Simbisa Brands, the Zimbabwean operator of Nando’s, Steers and Spur, raised revenue by 20% to about R6 billion in the year to June, boosted by an 11% increase in customer numbers and higher spending patterns at the company’s quick-service restaurants.
This stronger full-year revenue performance pushed up headline earnings per share by 45% to about R0.71, while operating profit for the period grew by 28% to about R953 million.
Cash generated from operations rose by 27% to just above R1bn. As a result of this stronger operational performance, Simbisa Brands increased total dividends for the period by 45% to R25.46 per share.
The home market of Zimbabwe “delivered strong operational and financial performance” during the period under review after serving 53.6 million customers during the year. Revenue from Zimbabwe’s fast-food outlets – including RocoMamas, Galito’s and Ocean Basket, among others – grew by 23% for the year to June.
“Customer growth was the result of a deliberate focus on compelling value propositions, improved food quality and enhanced service standards. Delivery orders increased by 75% compared with the prior year, contributing to an 11% increase in average spend,” said Simbisa Brands chairperson Addington Chinake.
Simbisa added 17 new stores and refurbished six existing outlets, bringing its total number of outlets in Zimbabwe, under various franchises, to 352. Operating profit from the Zimbabwean outlets grew by 39% compared with the prior year, with a stronger focus on protecting margins in the face of higher costs related to the fast-food tax, employee remuneration and elevated energy expenses.
Chinake said that “procurement savings, productivity improvements and disciplined control of operating expenditure enabled the business to absorb” some of the cost pressures “while continuing to invest in customer experience and long-term” growth.
“The operating environment, however, remains demanding. Higher employee costs, increased taxation and continued pressure from energy, distribution and input costs weigh on operating expenses,” said Chinake.
In Eswatini, Simbisa raised revenue by 24% compared with the prior year, with growth supported by a 10% increase in customer volumes and a 12% increase in real average spend. Operating profit for the period subsequently increased by 4% year on year.
Political unrest in Kenya affected trading at selected Simbisa locations. Despite these pressures, the group maintained operating margins through disciplined cost management, procurement efficiencies and improved operational execution in Kenya.
Competition in the Kenyan quick-service restaurant sector remained high, warranting a strong focus on pricing, promotional activity and compelling value propositions to stimulate customer traffic and defend market share.
As a result, Simbisa increased customer volumes by 14% against the backdrop of a 3% decline in average spend, which reflected its “value-led pricing” strategy. This was more than offset by stronger traffic, which boosted revenue by 11% for the full year.
In the outlook, Simbisa expects to benefit from ongoing positive customer momentum and a stronger operating base.
“While the outlook remains positive, consumer spending is expected to remain constrained and the group will continue to navigate elevated taxation, employee costs, input inflation and climate-related risks, all of which may place additional pressure on operating margins,” explained Chinake.
THE NATIONAL