- Famous Brands achieves impressive financial performance in 2023
- Revenue and profit soar, surpassing market expectations
- Successful expansion and strong brand portfolio contribute to the company’s success
Famous Brands Limited, a renowned South African franchisor and vertically integrated group, has announced its financial results for the year ending February 2023. Despite a challenging market environment, the company showcased strong financial performance, driven by its diverse portfolio of brands and expanding presence.
With 2,887 restaurants across 17 countries, Famous Brands operates franchised, master licensed, and company-owned establishments in South Africa, the rest of Africa, the Middle East, and the United Kingdom. The company’s business model revolves around four core pillars: Brands, Manufacturing, Logistics, and Retail.
Despite facing constraints in the consumer market and increased competition, Famous Brands achieved impressive growth in key financial metrics. Revenue increased by 15% to R7.4 billion, operating profit surged by 37% to R861 million, and headline earnings per share (HEPS) rose by 37% to 488 cents. The company also declared a dividend per share of 363 cents, representing an 82% increase compared to the previous year.
Famous Brands navigated a challenging operating environment marked by ongoing load shedding, weak economic growth, and high unemployment. However, the lifting of COVID-19 trading restrictions in June 2022 provided a boost to consumer spending on restaurants, travel, and entertainment. This, in turn, positively impacted Famous Brands’ restaurant locations as foot counts and dwell times in shopping centers improved. Although South Africa welcomed more tourists, the levels still lagged behind pre-pandemic figures.
To alleviate the effects of load shedding, Famous Brands implemented financial relief measures for its franchise partners in South Africa, including lower royalties and marketing percentages during load shedding hours. The company also focused on offering value propositions, attractive deals, and loyalty programs to consumers, while marketing campaigns emphasized quality perceptions.
Famous Brands recognized the changing consumer landscape, with more flexible mealtimes due to remote and hybrid work arrangements. The popularity of food delivery and user-friendly apps has transformed this category into a sustainable option. To leverage this trend, the company plans to expand its delivery services, both through its own infrastructure and partnerships with third-party food aggregators. Additionally, Famous Brands intends to roll out smaller restaurant formats at convenient locations and expand its drive-thru footprint.
The operational review highlighted the strong performance of Famous Brands’ Brands division, which experienced revenue growth of 21%. The Leading Brands portfolio achieved a 14% increase in system-wide sales, driven by compelling brands, technology investments, and a return to sit-down Casual Dining. The Signature Brands portfolio also enjoyed a robust recovery, with like-for-like sales up 29% and system-wide sales up 28%.
Famous Brands’ Manufacturing division achieved an 8.5% turnover increase and improved operating profit by 0.8%. The Logistics division reported a revenue increase of 16% and a substantial rise in operating profit by 89%. However, the Retail division faced challenges, including a global coffee shortage, resulting in a decrease in operating profit.
Looking ahead, Famous Brands acknowledges the macro-economic challenges but remains optimistic about growth opportunities. The company plans to expand its footprint through franchising, master licenses, strategic partnerships, and company-owned stores. Additionally, Famous Brands aims to invest in delivery technology, prioritize convenience, and strengthen partnerships with third-party platforms.
Despite concerns about South Africa’s weak economic prospects and load shedding issues, Famous Brands is committed to supporting its franchise partners through financial relief measures. In the Manufacturing division, the focus will be on operational efficiencies, product quality, and environmental sustainability.