New strategies introduced to turn around Famous Brands
RESTAURANT and food chain Famous Brands has said it has introduced new strategies to turn around its struggling UK subsidiary Gourmet Burger Kitchen (GBK) after it suffered an impairment of R873.9 million before tax and an operating loss of £2.6m (R48.63m) for the six months to end August.
Chief executive Darren Hele said GBK’s deteriorating financial position had forced the group to initiate a company voluntary arrangement (CVA) following extensive investigation into the options available to improve GBK’S financial stability.
He said the GBK operational loss had increased from the £872 000 it recorded last year.
“The CVA is designed to promote GBK’s long-term financial viability and sustainability. In this regard, the goal will be to reach binding agreements or compromise with GBK’s unsecured creditors, which could potentially enable GBK to exit underperforming sites and achieve rental reductions on others, thereby improving the health and profitability of the portfolio and general financial performance of the business,” Hele said.
He said 75 percent support was required from the unsecured creditors to proceed with the CVA. “We are hopeful that we will receive the required support and will apprise shareholders as the process evolves.”
Hele said Famous Brands would consider additional opportunities that currently existed, including the launch of a multi-vendor online delivery platform to increase the offering from vendors to enhance GBK’s competitiveness in an area in which it has lagged recently.
Famous Brands reported a 5.4 percent increase in revenue to R3.58 billion, up from R3.40bn, while losses widened to R572.10m from a R171m profit last year. The group said the results were negatively affected by an impairment of R873.9m before tax at group level, relating to GBK.
Basic loss per share increased to 572 cents as opposed to basic earnings per share of 171c. However, basic headline earnings per share rose to 188c from 170c last year.
The group did not declare a dividend during the period.
Famous Brands is Africa’s largest branded food services franchisor. Its businesses consists of 25 restaurant brands, represented by 2 874 restaurants across South Africa, the rest of Africa, the Middle East and the UK.
In the Rest of Africa and Middle East, revenue for the combined region increased by 9.9 percent to R135.2m while operating profit rose by 27.2 percent to R24.3m.
Revenue from its South African operations increased by 7.2 percent to R2.7bn and operating profit by 10.4 percent to R434m. Famous Brands rose 1.94 percent on the JSE yesterday to close at R102.60.