In 2024, our revenue and operating profit came under sustained pressure as inflation dampened demand. Nevertheless, we continued to hold and win market share by providing value, developing fresh and enticing products and delivering marketing campaigns that reinforce relevance and quality. We added 137 new restaurants to our network, which is\u00a0pleasing growth, although lower than our plans.<\/p>\n
Our results demonstrate resilience considering the worsening economic and trading conditions. In\u00a0this financial year, South Africa experienced its most severe power cuts to date, the Rand was extremely volatile, and inflation, especially food inflation, continued to rise. Consumer household spending is\u00a0under extreme pressure, and operating costs at the restaurant level are increasing. Several of our markets have become more challenging, especially with respect to inflation and weakening currencies. Fortunately, our management team is well-versed in\u00a0navigating environments with significant inflation.<\/p>\n
It is hard to overstate the impact of load shedding on our economy as growth for 2023 limped in at 0.6%, and several industries allocated resources to keep the lights on rather than grow. The restaurant industry, where sit-down dining has\u00a0not recovered to pre-pandemic levels, is highly exposed to load shedding. In general, load shedding was at higher stages and ran throughout the week, including weekends, which affected prime trading hours. Load shedding and\u00a0the associated cost of alternative energy sources remain a\u00a0major cost driver across the supply chain, increasing costs for\u00a0franchise partners. <\/p>\n
Basic infrastructural challenges, including water shortages, put additional pressure on our industry. Our franchise partners must deliver \u2018business as usual\u2019 for consumers, which comes at a cost. This limits their ability to expand, contribute to the economy and create jobs. <\/p>\n
From March 2023, we assisted franchise partners with a 1% point reduction (0.5% royalty and 0.5% marketing) on their franchise fees for sales generated while trading during load shedding. By year-end, the total financial relief provided to\u00a0South Africa franchise partners was R21.6 million. Around 15% of\u00a0our sales occurred during load\u00a0shedding. <\/p>\n<\/p><\/div>\n
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We are working with franchise partners to ensure that they have access to alternative power solutions. By year-end, 95% of Leading Brands restaurants had some form of alternative power in place. We will continue to focus on closing the alternative power gap, including encouraging strategic sites\u00a0to have more of their operations powered by alternative energy. We\u00a0have also invested in understanding power utilisation by brand and are building sustainable energy management solutions into each brand\u2019s business model. This includes energy considerations in restaurant design and configuration, moving to gas-supplied equipment and implementing energy efficiency\u00a0measures.<\/p>\n
Read more about how we are working with franchise partners to\u00a0mitigate the impact of load shedding<\/a>.<\/em><\/p>\n In 2024, we made a number of decisive strategic advances. We continued to invest in consumer-facing technology as an increasingly important differentiator. This includes our purchase of a strategic shareholding in Munch Software in October 2023, which will give us a tangible competitive advantage in the Point of Sale (POS)\u00a0space with a Rand-based fee\u00a0structure and targeted development. We also successfully implemented the delivery hub model and found it to be a highly effective way to enhance own delivery while removing the \u2018hassle factor\u2019 from franchise partners. <\/p>\n We continue to benefit from the operational efficiencies realised from our Manufacturing Way programme and improved Logistics footprint. In 2024, we continued to implement our new warehouse management system at our distribution centres, with one distribution centre remaining for\u00a0implementation. The\u00a0system continues to deliver better business intelligence, planning and scheduling capabilities. <\/p>\n Our people strategy is sound, with annual enhancements to our employee value proposition and deep thinking around people development and succession planning. Our overall Voice your View score, a measure of employment engagement and satisfaction, improved to 78% (2023:\u00a077%) and placed us in the top company category for the survey. Our net promoter score, a\u00a0measure of whether employees would recommend Famous Brands as an employer, improved to 22.3 (2023: 21.4). Pleasingly, we retained our Level 2 B-BBEE contributor status and improved our scores in three of\u00a0five scorecard pillars.<\/p>\n Read more about our consumer-facing technology projects<\/a>, our Supply Chain performance<\/a> and human\u00a0capital initiatives<\/a>.<\/em><\/p>\n <\/a><\/p>\n We continue to build our on-the-ground presence in AME to support our growth. In 2024, we opened 13\u00a0restaurants in AME, with the bulk of this activity in the UAE. We, together with our franchise partners, are investing in own delivery channels and delivery hubs. In December 2023, we entered C\u00f4te d\u2019Ivoire and opened our first restaurant. We acquired majority shareholding of franchise operations in Mauritius with our long-standing franchise partner.<\/p>\n From September 2023, we implemented a new management structure for the AME region. We split the region\u2019s management so that the SADC markets of Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, Zambia and Zimbabwe are now managed out of South Africa by the Leading Brands team. These markets are profitable and well-established, and\u00a0most have achieved some scale. This revised structure has resulted in lower costs for the SADC business through, closer alignment to the Leading Brands infrastructure.<\/p>\n The AME markets outside of SADC are more difficult to manage, less profitable and require a different approach. We now manage these countries from our Dubai office, where we have resources to oversee West Africa (Nigeria and C\u00f4te d\u2019Ivoire), East Africa (Kenya, Mauritius and Ethiopia) and Gulf (UAE and Saudi Arabia) hubs. This will allow us to accurately report on the true costs and returns of our investments in these countries. We\u00a0plan to grow our brands and networks in these markets with a responsible, deep and narrow focus.<\/p>\n We are excited about the prospects in the Middle East, and in many ways, this region presents an easier market than many other African operations. Regulations are well-established, overall adherence is better, and the financial and physical infrastructure is better developed. The response to Steers and Debonairs Pizza in the UAE, has been pleasing. We continue to bolster the franchise support team and have appointed a manufacturer for sauces, coffee and ice cream based in Dubai.<\/p>\nProgress with strategy<\/h2>\n
Growth in AME<\/h2>\n
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