Simbisa scales up African expansion
PAN African fast foods chain Simbisa Brands Limited says it plans to add almost 50 new outlets across its operations to increase counters under its stewardship to 560 by next year.
The Zimbabwe Stock Exchangelisted group, which has established a footprint in several African markets, has lined up 48 new outlets by next year under its long-cherished ambition to have a presence in most strategic markets.
It is a bold decision, given the uncertainties posed by a relentless rise in COVID-19 infections in the past few months, which have dimmed recovery prospects in most markets.
Fastfood chains were among the worst affected sectors last year after governments worldwide ordered their immediate shutdown to prevent overcrowding as part of efforts to keep the virus at bay.
But Simbisa chief executive officer Basil Dionisio said in a third quarter trading update for the period to March 31, there had been a significant upturn since governments eased pandemic-induced restrictions this year.
He said customer counts had recovered as trading hours surged across its markets.
“The group continues to pursue a short-to-medium term growth strategy hinged on new store openings and growth in the delivery business,” Dionisio said.
“There are 48 new store openings in the pipeline for FY22 (financial year), including the expansion of our casual dining footprint through four casual-dining brand openings. The group continues to work on the development and refinement of the dial-a-delivery mobile application in order to enhance user experience and with the target of growing application-related customers and orders,” he added.
“With the gradual easing of trading restrictions in our operating markets, trading hours are scaling up and with that, customer counts are recovering. Considerable effort has been put into managing our cost base which has seen a considerable improvement in group operating margins. Thus, a recovery in revenue will translate to growth in profitability and improved shareholder returns and value delivery.”
The firm rolled out three new counters in Kenya during the period to add to the existing 513.
In Zimbabwe, the group opened its inaugural Spur restaurant during the first quarter, which was “met with great excitement and trading to date has exceeded expectations”.
The outlet is the seventh new counter the firm has opened in the country between July 1, 2020 and March 31, 2021.
“Although consumer spending power remains under pressure in the market, Simbisa Zimbabwe achieved real growth in average spend in Q3 (third quarter) FY2021 versus the prior year comparable period. US dollar average spend increased 32% and ZW dollar average spend increased 417%, ahead of inflation, versus prior year,” Dionisio said.
Inflation adjusted revenue increased 68% during the review period.
Group operating profit margins dropped from 17% during the third quarter of last year to 12% during the third quarter of last year as a result of the impact of low revenue recorded in the Zimbabwe operations in January and February, against a relatively fixed cost base.