Guiding consumers since 2009

Famous Brands sees revenue increase despite challenges

By Staff Writer
Despite economic constraints and restrained consumer spending, Famous Brands, who are responsible for franchises such as Mugg & Bean, Steers and Debonairs Pizza, experienced an increase in revenue, for the six month period ended August 2015.
Famous Brands has also been involved in projects which aim “to integrate new high-volume low-margin business into its manufacturing and logistics operations.” This also proved a challenge to the business, being more difficult than originally expected.
Kevin Hedderwick, Group chief executive noted: “[This] pleasing top line turnover growth failed to translate into corresponding growth in operating profit, largely due to the sub-optimal integration of the new supply chain projects into the business. In addition, the final phase of the Group’s Fit-4-Purpose initiative, a programme aimed at bringing the business closer to its customers (franchisees) and consumers, incurred further costs. This investment has now been concluded and the resulting structure will play a significant role in building capacity and capability for the Group’s ongoing growth.”
The results
According to the business, revenue increased by 27% to R1.998 billion. Operating profit increased by 14% to R347 million, while operating margin decreased by 17.4%. This was as a result of margin erosion within the logistics business, according to Famous Brands.
Famous Brands has operations in South Africa, Africa, and the United Kingdom and the Middle East. In South Africa, Hedderwick highlighted that all of the Group’s brands, during the six months under review, experienced good growth. “System-wide sales, including new restaurants, grew 9.1% and same store sales increased 5.2%.”

In the past six months, 64 new restaurants have been opened in the local market, with plans to open a further 116 restaurants in the next six months.
The local market

“Mugg & Bean delivered a standout performance during the period, recording robust double digit growth. This brand continues to demonstrate extreme resilience as well as strong long-term growth potential, not only in South Africa but across the Rest of Africa as well. We are confident that Mugg & Bean, together with the Group’s other bouquet of niche coffee-related brands, will withstand competition from new global entrants,” revealed Hedderwick.
Furthermore, Debonairs Pizza also reported good performance numbers, with both organic and numeric growth. This is despite the introduction of new players into the pizza market within the last year, such as Dominos and Pizza Hut.
“As predicted by management, the much-publicised arrival of new participants in the pizza category has done nothing to slow down the performance of this brand, and in contrast, has served to grow the category, a development which Debonairs Pizza continues to benefit from,” said Hedderwick.
In addition, Hedderwick pointed out that some of the Group’s brands have undergone revamps. This includes Steers, which has seen a change to their brand’s creative platform, menu and promotional offering.
According to Hedderwick, “in the period since this intervention was implemented, strong growth has been reported [by Steers].”
Hedderwick highlighted: “We are resolute in our pursuit of growth strategies outlined at the start of the year, and despite the current challenges, remain focused on capitalising on the opportunities presented.”

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?


How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?


Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.


Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide

Latest Guide

Guide to debt rehabilitation solutions