New ‘smart’ restaurants for Steers, Wimpy and Debonairs owner

Famous Brands, owner of the Wimpy, Steers, and Debonairs brands, has seen a jump in its earnings and plans to invest in new technologies.

In its financial results for the six months ended 31 August 2024 (H1 FyY25), the group said that revenue increased marginally while operating profit remained steady.

“The results are largely due to prudence on our cost base even though our operating profit margins were impacted by lower volumes and overhead cost pressures,” said the group.

Headline earnings per share and basic earnings per share grew by 9.5% to 218 cents (H1 FY24: 199 cents) and 11.0% to 221 cents (H1 FY24: 199 cents), respectively.

“Our Leading Brands portfolio continues to perform strongly, with continued good performance from our Casual Dining Restaurants,” said the group.

“The performance of our Signature Brands portfolio is impacted by lack of discretionary consumer income for luxury dining experiences.”

The group’s leading brands include Steers, Wimpy, Fishaways, Milky Lane and Mugg & Bean, while the signature brands include Vovo Telo, Mythos, Paul, Salsa Mexican Grill and Turn ‘n Tender.

The group said its brand performance continues to come under pressure as lower consumer spending hurts demand. The impact at the storefront flows into the Manufacturing and Logistics results as well.

Decreased retail revenue and profitability were primarily due to lower sales volumes of potato chip products.

Despite the challenges faced by the group, it did hike its dividend by 9% to 150 cents per share.

“While the outlook is optimistic with load shedding seemingly under control, political stability, dropping fuel prices, downward pressure on interest rates and importantly reduced food inflation, it may take time before the consumer begins to recover any reasonable disposable income,” said the group.

“In the first half of our trading period, our primary purpose was to support our franchise partners through a tough economic cycle as we anticipate economic recovery.”

“We continue to invest and leverage technology to enable growth and enhance consumer experiences in meeting their ever-evolving needs.”

“We are investigating smart restaurant configurations and sustainable solutions to help our franchise partners understand best practice energy efficiency management and cost savings.”

Smart restaurants generally incorporate advanced technologies into the restaurant space and aim to enhance the overall customer experience.

The group also noted that it has implemented measures to ensure that alternative measures are in place to prevent loss of trade due to water shortages, which have a direct impact on restaurants.

“While business sentiment remains mixed, our focus remains to support our franchise partners through a tough economic cycle as we confidently emerge into the recovery of the economy.”

“We enter the second half of 2024 with slightly less uncertainty in the macroeconomic environment, considering the strengthening of the Rand.”

“Interest rate cuts may provide scope for a more positive consumer outlook. Although it takes time for positive sentiment to translate into consumer spending power, we believe it is trending in the right direction. We are cautiously optimistic about a degree of recovery in the second half of the year.”

The group also has a solid pipeline of promotional activity planned for the peak summer season, with a strong focus on its core brands.

The group said it will continue investing in consumer-facing technologies and plans to open 89 new stores in the second half of FY 2025.

Read: Even wealthy South Africans are living paycheque to paycheque