| Fri 18 Aug 2006, 9:27 | | Famous Brands Savours Fruits Of Labour |
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FBR
FBR
Famous Brands Savours Fruits Of Labour
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR ISIN code: ZAE000053328
("Famous Brands")
FAMOUS BRANDS SAVOURS FRUITS OF LABOUR
- System wide retail sales up 22%
- Like-on-like retail sales up 16%
- Food Services division turnover up 42%
- Catering Services division turnover up 31%
Johannesburg, 18 August 2006: Famous Brands (FBR) has delivered another
impressive performance for the four months commencing 01 March 2006, with the
benefits of initiatives implemented over the past year impacting on this period.
Chief Operating Officer, Kevin Hedderwick says: "Whilst a very slight softening
in turnover was experienced, the group continued to benefit from the
indisputable trend which is rapidly establishing quick service restaurants and
casual dining as a way of life in South Africa. The impact of two interest rate
hikes and dramatic petrol price increases only marginally cooled consumer
sentiment in July, and not sufficiently to dampen large scale demand for the
group"s offering."
FRANCHISING
For the review period, system wide retail sales (including new restaurants) rose
22% on the prior comparative period, while like-on-like retail sales grew 16%
across the franchise network. Amongst the group"s mainstream brands, Debonairs
Pizza grew system wide sales by 31% and like-on-like sales by 22%, whilst Steers
and Wimpy improved system wide sales by 22% and 21% respectively and like-on-
like sales by 16% and 15% respectively. These results were achieved on the back
of sub-inflationary menu price increases.
The restaurant network grew by 44 stores nationwide over the period, with the
addition of amongst others, 19 new Steers, 7 Debonairs Pizza- and 6 FishAways
restaurants. The total network now comprises 1 199 restaurants, and the group
is on track to meet its target of 80 net additional outlets for the year.
Hedderwick says that during the review period the group successfully converted
four Whistle Stop sites, situated on Shell forecourts in Middelburg and Midrand
to Steers Diners. Turnover at these re-branded Steers Diners has improved on
average between 30% and 50%, off an initial high sales base.
"This commendable achievement was driven by Steers" brand equity and the
position of these prime convenience sites. We are confident that the success of
this preliminary phase augurs well for the conversion of a further seven
restaurants before the end of 2006," comments Hedderwick.
Innovation continues to drive the group"s strategic imperatives. Debonairs
Pizza is currently trialling a pioneering technology aimed at simplifying ease
of conducting businesses with the brand"s restaurants. If successful, this
programme will be rolled out to a further seven restaurants in the short term.
Wimpy"s "Nutrition Mission" centered on "the choice is yours" concept is geared
to accommodate health conscious consumers requiring detailed product nutrition
information. Initiatives include specifically designed menus and educational
take-home leaflets.
Hedderwick says: "Our philosophy has always been to provide fast food but good
food, facilitated by our quality ingredients and healthy preparation. This
Nutrition Mission initiative empowers our customers to make informed choices.
The response has been extremely positive."
Hedderwick comments: "Of particular excitement to us are our plans for the
coffee category. Wimpy"s Premium Blend campaign, which was introduced to
complement the brand"s existing offering, has attracted a wide range of new
consumers."
Hedderwick adds: "Furthermore, we aim to pioneer a new coffee category when we
re-launch the "revolutionised" Brazilian brand in September. This brand has
undergone a complete overhaul - the new look Brazilian will be a `brand with
attitude" - managed by a new team and delivering a superior quality "grab and
go" offering. We are confident that this brand has the potential to support a
network of 100 restaurants."
"We are also supporting our mainstream brands with aggressive electronic media
campaigns," says Hedderwick, "and feedback shows that these are achieving
excellent consumer recognition levels."
FOOD SERVICES, CATERING SERVICES AND RETAIL SERVICES
The group recently re-engineered its business model along functional lines,
creating stand-alone divisions in food services, catering services and retail
services.
"Our efforts at streamlining the business are starting to pay off," notes
Hedderwick.
Benefitting from increased retail sales, further integration of Wimpy"s supply
business and successful optimisation of capex, turnover from the Food Services
division rose 42% for the period. Capacity enhancement in the group"s bakery
and meat processing plant has been completed and the sauce production plant
expansion will be completed by the end of August.
Hedderwick adds: "Despite a particularly cold, wet winter, the group"s fruit
juice and ice cream businesses, Trufruit and Baltimore, have turned in
creditable performances, with turnover up 27% and 39% respectively. We are
employing this typically quieter period to ensure capacity is in place to
captialise on the peak trading season, commencing in November."
"When we announced our year end results we undertook to focus on improving
margins and to address the return on investment in the Food Services" division.
The improvement in turnover and early indications of an upward trend in margins
is a rewarding start," says Hedderwick.
PROSPECTS
For the period ahead, Hedderwick notes that 24 existing Bimbos sites will be
converted to Steers restaurants by the end of October, with a further two
scheduled for conversion by March 2007. This programme will extend Steers"
footprint as a convenience offering given their prime locations.
Hedderwick concludes: "Our business model is now optimally structured to
capitalise on opportunities across the group, and the fruits of our labour are
reflected in these results. We are however mindful that to continue to grow
this business and entrench our leadership role in our participant categories
means that we have to continue to innovate and pioneer. Focus on product
accessibility and affordability, complemented by asset-sweating will help us to
deliver a similar performance in the forthcoming period. "
18 August 2006
Sponsor: Java Capital (Pty) Ltd
Date: 18/08/2006 09:27:15 AM Produced by the JSE SENS Department
