Operational performance in 2024

In South Africa, low economic growth, sustained load shedding and high unemployment remain key challenges. Against this backdrop, competition has intensified with a rise in advertising spend, major competitor restaurant revamps, and the increasing frequency and depth of value deals and promotions.

South African consumers face several challenges, including political uncertainty, the ongoing water shortages, electricity crisis, elevated food and fuel prices and higher interest rates. According to Statistics South Africa, the local economy grew by 0.6% in 2023, which is not enough to create new jobs and opportunities. Despite this troubling background, consumers are more resilient than expected and still spend time at restaurants or order take away meals. Restaurants and take aways offer affordable indulgent moments as a reprieve from their daily challenges.

Consumers seek affordable and reliable products. The restaurant industry is highly competitive, and the landscape favours established networks over independent operators.

Consumers are enticed through value deals, discounts, smaller meals with lower price points, competitions, menu innovation and loyalty programmes.

South Africa’s socio-economic difficulties and discontent with service delivery result in protest action and growing social unrest. In August 2023, the Western Cape experienced an eight-day taxi strike, resulting in restaurant closures and cancelled restaurant deliveries due to transport unavailability.

Read more about our operating context.

Our 2024 financial year was characterised by:

  • Highly successful loyalty programmes.
  • Rollout of ‘drive thru’ in Quick Service Restaurants.
  • A highly competitive landscape of established restaurant chains.
  • Lost revenue due to increased at-home dining during the Rugby World Cup.
  • A poor peak tourism season for KwaZulu-Natal.
  • Local protests reducing trading days.
  • A difficult environment for small business owners with a high level of bureaucracy.
  • Elevated levels of severe load shedding, increasing operating costs.
  • Impacts from deteriorating infrastructure, including port delays and water outages.
  • Higher insurance, food and fuel costs.

Brands

Our Brands portfolio consists of Leading Brands and Signature Brands. The Leading (mainstream) Brands portfolio is segmented into Quick Service Restaurants and Casual Dining Restaurants, while the Signature Brands portfolio includes our bespoke Casual Dining Restaurant offerings. Our brands are represented through a network of 2 824 franchised and 90 Company-owned restaurants in SA, SADC, AME and the UK. Our Brands portfolio represents 14% of the Group’s revenue (2023: 14%).

Important definitions

System-wide sales refer to sales reported by all restaurants across the network, including new restaurants opened during the year.

Like-for-like sales refer to sales reported by all restaurants across the network, excluding restaurants opened or closed during the year.

Leading Brands’ sales refer to sales of the Leading Brands trading in SA.

Signature Brands’ sales refer to franchises and Company-owned store sales in SA as well as cross-border sales where the AME management team does not manage the brand.

Our global footprint

SA

The impact of load shedding on our restaurants

The restaurant business is particularly vulnerable to load shedding, with impacts including lost revenue, higher running expenses and a rise in potential food waste. Higher levels of load shedding increase the risk of generator failures, which may require the restaurant to close during load shedding.

There are several other negative knock-on impacts of load shedding. Suppliers may be unable to deliver products or may be delayed. In addition, prices for ingredients increase, and suppliers must run generators to produce and store their products.

The calendar year 2023 was the worst year of load shedding to date, with power cuts in effect for around 335 days or 83% of the year. This is more than double the amount experienced in 2022 and almost ten times as much as in 2021. Significant portions of the year were at load shedding stages 5 and 6. Load shedding runs throughout the week, including weekends, which affects prime trading hours.

At year-end, 95% (2023: 82%) of our South African Leading Brands restaurants had access to alternative power solutions including generators, inverters with battery backup and/or solar. This includes 103 restaurants, approximately 4.3%, that are not impacted by load shedding and fall into a non-load shedding zone.

Restaurants trading on alternative power are split into full backup power (82%) and partial backup power (18%). Full backup power is defined as the entire site and all equipment (full menu, extraction, cold storage and heated storage), while partial backup power is defined as a reduced menu offering with limited equipment and excludes cold and heated storage.

On average, restaurants with alternative power solutions and those in no load shedding zones have experienced a positive 7.5% growth versus the prior year. In comparison, those with no alternative power solutions realised a -10.5% restaurant growth compared to the prior year. In 2024, approximately 15% of all restaurant sales of Leading Brands were generated using alternative power.

Since March 2023, we have assisted franchise partners that have invested in alternative power solutions with a 1% break (0.5% royalty and 0.5% marketing) on their franchise fees for sales generated during load shedding. By year-end, the financial assistance provided to franchise partners was R20.6 million.

Famous Brands invested in an energy project to determine the best alternative power options for franchise partners to ensure they are more informed regarding their choices. We continue to investigate energy management practices that can be adopted across the network with little to no capital investment. Energy efficiency reports tailored per brand have been shared with franchise partners. These reports are continuously updated with best practices, resulting in energy savings for franchise partners. The most efficient alternative power solutions are integrated into new restaurant builds.

We assist franchise partners with implementing local store marketing activities to create consumer awareness that their restaurants are trading during load shedding.

Load shedding also affects cell phone connectivity which means that consumers are not always able to place orders via their phones. Drivers are equipped with dual SIM cards to improve network availability and minimise disruptions related to cellular network connectivity, which can affect consumer communication and payment issues. All national outsourced call centres have alternative power solutions in place to ensure smooth operations during load shedding.

Famous Brands launched a project to monitor all restaurants’ online ordering status. Dedicated resources monitor online ordering availability for delivery, collect, order ahead, and order and pay at the table. They flag any restaurant that is offline to ensure this is corrected and the store is brought back online as soon as possible.

In 2025, we plan to focus on the following to improve our resilience during load shedding:

  • Continue to assist with landlord negotiations regarding generator access and more favourable lease terms to ensure a sustainable business model for franchise partners.
  • Introduce gas equipment alternatives where possible.
  • Ensure that key strategic sites leverage alternative power.
  • Customise alternative power solutions per site.
  • Explore the commercial viability of solar and battery backup solutions for eligible sites.

Leading Brands

Performance and focus areas

Leading Brands’ system-wide sales improved by 6.4%, and like-for-like sales increased by 4.3%. These solid results can be attributed to our well-established brands, value offerings and careful management of menu price increases.

Consumer price sensitivity and the search for affordable products and deals are evident in the Quick Service Restaurant and Casual Dining Restaurant spaces. In addition, the accessibility of the restaurant and its location further play into the affordability calculation. Restaurants that are closer and do not require additional travel costs are often chosen, even if they may not be their preferred brand choice. Value is also found in sharing, particularly within the chicken and pizza category, where the value equation is balanced by the number of people that the meal is able to feed. This extends to other food types, where quantity for a price remains critical to denoting value.

Most restaurants can trade during load shedding, contributing to our resilient results. We placed significant emphasis on closing the power gap by encouraging franchise partners to implement alternative power solutions. However, we have undoubtedly lost sales where alternate power solutions are not yet available. In general, Casual Dining Restaurants delivered better performance than Quick Service Restaurants. They tend to be situated in shopping centres where landlords provide alternative power solutions.

There was some upside from load shedding on take aways and some easing of food inflation, but there is no substitute for uninterrupted trade. Consumers have been forced to cut back on discretionary spending, which is evident in a slowdown in transaction size growth.

Growth in the delivery channel slowed across all brands. Menu engineering across third-party platforms and own delivery is essential to achieving targeted gross profit margins. The collect ordering and drive thru channels continue to perform strongly, and we opened five new drive thru restaurants in 2024.

While overall airport passenger numbers (domestic and international) at all major airports are growing double digit compared to the previous year, only smaller regional airports reflect higher passenger numbers than 2019 (pre-Covid-19). Despite this, our restaurants at airports continue to deliver strong results and attract improved passenger numbers.

The rollout of digital menu screens and self-service terminals at Quick Service Restaurants accelerated, offering a better customer experience and allowing for quicker menu changes. In general, investing in consumer-facing technology is important in ensuring our relevance and meeting consumer needs.

Franchise partner profitability remains a key priority, and our alternative energy drive aims to ensure that these alternatives are accessible and cost-effective and provide long-term efficiencies to ensure sustainability and lift gross profit margins.

We continued to sell our Leading Brands Company-owned restaurants, and at the end of February, we owned six restaurants (2023: 12).

Leading Brands will differentiate its offerings through a customer-centric approach, innovation, technology enablement and a strong commitment to social responsibility. This will position the brands to weather the current challenges and prosper in a competitive environment.

Read more about our investment in consumer-facing technology and our brands’ CSI activities.

Leading Brands portfolio: Quick Service Restaurants

Focus areas for 2024
  • Grow delivery on own platform and third-party delivery platforms.
  • Roll out self-service terminals and digital screens across all restaurants.
  • Support the promotional strategy through increased media spend.
  • Deliver improved profitability for franchise partners.
  • Ensure that products are affordable and offer value to consumers.
  • Capitalise on opportunities to provide catering for corporate events and other festivals.
  • Increase our CSI contributions through the ROUNDA initiative.
Key developments and initiatives
  • Exceeded our budget for new restaurants by opening 17 new restaurants. We closed 14 restaurants and revamped 68.
  • To meet consumer demand for convenience, we opened five new drive thrus, increasing the total number of drive thrus to 52.
  • Made changes to the menu mix by introducing new affordable options to attract consumers.
  • Steers continued to roll out self-service terminals and digital menu screens to improve the consumer experience. By year-end, 112 self-service terminals were operational.
  • Steers implemented successful marketing campaigns to promote value offerings and new innovations, including a Turkish delight milkshake and a higher quality rib offering.
  • Steers continued to capitalise on its Varsity Cup sponsorship with a strong focus on vending at viable sites. This sponsorship builds brand affinity and includes significant media support on television through SuperSport and digital and social media platforms.
  • Steers completed the trial of the Steer Fried Chicken concept. The performance of the trial did not meet expectations and was shelved.
Focus areas for 2025
  • Continue to address the need for affordability through value offerings.
  • Invest in growing the own delivery channel.
  • Roll out self-service terminals and digital menu screens.
  • Support sponsorships, such as the Varsity Cup, to build brand affinity.
  • Secure attractive sites for drive thru restaurants to meet consumer demand for convenience. These will be supported by local outdoor advertising campaigns and signage.
Focus areas for 2024
  • Offer customers exceptional value despite inflationary pressures.
  • Implement carefully considered menu price increases to keep pace with inflation.
  • Roll out delivery hubs to reduce delivery costs and improve efficiencies.
  • Invest in technology to support the consumer experience and operational efficiencies.
  • Support our own delivery channel and strengthen partnerships with third-party food delivery aggregators.
Key developments and initiatives
  • We opened 34 new restaurants, closed 5 and revamped 57.
  • We continued to roll out the Debonairs Pizza express container concept to take pizza to communities that cannot easily access our restaurant option. We opened one container in 2024.
  • We continued to convert all restaurant in-store menus to digital menu boards and introduce self-service terminals. All new Debonairs Pizza restaurants have self-service terminals.
  • The brand continued to roll out kitchen display systems to monitor prep times and implement measures to reduce order prep time, increase capacity, and exceed consumers’ expectations.
  • We launched 26 delivery hubs which has driven operational efficiencies and decreased the delivery cost per drop.
  • The brand upgraded its delivery software to a new version, which has improved driver tracking and the consumer experience, shown by better experience ratings and on-time deliveries.
  • To revitalise our offering, we refreshed our menu in November 2023 and introduced nine new products.
  • We launched our new Real Deal range of pizzas starting at R29.90 to target the cash-strapped consumer. Shared meal deals remain a key part of our value proposition.
  • The brand continues to build affinity through its sponsorship of soccer, including SABC’s Soccer Laduma and international and local soccer events on DSTV.
  • We launched the IFA Lethu, which means our legacy, an insurance benefit that covers all registered delivery drivers in the event of accidental death or disability while on duty. Famous Brands is fully funding the premiums for the policies.
  • Our flagship Doughnation CSI initiative continues to make good strides, with 80% of our franchise network making at least one donation in their communities every week (read more).
Focus areas for 2025
  • Grow the brand by offering incredible value and product innovation.
  • Invest in technology to enable growth and efficiencies.
  • Auto-allocation of orders to drivers will be enabled for all delivery restaurants to improve efficiencies and boost the consumer experience.
  • Continue the roll-out of digital menu boards.
  • To complete the rollout of kitchen display systems.
Focus areas for 2024
  • Grow the delivery channel through own delivery and partnerships with third-party delivery aggregators.
  • Promote the under 500-calorie menu offerings and exploit the market opportunity for healthier choices.
  • Continue to build the Fishaways brands through advertising campaigns that emphasise the value of fish as a component of a healthy lifestyle.
  • Continue to roll out the elevated eat-in experience and sushi offering.
Key developments and initiatives
  • In 2024, six new restaurants opened and 11 closed. There were 26 revamps completed.
  • Provided excellent value through smaller and affordably priced meals and sharing promotions.
  • Increasing the number of restaurants that offer own delivery and third-party food delivery aggregators. By year‑end, 66% of the network offers delivery.
  • The brand continued to leverage the delivery hub model resulting in improved delivery metrics and positive customer feedback.
  • We continued to leverage and extend the Momentum Multiply partnership.
  • 18% of restaurants launched the elevated eat‑in experience receiving positive feedback from consumers.
  • We continued to roll out the sushi offering to attract new consumers and expand our product offering.
  • The gross profit margin improved due to more consistent supply and pricing on hake and benefits realised from our packaging cost reduction projects.
  • Fishaways now has 95% recyclable, biodegradable and compostable packaging.
  • Fishaways launched a CSI initiative called Clean Up Mzansi, which aims to reduce plastic pollution in our rivers and oceans and protect marine life (read more).
Focus areas for 2025
  • Ensuring a profitable and sustainable business model for franchise partners without compromising the value and quality of products offered.
  • Promoting new avenues of brand growth, including the sushi offering and an elevated eat-in experience at appropriate sites.
  • Improve our own delivery capabilities.

Leading Brands portfolio: Casual Dining

* 10 Fego Caffés were converted to Mugg & Bean restaurants.
Focus areas for 2024
  • Managing menu price increases in an inflationary environment to provide value to consumers while protecting franchise partner profitability.
  • Menu innovation, especially in plant-based meals, to attract customers and support growth.
  • Expanding our partnership with Discovery Vitality and ensuring consumers are aware of this partnership.
Key developments and initiatives
  • Despite a challenging external environment, Mugg & Bean’s strong financial performance reflects a return to sit‑down dining and brand loyalty.
  • We grew our brand footprint by opening five sit-down restaurants, 13 On-The-Move smaller formats and four coffee carts. This takes our total footprint to 254.
  • We have experienced a significant increase in registrations and regular usage of our loyalty app. To improve consumer engagement, we simplified and enhanced the app’s user experience.
  • Our coffee subscription (available on app) continues to perform well, supporting more regular visits from consumers and growth in monthly user spend at restaurants.
  • Mugg & Bean’s partnership with South Africa’s renowned plant-based chef, Mokgadi Itsweng, has grown in scope and range. Consumer demand for her plant-based dishes has been robust, and we have continued to introduce new offerings.
  • The Mugg & Bean partnership with Discovery Vitality continued to evolve and grow. We are a Vitality Active Rewards partner where Vitality clients can redeem earned rewards. In 2024, we expanded our range of HealthyDining meals on menus with some dishes developed with Mokgadi Itsweng. This year, we expanded our HealthyDining benefit to our On-The-Move format, allowing consumers to find healthier options while on the go.
  • Mugg & Bean continued to be recognised in independent consumer studies as a leading restaurant brand for consumer satisfaction, experience and product offering. We received several accolades in 2024 (read more).
  • Mugg & Bean continued to partner with Cupcakes of Hope and raised an incredible R2.1 million to assist families with dealing with the direct and indirect costs of childhood cancer treatment (read more).
Focus areas for 2025
  • Manage menu price increases carefully.
  • Offer freshness and menu innovation to attract consumers.
  • Growth our network with a focus on the On-The-Move Format.
  • Continue to promote and enhance our loyalty app.
Focus areas for 2024
  • Entrenching Wimpy’s position as the inclusive restaurant that welcomes all South Africans with the entire menu available in all 11 official languages.
  • Providing consumers with a variety of quality meal offerings at attainable prices to deliver an overall positive sit‑down experience.
  • Building a take away model in partnership with Engen.
  • Improving franchise partner profitability by unlocking operational efficiencies.
  • Building own delivery capabilities and implementing targeted marketing campaigns to boost presence and promotions on third-party delivery aggregators.
  • Promoting the Wimpy loyalty app.
Key developments and initiatives
  • Wimpy delivered a strong performance with good growth from the Western Cape, Eastern Cape and Gauteng East segments. Airport, garage, casino and strip mall sites were our biggest growth contributors.
  • We opened seven new sit-down restaurants and one new drive thru in Melkbosstrand, the first for the brand in the Western Cape. By year-end, Wimpy had 14 drive thrus nationwide.
  • We relocated eight restaurants in line with our restaurant positioning strategy. We revamped 21 restaurants.
  • Our app has demonstrated consistent growth and engagement over the past year, reflecting positive user adoption and satisfaction.
  • The Wimpy brand developed a Quick Bites concept in collaboration with Engen to offer a smaller format on well‑travelled routes. The pilot site went live in April 2023 and offered a streamlined menu designed for take away while highlighting core Wimpy favourites. The concept has been well-received by consumers.
  • We continued to roll out self-service terminal units to improve the consumer experience.
  • We focused on improving the consumer experience through the successful Hospitality Ambassador Training Programme. This programme empowers restaurant teams to deliver service that leaves guests feeling welcomed, valued, and respected, boosting positive consumer feedback and excellent online reviews.
  • Our promotional activities focus on growing our lunch occasion while maintaining our breakfast market. The key focus of our lunch promotions was value, ensuring we offer great value at a competitive price point.
  • We built on our partnership with Ethnikids to create a new set of inclusive children’s books featuring various South African languages. This year we extended this partnership into a CSI initiative to address South Africa’s literacy crisis (read more).
  • We continued to partner with Reach for a Dream to make a difference to children fighting life-threatening conditions (read more).
Focus areas for 2025
  • Positioning Wimpy as a family restaurant that welcomes all South Africans.
  • Enhancing the customer experience through technology, including our loyalty app.
  • Promoting our value for money products and kids’ value proposition.
  • Ensuring franchise partners’ profitability by improving operational efficiencies, including energy efficiencies.
  • Our restaurant positioning and accessibility are key to our growth. We will focus on opening sustainable restaurants in the right locations. This includes securing suitable sites to expand the Quick Bites concept.
Focus areas for 2024
  • Build on the hub and spoke model of restaurants and mobile carts.
  • Provide innovative products and more points of purchase to improve appeal and access for customers.
  • Grow delivery via third-party food aggregators.
Key developments and initiatives
  • In 2024, we opened nine new restaurants and closed four. We also launched 16 new mobile cart sites. We now have a total of 96 mobile carts nationwide.
  • We continue to benefit from our mobile carts selling products at school events, flea markets and festivals. This year we had a presence at events such as Comic Con Johannesburg, the Festival of Motoring and the Waterkloof Air Show. In 2024, we launched mobile vending at Durban beachfront.
  • The brand continues to benefit from impulse purchases and increased customer activity at its entertainment complex and major mall sites.
  • We continued to innovate in our impulse category with a new flavour variant of Caramel P.S NiceCream Stix in partnership with Cadbury P.S., a much-loved brand.
  • Milky Lane launched our two-litre tub ice cream range through the Retail division. This range, which is available nationally at selected stores at a competitive price point, was launched with Pick n Pay.
  • We continue to leverage third-party delivery aggregators to conveniently deliver our product to consumers.
  • Milky Lane continues to support the Smile Foundation (read more).
Focus areas for 2025
  • Expand the hub and spoke model to boost revenue opportunities for franchise partners.
  • Entice customers with new products and promotions.

Signature Brands

Our Signature Brands portfolio comprises a range of bespoke Casual Dining offerings. There are 132 Signature Brands restaurants in South Africa. With the exception of PAUL1, with non-controlling shareholder, Signature Brands are 100% owned by Famous Brands. The Group operates eight Company-owned restaurants within the Signature Brands portfolio.

Read more about our Signature Brands portfolio.

1 Licensed brand by PAUL International.
* Included in this figure are the 10 Fego Caffés that were converted to Mugg & Bean restaurants and one Fego Caffé that was converted to a Vovo Telo.

Trading conditions in 2024

Trading conditions remained challenging with increased load shedding, water disruptions and fuel price increases. From September to November 2023, the Rugby World Cup negatively affected trading activity, and restaurant patrons stayed home or visited friends to watch the games. Activity recovered slightly from December 2023 onwards. In general, evening trade has not recovered to pre-pandemic levels, and those who do make evening reservations tend to book earlier.

Franchise partners faced high food inflation and steep increases across alcohol types. Post the 2024 South African budget announcement with sin tax increases, local wine producers increased their prices between 7% to 14%. Some of these increases have been passed on to consumers. These trading conditions remain unfavourable for attracting new potential franchise partners.

Performance and focus areas

The Signature Brands portfolio experienced a mixed performance due to increased load shedding, the conversion of restaurants to Leading Brands portfolio and consumers with low disposable incomes. Like-for-like sales were up by 6%, while system-wide sales were up by 2.5%. The operating profit margin declined to -2% (2023: 4%) due to impairments of R12.9 million.

Signature Brands offers streamlined menus to simplify restaurant operations, manage gross profit margins and reduce staffing requirements in a lower turnover environment. The leadership team continues to assist franchise partners in renegotiating more favourable lease terms to support their long-term sustainability. On a positive note, many landlords now offer better lease terms and conditions to tenants. In addition, strategic, hard-to-secure restaurant sites have emerged and Signature Brands is able to capitalise on this.

Franchise partners continued to receive financial support in royalty and marketing breaks using a sliding scale model.

Fun Dining

The Fun Dining category remains under pressure due to consumers choosing to forgo eating out. LUPA Osteria has demonstrated the most resilience with strong system-wide sales due to its footprint of blue-chip locations across Gauteng.

In the Fun Dining category, five restaurants closed, and there have been few opportunities for new restaurants as several new development projects were delayed during the year. However, the outlook for 2025 is more promising, with four new restaurants in the build phase, with Fun Dining restaurants on target to open eight new restaurants. The Signature Brands team is actively looking for new sites to grow the portfolio’s footprint.

The one Zambian Turn ‘n Tender restaurant closed at the end of February 2024. The brand will focus on its core objective of growing the brand in South Africa.

Captive Markets

The NetCafé and Coffee Couture recovered strongly as hospital environments extended their visiting hours and attracted higher footfall. NetCafé and Coffee Couture both enjoy positive landlord and franchise partner relationships. These restaurants remain largely unaffected by load shedding due to hospital generators, although they are billed for diesel consumption and generator maintenance.

We continued to support the remaining Fego Caffé restaurants. In 2024, we converted 10 Fego Caffé restaurants to Mugg & Bean restaurants and one to a Vovo Telo. This conversion means that these restaurants have been moved to the Leading Brands portfolio and no longer contribute to Signature Brands’ revenue or restaurant numbers.

Luxury

The PAUL brand continues to attract a higher-income café clientele and opened its first Cape Town restaurant in May 2023 at the V&A Waterfront. This is a flagship restaurant with an excellent location. PAUL faces the same consumer pressures felt by the Fun Dining category. We continue to refine the business model to reduce costs and improve the gross margin.

Vovo Telo experienced strong revenue growth in 2024, which was supported by the opening of three new restaurants. Their position in mostly residential malls and strong coffee, breakfast, and lunch offerings continue to attract loyal consumers.

Pick n Pay barista concept gains scale

The Roastery is an in-store coffee kiosk within the Pick n Pay corporate-owned supermarket network. It was launched in 2019 and has a presence in 40 stores, with one new kiosk opened in 2024. The Roastery caters to coffee enthusiasts who are looking for high-quality coffee at a reasonable price point.

It provides coffee, hot and cold drinks and light snacks. It also retails private label coffee beans and filter coffee for at-home consumption. According to the South African Coffee Industry Landscape Report 2023 by Insight Survey, the South African at-home coffee market is set to grow by 13.6% between 2023 and 2027.

The Famous Brands Coffee Company sources, roasts, and packages coffee products.

Pick n Pay benefits from ongoing support from the Signature Brands team, including barista training for its employees. The Roastery offers a built-in kiosk and a coffee cart, which require less space and have a lower initial investment. Famous Brands receives a turnover-based royalty fee per kiosk and coffee cart.

Signature Brands focus for 2025

Our focus areas for 2025 include growing selected brands in South Africa and capitalising on good sites becoming available at attractive rentals. As always franchise partner profitability and the sustainability of the restaurants is a priority. We will continue to manage food inflation closely while keeping our menu pricing competitive. We intend to convert the remaining Fego Caffés to Mugg & Bean restaurants.

SADC

The South African Leading Brands team manages the Leading Brands SADC market, which includes Angola, Botswana, Eswatini, Lesotho, Namibia, Malawi, Mozambique, Zambia, and Zimbabwe. There are 207 restaurants in this region. While Mauritius is a SADC country, it is managed by the AME team.

Trading conditions

Many countries in the SADC market face severe inflation. At the end of February 2024, inflation in Anglo was 22%, Malawi was 35%, Zambia was 13.5%, and Zimbabwe was 47.5%. Most SADC currencies have weakened against the Dollar, increasing inflationary pressure as the price of imported goods increases. This, together with growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still fragile recovery post-pandemic.

We have a large presence in Angola (13 restaurants) and Botswana (48 restaurants). Angola’s economy grew by 3.2% in 2023 compared to 3% in 2022, lifted by strong growth in the agricultural, mining and oil sectors. Inflation soared as its currency, the Kwanza, experienced a sharp devaluation in June 2023, and the fuel subsidy was removed, which saw fuel prices almost double. The devaluation, where the currency weakened by 60% from 500 Kwanza to 800 Kwanza to the Dollar, is due to extensive government loans that were due.

Botswana’s growth slowed down to an estimated 3.8% in 2023, compared to 5.8% in 2022, as demand for its diamond exports decreased. However, inflation reached 3.2% by September 2023 and is expected to remain in a range of 3% to 6% in the short to medium term.

Performance and focus areas

System-wide sales increased by 21.8%, while like-for-like sales increased by 13.2%. Revenue for the region increased by 4% to R409 million (2023: R395 million), with revenue growth driven by appreciation of the Pula. Operating profit improved to R55 million (2023: R50 million), while the operating profit margin was 13.4% (2023: 12.7%).

Despite inflationary conditions, we managed menu prices carefully to maintain market share without alienating consumers. In some instances, we held prices at the expense of the gross profit margins to offer competitive price points.

We are building our own delivery capacity in SADC. In Zambia, we launched the first outsourced call centre. Enhancements to our reporting tool for SADC call centre performance went live in 2024 and will benefit Botswana, Namibia, and Zambia. In Namibia, offering home delivery provides a first-mover advantage.

Famous Brands is investing in technology across the region to drive convenience and the consumer experience. This includes the rollout of self-service terminals and digital screens at restaurants.

In 2024, we opened 22 restaurants and revamped 15 restaurants across the region.

SADC focus for 2025

We will continue to grow our network in SADC through well-chosen sites with attractive rentals. We continue to invest in our own delivery capabilities as well as consumer-facing technology to improve the overall consumer experience.

AME

The Group operates in seven countries in the AME market outside of SADC. These include Côte d’Ivoire, Ethiopia, Kenya, Nigeria (an associate), Mauritius, Saudi Arabia and the United Arab Emirates (UAE). In 2024, we had to close our operations in Sudan due to the outbreak of war. We also exited Oman as our licensee closed its Quick Service Restaurant operations.

Trading conditions

2024 was a difficult year for several of Africa’s economies, with muted growth, fiscal challenges and high inflation and inflation targeting by central bankers. Across many markets (Côte d’Ivoire, Kenya, Mauritius, Saudi Arabia and the UAE), inflation has trended lower in 2023, settling between 4% and 6% by the end of February 2024. However, in Ethiopia and Nigeria, inflation has increased sharply to 28% and 30%, respectively, by year-end. Notably, the Nigerian Naira and the Kenyan Shilling depreciated against the dollar by 78%, and 18%, respectively.

In Ethiopia, internal conflict continues in the Amhara Region, with the potential to escalate into other areas of the country. Tensions with neighbours Sudan and Egypt over a hydropower project have also fuelled increased uncertainty among businesses and consumers, leading to depressed retail spending.

Mauritius enjoyed strong economic growth in 2024, with the recovery of the tourism sector and the development of the fishery and sugar sectors boosting consumer spending.

While economic growth in the UAE slowed to 3%, compared to 7.9% in the previous year, its economy remains resilient. New competitors have entered the market, creating upward pressure on rentals and offering deep discounts to attract consumers.

Saudi Arabia’s economy contracted in 2024 due to a cut in oil revenues. However, its non-oil economy grew, driven by private consumption as households continued to take advantage of new spending opportunities in sectors such as entertainment and tourism. In the Middle East, the Gulf states, largely dependent on oil for revenue, all have plans to diversify their economies and sources of income and attract foreign investment.

Performance and focus areas

Revenue increased by 68% to R55 million (2023: R33 million). Operating loss was R14 million (2023: (R26 million)), while the operating loss margin was (26.0)% (2023: (77.7)%).

The home delivery channel continues to attract new consumers, and we invested in making this channel more accessible in 2024.

In 2024, 13 restaurants were opened while two were revamped. We continued to roll out self-service terminals and digital menu screens across the region. Famous Brands is growing its footprint of Company-owned restaurants in selected markets, including restaurants in Mauritius. We acquired a 51% majority shareholding in Famous Brands Restaurants Holdings with a portfolio of 10 Quick Service Restaurants in Mauritius from a franchise partner. These stores are now operated as Company-owned restaurants, with further Company-owned restaurants to be opened in 2025.

High inflation in Nigeria and Ethiopia meant that we had to implement regular menu price increases to maintain gross profit margins and enable sales growth to keep pace with inflation. In general, the AME teams explored ways to add new value offers to the menu and diversified suppliers for competitive pricing.

In Nigeria, UAC faced challenging conditions and recorded a loss, driven by raw material price increases, high restaurant set-up costs, high energy costs and increased reliance on generator power for restaurant operations. These pressures were compounded by the removal of the government fuel subsidy, once-off restructuring costs and higher financing costs. A strategic decision was taken to streamline the business by outsourcing manufacturing capability and focusing on restaurant network development and management.

The Company-owned restaurant network was rationalised with the closure of eight underperforming outlets. In addition, UAC exited its head office premises and secured a more affordable sublease arrangement. These structural changes position UAC for an improved performance in 2025.

In December 2023, we entered Côte d’Ivoire with the opening of a Debonairs Pizza restaurant. Early trading results indicate strong consumer support for the brand, and two new sites have been identified for 2025. We also concluded a master licence agreement in Egypt for Debonairs Pizza, with the first store opening in April 2024.

In April 2023, we closed the restaurants in Sudan due to the outbreak of war. The master licensee in Sudan had a strong and profitable operation with eight restaurants. Sadly, due to the ongoing conflict and the looting and damage of the restaurants, we do not foresee reopening in Sudan in the near future. This has had an impact on the revenue and profitability of the AME region.

The franchise support team in the UAE is well-established to support increased trading activity in the Middle East. We opened 10 stores in the UAE (Four Debonairs Pizza and six Steers), including the first restaurants in the Emirates of Fujairah and Abu Dhabi.

The localisation of the Debonairs Pizza and Steers supply chain in the Middle East is progressing well, with the appointment of a manufacturing partner for sauces, coffee and ice cream based in Dubai.

In Saudi Arabia, the licensee failed to meet its development plan objectives during the initial five-year term of the master licence agreement. When the agreement expired in December 2023, the market reverted to operating as a franchise market, with support from the Famous Brands team in the UAE. Saudi Arabia remains a significant market opportunity, and new franchise and licence partners are being sought for the Debonairs Pizza, Steers and Mugg & Bean brands.

In March 2023, our strategic partner in Oman decided to close its Quick Service Restaurant division. We explored the possibility of entering into a new joint venture with this partner to take over the operational control of the business. After considering the business case and the level of risk, Famous Brands decided to exit Oman, and in September 2024, the four Debonairs Pizza and four Steers restaurants closed in Oman.

AME focus for 2025

We will increase our presence in the AME region through strategic partnerships with master licensees, franchising and Company-owned restaurants. We acknowledge that each country demands a different approach.

Supporting the delivery channel will remain important in several markets. The launch of a centralised call centre is planned for the UAE in 2025.

In 2025, we will enter Egypt and will continue to seek franchise partners for Saudi Arabia.

UK

Famous Brands operates the Casual Dining Restaurant brand Wimpy in the UK.

* Operating margin after impairment loss.

Trading conditions

The year 2024 was difficult in the UK as political and economic uncertainties continued, along with a deepening cost-of-living crisis. Inflation peaked at 8.9% in March 2023 before reducing to 3.8% by the end of February 2024. Interest rates continued to increase and hit a 15-year high of 5.25% in August 2023. These rate hikes increased the cost of borrowing and made it more difficult for franchise partners to fund new store openings and revamps. While pressure on energy costs and utility bills have eased, they remain significantly higher compared to 2021 while government support has reduced considerably. Fortunately, the supply chain issues experienced in previous years have stabilised, which reduced pressure for menu price increases.

Performance and focus areas

The UK’s revenue increased 14% to R161 million (2023: R142 million), largely due to the weakening Rand against the Sterling. Operating profit marginally declined to R18 million (2023: R19 million), and there were no further impairments in 2024.

The operating profit margin for the year was 11.4% (2023: (11.4)%).

The cost-of-living crisis impacted consumer confidence and spending patterns, resulting in a general decline in retail spending and footfall. While home delivery sales significantly dropped, in-store sales performed more positively as consumers swapped take away for dining at restaurants.

We are working with franchise partners to implement energy-saving initiatives at restaurants. The Wimpy management team is also focused on securing best ingredient pricing for ingredients for franchise partners and exploring other ways to improve operational efficiencies.

UK focus for 2025

In 2025, preserving and improving franchise partners’ sustainability will remain a focus area. We will also work with franchise partners to revamp the 17 remaining restaurants to the SHIFT design. In light of difficult economic conditions, Famous Brands may provide financial support to franchise partners when required.

Supply Chain

Our integrated Supply Chain, which supports our Brands pillar in South Africa and a few other African nations, consists of our Manufacturing, Logistics, and Retail activities. The main purpose of our Supply Chain is to offer our franchise partners a competitive advantage through efficient margin management, product innovation, and efficient supply of products and ingredients. Our Supply Chain businesses are managed and measured in line with our Group’s strategic objectives.

Most of our manufacturing plants are wholly owned, but we also operate certain partially owned subsidiaries. The Retail business sells condiments (sauces, dressings, spices), frozen meat products, coffee (ground and beans), frozen potato chips and other value-added products.

Manufacturing

Trading conditions

Our Manufacturing operations aim to keep production costs low while adhering to stringent quality and food safety requirements. In 2024, this was challenging given high food inflation, with increases in key commodities (chicken, potatoes and sugar). The supply of chicken and eggs remained under pressure due to the aftermath of avian influenza. A weaker Rand/Dollar exchange rate increased the price of raw imported materials, especially tomato paste and milk powders.

In addition, the division’s overhead costs were higher due to load shedding related costs and significant increases in insurance premiums and higher utility costs.

South African port congestion caused supply delays, including finding alternative suppliers and modes of transport. For example, using airfreight at higher costs.

The impact of load shedding on our Supply Chain

Load shedding continues to negatively affect our Supply Chain operations. The impact areas in 2024 were as follows:

  • Diesel costs for non-fleet usage up 69% to R25 million (2023: R15 million).
  • Increased diesel usage increases our carbon footprint.
  • Higher costs passed on from suppliers.
  • Higher supplier delivery failures.
  • Increased insurance premiums as load shedding increases risks, including the risk of a total grid failure and low appetite to ensure cold storage.
  • Increased traffic due to load shedding congestion result in delayed deliveries for franchise partners and retailers.

Our response

Load shedding continues to increase costs at all plants. Where necessary, we have replaced older generators with more efficient and reliable units and have invested in bulk diesel storage. In June 2023, we commissioned a larger generator at Cater Chain to run the production and refrigeration. We have brought generator maintenance in-house by upskilling our technical team. This has reduced our maintenance costs and reduced stoppages as we can resolve minor generator issues.

All generators have monitoring systems installed to provide an indication of fuel usage efficiency and overall health. The older generators have been retained as backup should the newer generators be out of operation.

We are investing in solar installations to reduce our dependence on Eskom while lessening the pressure on our generators.

Our business continuity plan includes the impact of load shedding on our operations and the unlikely possibility of a total grid failure. We are finalising our contingency plan for this scenario.

We have mitigated the impact of supplier failure by sharing our orders with several suppliers and diversifying our supplier base. We will continue to list alternative suppliers, including Black-empowered suppliers, to mitigate the risk for key commodities. We have invested working capital into securing additional inventory to lock in pricing and supply.

The registration for the diesel rebate scheme offered to food manufacturers has onerous paperwork requirements, but the applications have been submitted. There are no indications of when the re-imbursements will be forthcoming.

Performance and focus areas

Manufacturing revenue increased by 9% to R3.3 billion (2023: R3.0 billion) despite weaker demand from the front end, including volumes for core products. The operating profit declined by 2% to R297 million (2023: R302 million) and was weighed down by insurance increases, load shedding and higher input costs. The operating profit margin declined to 9% (2023: 10.0%). Insurance premiums escalated 246% to R14 million (2023: R4 million).

Our Manufacturing internal cost inflation was tightly controlled and decreased by 1.7 %, with a selling price increase of 0.5% despite inflationary pressures. This is below the consumer price inflation index of 5.3% in February 2024. In many cases, we absorbed some of our price increases to provide competitive pricing to franchise partners.

All our plants continue to improve their yield by refining their production processes and reducing waste. This forms part of our continued Manufacturing Way efficiency programme. Reducing waste through better processes and employee training was a focus area for 2024. We are tracking various metrics to improve how employees complete tasks. There were no material product write-offs for 2024.

At our meat plant, we plan to introduce new microwave technology in 2025 to thaw beef more efficiently and increase yields.

In April 2024, we relocated the sauce plant warehouse to improve production flows. This has also eliminated the transport requirements between delivery, production, and storage. We also implemented the second phase of cleaning-in-place (CIP) at the sauce plant to reduce chemical usage and water consumption. CIP is an automatically performed method of cleaning, applied to remove residues from complete plant equipment and pipeline circuits without dismantling or opening the equipment.

Lamberts Bay Foods was the best-performing plant for the year, mainly due to the high supermarket demand for its frozen potato chips. However, the potato harvest across South Africa was impacted by poor weather which resulted in poor potato yields per hectare and high sugars. According to the Bureau for Food and Agricultural Policy (BFAP), South Africa has experienced a 24% reduction in potato volumes due to the impact of load shedding on the ability to irrigate, which is why prices have escalated. While the plant processed these potatoes, it was an expensive exercise due to yield losses.

We rolled out person-machine-interface technology at the ice-cream plant, which allows for live tracking of production outputs and quicker troubleshooting and resolution of issues. We also implemented Sage X3 at Cater Chain to improve our financial management of that plant.

In 2024, the National Occupation Safety Association of South Africa (NOSA) audited our plants, with no plant receiving a rating below four stars. Seven of our plants, including Lamberts Bay Foods, received a four-star rating (2023: five), while the Famous Brands Coffee Company achieved a five-star rating for the first time. Lamberts Bay Foods achieved the milestone of one million Lost Time Injuries (LTI)-free hours and was acknowledged with a certificate from NOSA. These excellent ratings can be attributed to a concerted focus on safety and the onboarding of an internal safety specialist. Our safety programme continues to monitor lagging and leading safety indicators.

Food safety risk is well-managed no plant stoppages occurred in 2024. We received 100% food safety accreditation across all Manufacturing plants. The Group monitors customer complaints across all plants, and the number of complaints remains well-managed.

Capex increased to R53 million (2023: R44 million), including investments in more efficient generators, solar installation at the sauce plant, new equipment, fire protection and water recycling projects, and a solar installation at the sauce plant.

We allocate sufficient maintenance capex to ensure that our assets are well-maintained.

ESG projects

In 2024, we implemented the second phase of our ESG roadmap for Manufacturing. Lamberts Bay Foods implemented a water recovery project that was commissioned in September 2023. The project will result in a projected annual water usage saving of 28 828 kilolitres.

There are other water-saving projects in the pipeline for 2025. At the Famous Brands Cheese Company, we are in discussions with the landlord to implement a project to capture and reuse wastewater using a reverse osmosis. This will result in a 50% reduction in water usage and an annual reduction of 28 828 kilolitres. Additional CIP technology at the sauce plant will result in an annualised water saving of 1 800 kilolitres. At the meat plant, a heat recovery project on the ammonia plant will result in an annualised water saving of 4 589 kilolitres.

We completed a solar installation at the sauce plant, which will generate 477 300 kWh of electricity per year.

These projects are critical for achieving our five-year ESG targets for Manufacturing.

Supply Chain focus for 2025

Some food shortages are likely to persist, and food security remains a major global risk. We will continue to list alternative suppliers, including Black-empowered suppliers, to mitigate the risk for key commodities. We expect to manage working capital by the right inventory to lock in pricing and supply.

The Manufacturing division will focus on the following in 2025:

  • Driving the Manufacturing Way to improve operational efficiencies and reduce production costs to enhance overall profitability and offer more competitive products to franchise partners.
  • Continuously evaluating and optimising operating structures.
  • Investing in newer machinery and technology to drive better yields.
  • Reducing waste through better processes, training and machinery.
  • Reducing chemical and water usage.
  • Further diversifying the supplier base to avoid product shortages and secure better pricing.
  • Investigating opportunities for more solar installations.
  • Maintaining and improving NOSA ratings.
  • Implementing our ESG roadmap.
  • Rolling out person-machine-interfaces to more plants.

How do your internal procurement capabilities enhance operational efficiencies?

Our total cost of ownership approach to procurement assists us to make sound decisions and supports better contractual decisions in the future. We have a highly skilled procurement team that is well-versed in sourcing and negotiating local and international supply and developing new procurement strategies to overcome product shortages and other challenges.

For example, our 2024 financial year was especially challenging for local chicken producers, with inflated feed costs and load shedding. As a key commodity, we have to address chicken’s affordability.

We have a procurement project to buy whole birds and process them into the various required products. This brings production in-house and produces a more affordable product.

Potatoes are another core product for which we are exploring ways to expand our supplier pool and increase our access to quality products. We have invested in agronomy services to help farmers maximise harvests and implemented a scientific procurement and pricing model to ensure input prices are managed. We regularly plant new cultivars of potatoes to explore yields and resistance to pests and weather events. We have various enterprise development initiatives in collaboration with Potatoes SA to support emerging Black farmers, with the first harvests successfully delivered in April 2024.

Logistics

Performance and focus areas

Logistics revenue increased 7% to R5.0 billion (2023: R4.7 billion), due to higher volumes and price increases. Operating profit declined R94 million (2023: R114 million). The comparative year also includes a R10.8 million July 2021 civil unrest insurance settlement received in August 2022.

Revenue remains under pressure due to the current economic environment, while operating profit is weighed down by increased operating costs, including significant insurance cost increases, increasing fuel and commodity prices coupled with constant electricity shortages. Diversifying suppliers to improve supply chain resilience remains a priority.

While our case volumes grew by 4.6% year-on-year, our fuel consumption (litres per 100 km) was 2% better than planned and 1% better than in 2023. This is due to an upgraded route planning system and better driver behaviour.

The last stage in Logistics, which aims to optimise our distribution network, is the relocation of our frozen storage from the Crown Mines Distribution Centre to our Midrand Campus. The construction of the new frozen storage facility will be completed in 2025.

A volatile operating environment
The sporadic service delivery protests and unrest in Gauteng, Mpumalanga and the Western Cape are concerning. For example, the taxi industry’s protest of the enforcement of vehicle laws by the City of Cape Town led to an eight-day taxi strike resulting in restaurant closures and cancelled restaurant deliveries due to transport unavailability.

In addition, attacks on the trucking industry have escalated, and Mpumalanga and Northern KwaZulu-Natal have been negatively impacted by regular delays and rerouting. Traffic congestion due to load shedding also results in delays, increased fuel usage and rerouting of deliveries.

Other challenges include power interruption due to cable theft at the Crown Mines Distribution Centre and the Free State Distribution Centre.

In 2024, we successfully rolled out the new warehouse management system to the Free State Distribution Centre, the Western Cape Province Distribution Centre, the Eastern Cape Province Distribution Centre and the Gauteng Distribution Centre. In August 2024, we will complete the implementation of the warehouse management system at Crown Mines Distribution Centre. The system allows us to improve our productivity and employee engagement and quickly respond to demand changes.

A new asset care software was implemented to manage preventative maintenance and repairs of all assets. Artisans and machine operators use a simple digital interface to interpret and record all maintenance activities. Paper is eliminated from all maintenance activities, and the software provides complete traceability.

We completed the final phase of the new layout at the Eastern Cape Province Distribution Centre. The racking was installed according to an expansion plan to ensure changes will not be required again in the future. The completed project gained an additional 667 stock locations. This increased capacity and an additional 6.2 metres for loading have resulted in better flow and efficiency.

Improving our fire protection and smoke detection systems to meet insurers’ requirements was a major focus for 2024. Three of our sites are fully certified by the Automatic Sprinkler Inspection Bureau (ASIB) with three sites in progress. All six of our sites are fully Fire Systems Inspection Bureau (FSIB) certified, while the other three are awaiting full certification from both bureaus.

In 2024, we completed two solar installations at the Western Cape Province Distribution Centre and at the Gauteng Distribution Centre. These two installations are expected to generate more than 780 000 kWh of electricity per year. The payback period for these installations is between four and eight years.

In 2024, the Free State Distribution Centre, Western Cape Province Distribution Centre and the KwaZulu-Natal Distribution Centre achieved Export ZA certification. The benefits of this certification is to store and export chilled and frozen products across borders or other countries.

Two of our sites achieved five star ratings from Nosa for safety and four of our sites achieved a four star rating from Nosa for safety.

Capex of R22 million (2023: R33.6 million) was incurred, largely related to the implementation of the new warehouse management system, fire sprinklers and detection equipment and solar installations.

Focus for 2025

Our priorities for Logistics in 2025 include:

  • Finalise the rollout of the new warehouse management system.
  • Continued benchmarking of processes, costs, and margins to ensure efficiencies and reduce operating costs. This includes closely managing expenses related to employee allowances and overtime.
  • Approving the upgrade of the franchise partner online order system to improve the user experience and boost purchases from franchise partners.

Retail

Performance and focus areas

The Retail division increased revenue by 35% to R368 million (2023: R273 million) and improved its operating profit to R6 million (2023: R0.2 million). The improved profitability was due to increased sales volumes, expanded distribution and increased frozen potato chips sales. The house brand coffee sales recovered strongly compared to 2023. In addition, there were no material product write-offs for 2024, compared to 2023, where we wrote off coffee stock.

The retail trading environment is price-sensitive, and consumers increasingly seek better value. Our Retail division has been able to increase its sales and distribution footprint due to its trusted brands and competitive pricing.

In 2024, the Retail division launched 14 new products (2023: 13), and plans to introduce additional products in the 2025 financial year.

Focus for 2025

The Retail division intends to grow the business by continuing to introduce new products, promote existing products and expand its retail footprint. The division will invest in retail marketing activities to build consumer demand for its products.

Group associates

Famous Brands has strategic shareholding in the following entities: UAC Restaurants Limited in Nigeria, Sauce Advertising, DHQ Interior Brands Architects, FoodConnect and Munch Software in South Africa.

This business comprises the Mr Bigg’s and Debonairs Pizza brands in Nigeria. In 2024, UACR exited the central kitchen (bakery and manufacturing) in favour of an outsourced arrangement (read more).

Shareholding owned by the Group:

49%

Sauce Advertising assists the Group by providing enhanced marketing capabilities and leveraging marketing spend to improve the business’s competence in the digital market.

Shareholding owned by the Group:

37%

FoodConnect is a sales and distribution business in the food and beverage sector. It owns the Group’s Baltimore ice cream brand rights and distributes the product to third parties, providing Famous Brands with a strategic route to market.

A Level 2 B-BBEE contributor, FoodConnect supports the Group’s transformation agenda.

Shareholding owned by the Group:

49%

DHQ provides restaurant planning and design services to the Group and third-party clients. Famous Brands now holds 49% of DHQ (formerly 60%) after the DHQ employees’ share trust was created.

Famous Brands donated the shares to the trust.

Shareholding owned by the Group:

48.5%

Munch Software is a software developer catering to the hospitality industry with a POS solution and order management software that integrates with third-party delivery aggregators.

Shareholding owned by the Group:

45%