31, 2022, and December 31, 2023.
Dionisio said minimal, inflationary local currency menu price increases were effected during the period under review, remaining cognisant of customers’ demand sensitivity to price increases.
“This resulted in an 11 percent increase in local currency average spend.
However, local currency price increases were outpaced by exchange rate devaluations over the same period, resulting in US$ average spending declining 9 percent year-on-year in 1H FY 2024.
“Local currency revenue, therefore, increased 16 percent year-on-year, while, in US dollar terms, revenue declined by 5 percent on the prior year,” he said.
Simbisa said Eswatini performed well in the half year under review, with customer counts increasing 9 percent and average spend up 7 percent in 1H FY 2024 compared to the prior year, translating to revenue growth of 16 percent yearon-year.