{"id":804034,"date":"2024-12-12T12:00:00","date_gmt":"2024-12-12T10:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=804034"},"modified":"2024-12-12T12:33:17","modified_gmt":"2024-12-12T10:33:17","slug":"iconic-fast-food-restaurants-shut-down-across-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/804034\/iconic-fast-food-restaurants-shut-down-across-south-africa\/","title":{"rendered":"Iconic fast food restaurants shut down across South Africa"},"content":{"rendered":"\n

A tough consumer environment has forced Famous Brands to close poor-performing fast-food restaurants across South Africa, including Steers, Debonairs Pizza, and Fishaways outlets.<\/p>\n\n\n\n

South Africa\u2019s quick-service restaurant (QSR) industry is navigating a challenging year, grappling with inflation, budget-conscious consumers, and fierce competition from both traditional rivals and emerging threats such as grocery retailers and coffee shops. <\/p>\n\n\n\n

As outlined in Trade Intelligence\u2019s recently published Food To Go report<\/a>, the sector’s ability to adapt has become essential for survival<\/span>.<\/p>\n\n\n\n

The report highlights that while QSRs experienced 11.2% growth, this was largely driven by food inflation rather than genuine expansion. <\/p>\n\n\n\n

\u201cQuick-service restaurants have experienced solid growth in 2023, despite constrained consumer spending,\u201d noted Sandy Sutton, Retail Analyst at Trade Intelligence. <\/p>\n\n\n\n

However, she also pointed out that the same food inflation that has buoyed revenue has simultaneously eroded consumer spending power. <\/p>\n\n\n\n

Famous Brands, Africa\u2019s largest restaurant franchisor, has felt the full impact of this tough environment.<\/p>\n\n\n\n

Chief Executive Darren Hele described the past six months as one of the tightest periods for consumer disposable income. <\/p>\n\n\n\n

Famous Brands, which owns leading chains such as Steers, Debonairs Pizza, Wimpy, Mugg & Bean, and Fishaways, along with signature brands like Mythos, Vovo Telo, and Salsa Mexican Grill, has had to adapt by closing underperforming outlets.<\/p>\n\n\n\n

In its financial results for the six months ended 31 August 2024 (H1 FY25), Famous Brands reported marginal revenue growth and steady operating profit, achieved through stringent cost management.<\/p>\n\n\n\n

Despite this, lower sales volumes and rising overhead costs pressured profit margins. <\/p>\n\n\n\n

Basic earnings per share rose 11% to 221 cents, while headline earnings per share increased by 9.5% to 218 cents. The company also hiked its dividend by 9% to 150 cents per share.<\/p>\n\n\n\n

However, the group\u2019s performance was uneven across its portfolio. <\/p>\n\n\n\n

Leading brands such as Steers, Wimpy, and Fishaways continued to show resilience, buoyed by their strong market presence and appeal to cost-conscious consumers. <\/p>\n\n\n\n

In contrast, the Signature Brands portfolio, catering to more discretionary and luxury dining experiences, struggled amid declining consumer spending power. <\/p>\n\n\n\n

The downturn in discretionary income also impacted the group\u2019s manufacturing and logistics operations, with decreased retail revenue and profitability driven by lower potato chip sales.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Closing stores <\/strong><\/p>\n\n\n\n

To mitigate these challenges, Famous Brands implemented a strategic rationalisation plan. <\/p>\n\n\n\n

Between 1 March 2023 and 29 February 2024, the group closed 47 restaurants in South Africa, including 14 Steers outlets, 11 Fishaways restaurants, 5 Debonairs Pizza outlets, 7 Mugg & Bean stores, 6 Wimpy locations, and 4 Milky Lane branches. <\/strong><\/p>\n\n\n\n

The Signature Brands portfolio also saw significant closures, including the conversion of 10 Fego Caff\u00e9s into Mugg & Bean restaurants. <\/p>\n\n\n\n

This trend continued into the first half of FY25, with an additional 18 outlets shut down.<\/p>\n\n\n\n

The closures were attributed to demographic shifts, increased competition, and the diminishing viability of certain trading areas. <\/p>\n\n\n\n

Nevertheless, the group emphasised that these decisions were necessary to strengthen its overall portfolio and position it for future growth.<\/p>\n\n\n\n

Despite the operational headwinds, Famous Brands remains cautiously optimistic about the future. <\/p>\n\n\n\n

The group\u2019s latest report expressed hope that anticipated interest rate cuts might improve consumer sentiment, though the translation of this optimism into spending power will take time. <\/p>\n\n\n\n

\u201cWe are cautiously optimistic about a degree of recovery in the second half of the year,\u201d the company stated.<\/p>\n\n\n\n

Looking ahead, Famous Brands is banking on a robust pipeline of promotional activity during the peak summer season and a renewed focus on its core brands. <\/p>\n\n\n\n

The company also plans to open 89 new stores in the second half of FY25, signalling a commitment to growth even in the face of economic challenges. <\/p>\n\n\n\n

Investments in digital transformation remain a priority, with innovations aimed at enhancing convenience, customer engagement, and operational efficiency.<\/p>\n\n\n\n

While the QSR sector in South Africa is undeniably under pressure, the resilience and adaptability demonstrated by market leaders like Famous Brands underscore the industry\u2019s potential to weather the storm. <\/p>\n\n\n\n

With strategic closures, targeted investments, and a focus on core strengths, the sector holds onto hope for a brighter future, even as it navigates the complexities of the present.<\/p>\n\n\n\n

\n\n\n\n

Read: China wants its major companies to move operations to South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Famous Brands is closing underperforming outlets like Steers and Debonairs across South Africa as pressure on consumers over the year bites. <\/p>\n","protected":false},"author":92,"featured_media":804039,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[10215,10789,9399,21243,5808,853,9812,5812],"class_list":["post-804034","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-debonairs","tag-famous-brands","tag-fast-food","tag-fishaways","tag-mugg-bean","tag-south-africa","tag-steers","tag-wimpy"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/804034","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=804034"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/804034\/revisions"}],"predecessor-version":[{"id":804101,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/804034\/revisions\/804101"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/804039"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=804034"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=804034"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=804034"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}