Famous Brands eyes continent

Unlike their broader retail counterparts who are feeling the pinch as disposable incomes come under pressure‚ those in the quick-service restaurant segment are being affected to a lesser degree as consumers favour convenience and value over cost.

Famous Brands (Fbr)‚ the company behind Mugg & Bean and Steers‚ on Wednesday said overall franchise sales increased 16.8% for the quarter March to May‚ comprising a 16% improvement in SA and a 27.2% improvement in sales in the rest of Africa region.

Chris Gilmour‚ an analyst at Absa Investments‚ said the group's results were "pretty impressive".

"Quick service restaurant groups like Famous Brands and Taste Holdings (TAS) are offering a very good value proposition and often it's cheaper to buy from them than it is to buy from the supermarket. Furthermore‚ what the 27.2% is really telling us is that they're forging into the rest of Africa and that is making a big difference‚" he said.

Like other retailers eyeing the fast-growing continent‚ Famous Brands will open about 55 restaurants in the rest of Africa this year.

Famous Brands CEO Kevin Hedderwick said the South African food services industry continued to evolve in the current socio-economic environment.

"The competitive trading environment and general economic downturn have trained consumers to look for value. Convenience matters a lot. Consumers are no longer eating three traditional meals a day - these are fragmenting into nibbles and bites at non-traditional times. Particularly strong drivers of growth in the industry are coffee and all-day breakfasts. Coffee is no longer seen as a meal accompaniment‚ but is increasingly being purchased as a snack meal‚" Hedderwick said.

Looking to Africa

Furthermore‚ Hedderwick said the black middle class had grown from 1.6-million people in 2004 to 4.2-million‚ and their disposable income had increased by 35%.

"There is a range of opportunities which we plan to capitalise on in the period ahead. Amongst those is to unlock the potential of our new acquisitions including Turn `n Tender‚ The Famous Brands Great Bakery Company (The Bread Basket's specialist bakery facility)‚ Famous Brands Choice Meats Company and of course growing the volumes and range out of our Coega Cheese company‚" he said.

"Additionally‚ we are enthusiastic about the potential to grow our presence on the African continent. The rest of Africa is fast becoming the playground for opportunistic investors and with more than 12 years experience in the region‚ we believe our strategy to deepen our presence in specifically targeted markets will continue to serve us well‚" said Hedderwick.

The group's supply chain division delivered a 20.8% rise in sales for the quarter.

Hedderwick said it was not just its main brands such as Steers that delivered "stellar" results‚ but also the likes of tashas‚ at the premium niche end of the spectrum‚ which turned in a 22% rise in sales compared with the previous year.

Famous Brands bought a 51% stake in the trendy eatery in July 2008‚ when the operation had two restaurants. There are now 10 chains in SA. The group has plans to open a tashas outlet in Dubai this year.