A bright silver lining in the cloud of economic woes is the encouraging performance of listed franchise brands, in particular those in the food service sector. Commenting on the trading results of listed franchise brands, Annaleigh Vallie of I-NetBridge highlighted the encouraging growth in all franchise brands. First to post good results were Spur Corporation who last month reported a 31% increase in diluted headline earnings per share to R1.28 for the year to June. Franchise revenue in the Spur chains rose 13.5% to R155.4m. CEO Pierre van Tonder attributed the company's success to the introduction of its breakfast offering as well as its loyalty card and re-iterated that in tough economic times innovation is the key. "Consumers are cash-strapped, so you have to give them value and quality propositions if you want them to come into your restaurants," he said.
Taste Holdings’ results showed sales increases of 54% to R641 million - much of it attributed to the establishment of distribution depots in Cape Town and Gauteng, which laid the foundation for the group to achieve substantial long-term growth. With over 500 food outlets across the group’s Scooters, Maxi’s, St Elmo’s Woodfired Pizza and The Fish & Chip Co brands, the move to bring the warehousing and distribution in-house would directly benefit franchisees through a leaner, more efficient supply chain management, According to Carlo Gonzaga, the four consumer brands are underpinned by strong value-for-money propositions and The Fish & Chip Co. has extended the group's consumer reach from the traditional LSM 7-10 levels to a larger, diverse universe of LSM 4-10 consumers. The food division also houses Buon Gusto Food Services, manufacturing specialised sauces, spices, dough pre-mixes and added-value meat products for the food brands. The stellar year-on-year performance of jewellery chain NWJ, which showed operating profit rising 26%, driven by strong sales performances, a 6.2% cost increase and a sale mix yielding improved gross margins also added to the bottom line.
Franchise group Famous Brands reported a 20% increase in headline earnings per share to 150c for the six months to August 31 with operating profit up 12% to R207m, while revenue rose 17% to R1.18 bn. In line with its aggressive growth plan, the group is planning to add 134 restaurants over the next six months, growing its footprint to 2 048 restaurants across its brands in South Africa, Southern Africa and the UK.