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Steers and Wimpy owner Famous Brands has hiked its full-year dividend by more than 80%, reporting earnings that rose more than a third as it benefitted from the lifting of Covid-19 restrictions that saw South Africans flocking back to restaurants.
But while the quick service and casual dining group said on Monday that "foot counts and dwell times" in shopping centres improved to support restaurants located there, it also warned consumers were coming under pressure amid a "competitive environment" that saw it coming head-to-head with others for a "share of wallet".
At the same time, the country's intensifying load shedding affected all its divisions.
The company, which also owns Debonairs and Mugg & Bean, said the local and global "inflation picture remains elevated" and that SA was grappling with country-specific problems such as "persistent load shedding, weak economic growth and high unemployment".
"The restaurant industry is highly exposed to load shedding with impacts including lost revenue, increased operating costs and food waste. We are working with our franchise partners to mitigate the worst impacts of load shedding."
The company reported that its revenue rose 15% to R7.4 billion, "materially higher" than its pre-Covid levels, while operating profit rose 37% to R861 million. Headline earnings per share were also up 37% to 488c, while its dividends per share rose 82% to 363c.
CEO Darren Hele said in a statement that while Famous Brands also completed its revenue recovery and further improved its cash generations from operations, it also "controlled" its cost base tightly, despite an inflationary environment, load shedding and significant input cost increases.
"The removal of Covid-19 restrictions in June 2022 resulted in an immediate increase in restaurant and retail sales. This positive performance in the front end boosted volumes for both our manufacturing and logistics divisions," said Hele.
The company also said that despite the "ongoing macro-economic challenges", it saw "opportunities for growth and innovation in trading formats, technology and product development".
It said it opened three drive-through restaurants in SA, adding it would continue to focus on growing this format in the 2024 financial year.
"The format meets consumers' growing requirements for convenience and security."
It would also be investing in delivery technology to improve its "last-mile efficiency", saying that "partnerships with third-party platforms will remain critical".
