Branded food services franchisor Famous Brands has achieved a 14.2% increase in its total dividend to R3.45 for the financial year ended February 28. 

This compares with a dividend of R3.02 having been declared in the prior financial year.

The group says its financial performance demonstrated resilience despite difficult trading conditions, with its operating profit having increased by 12.6% year-on-year to R914-million and its operating profit margin having increased to 11%, from 10.1% for the 2024 financial year.

Headline earnings per share (HEPS) also improved by just below 12% to R5.20, compared with HEPS of R4.65 reported in the prior year, while basic earnings per share (BEPS) improved to R5.47, compared with BEPS of R4.57 in the prior year.

The group’s final dividend of R1.95 adds up to the total dividend of R3.45 declared for the year.

CEO Darren Hele comments that the company remained focused on becoming more efficient despite consumers’ limited disposable income for dining out and takeaways in the year under review. The company’s scale of operations and well-known brands provided an advantage in what had been a challenging and highly competitive market.

Famous Brands spent R214-million in capital expenditure in the year under review, spanning all four of its divisions – Brands, Manufacturing, Logistics and Retail.

DIVISION PERFORMANCE

Famous Brands’ Brands division holds 16 restaurant brands, including Steers, Fishaways, Debonairs Pizza, Wimpy and Mugg & Bean. While the leading brands reported a revenue increase of 1.6% in the year under review to R969-million, the signature brands revenue decreased by 4.4% year-on-year to R198-million.

The group’s network spans 2 979 restaurants, including franchised, master licence and company-owned restaurants. It also has nine logistics sites, 11 manufacturing facilities and 188 products that it distributes through its vertically integrated model.

The leading brands’ footprint grew by 3.4% year-on-year with 122 new restaurants having opened, including seven drive-thru locations. The company also revamped 266 restaurants comprising 11% of the South African network to ensure relevancy to consumers.

The signature brands, including Lupa Osteria, Mythos, Salsa, Vovo Telo and Paul, were under pressure owing to lower consumer demand and recorded systemwide sales declines of 2.7% in the year under review.

In respect of the Southern African Development Community (SADC) region, Famous Brands opened 21 new restaurants, including two in the Democratic Republic of Congo.

Revenue in the SADC region increased by 10% to R451-million in the reporting year; however, operating profit decreased to R51-million, from R55-million in the prior year.

The company explains that franchise partners in SADC face significant pressures including increases in food input, electricity, diesel and labour costs.

Famous Brands also operates 68 restaurants in the Africa and Middle East (AME) region, including Egypt, Ethiopia, Kenya, Kuwait, Côte d’Ivoire, Mauritius and the United Arab Emirates. Revenue in this region increased by 27% year-on-year to R71-million in the year under review, but still reported an operating loss of R43-million.

The UK region, likewise, experienced a challenging year marked by significant political and economic uncertainties. Revenue from Famous Brands’ businesses in the UK decreased by 18.5% year-on-year to R132-million, while operating profit decreased from R18-million in the prior year to R7-million in the reporting year.

Moreover, the group’s Manufacturing revenue increased by 2.5% year-on-year to R3.4-billion, while a focus on cost containment and efficiency led to a 25% higher operating profit of R371-million.

Logistics revenue grew by 4.1% year-on-year to R5.2-billion, but operating profit decreased from R94-million in the prior year to R71-million in the reporting year, owing to the challenging operating environment and a product mix shift to lower-value case categories.

The Retail division’s revenue decreased by 6.6% year-on-year to R344-million while operating profit decreased to R1-million, compared with R6-million in the prior year. Here, revenue was impacted by lower sales volumes of frozen potato chips as a major competitor re-entered the market after a stock shortage in 2024.

OUTLOOK

Hele says the economic outlook for its regions remains uncertain owing to global political tension and the US’s policy decisions. South Africa also continues to face its own challenges of low economic growth, high unemployment and deteriorating infrastructure.

He confirms that Famous Brands will continue enhancing its supply chain, investing in its delivery channel, expanding through smaller formats and introducing new drive-thrus to meet consumer demand for convenience.

“The group has a healthy restaurant pipeline with strong interest from new and existing franchise partners. Expansion in SADC and AME remains a focus, with a cautious and targeted approach on specific markets,” Hele adds.

He remains optimistic about the group’s growth prospects, including through new trading formats, technology adoption and menu development.