Fast foods giant, Simbisa Brands Limited says despite depressed consumer demand across all its operating markets, it will open 49 new stores by end of year as it forges ahead with its expansion strategy meant to increase customer count.
The pan-African group, with operations in Zimbabwe, Zambia, Ghana, Kenya, Mauritius and Namibia currently with 631 stores is targeting to close the current financial year with 680 counters after opening 46 new counters between January and December 2022.
Simbisa owns and operates brands such as Chicken Inn, Pizza Inn, Fish Inn and has the master license to other successful brands such as Galito’s Africa, Nando’s, Steers, Rocomama’s and Vida E Caffé.
“There are exciting prospects for the Group for the remaining six months of the current financial year ending 30 June 2023. The Group expects to open a further 49 stores to close the financial year with 680 stores,” said Simbisa board chairman, Addington Chinake in a statement accompanying half year results.
He said the group will continue to invest any additional free cash generated in strategic assets to achieve its overall target growth trajectory with the 46 new counters opened between January and December 2022 having resulted in organic growth in customer counts of 28.9 percent year-on-year.
A further 103 sites have been identified for FY2024 expected to drive growth and unlock shareholder value.
“The primary growth markets in the short to medium term will be Kenya and Zimbabwe. However, the Group remains vigilant of new growth opportunities in existing and potential new markets and continues exploring business development options,” said Simbisa CEO Basil Dionisio.
The group endured high inflation and currency devaluations in almost all its operating markets. The devaluation of currencies in Ghana, Kenya, Zambia and Zimbabwe led to subdued demand for the group’s products.
Simbisa implemented a pricing strategy during first half of the year to December 2022 that resulted in menu price increments, executed in a minimal and phased approach to minimise the impact on the price-sensitive consumer.
This enabled the Group to keep pace with inflation and exchange rate devaluation to grow real Average Spend in all markets, with the exception of Ghana. Group US dollar Average Spend grew 4.0 percent year-on-year in the half-year period to December 2022.
Resultantly, the Group achieved US dollar top-line growth of 24 percent in 1H FY2022 versus prior year.
Although the inflationary escalation in operating costs outpaced revenue growth, resulting in slightly softer operating margins compared to the prior year period, the Group still achieved 38 percent growth in profitability and increased shareholder returns.