CEO’s report
" Our financial results are thanks to strong cost containment measures, the enduring appeal of our Brands and the resilience of our business model. "
Darren Hele
This year, overall business and consumer sentiment remained mixed across South Africa and several other African countries faced pre-election uncertainty and the knock-on economic impacts of global geopolitical tensions. In South Africa, the formation of the GNU was welcomed as a sign of a maturing democracy, boosting confidence. It has, however, not translated into more supportive policies for business or economic growth.
Economic growth in South Africa remains depressed and nowhere near the levels required to boost employment, reduce inequality and grow a middle class.
Consumers are circumspect about their choices and may forgo local travel or eating out. As discretionary spend shrinks, South African consumers are becoming increasingly price-sensitive, shifting towards value offerings and promotions, and trading down to more affordable menu items.
There were several economic tailwinds as we benefited from the halt in load shedding for most of our financial year. South African inflation in many countries across the continent, is under control, the Rand remained relatively stable, and the two-pot retirement system relieved indebted consumers.
While the marketplace is highly competitive, we have well-established and category-leading brands, and our consumers appreciate our value offerings, consistent quality, variety and record of innovation. While our financial performance was below our expectations, we achieved 3.2% revenue growth, maintained a stable operating profit and improved our HEPS. Across our regions, we opened 153 new restaurants, converted an additional five Fego Caffès to Mugg & Bean restaurants and revamped 289 restaurants. This high revamp activity indicates willingness from franchise partners to reinvest in their businesses.
This year, overall business and consumer sentiment remained mixed across South Africa and several other African countries faced pre-election uncertainty and the knock-on economic impacts of global geopolitical tensions. In South Africa, the formation of the GNU was welcomed as a sign of a maturing democracy, boosting confidence. It has, however, not translated into more supportive policies for business or economic growth.
Economic growth in South Africa remains depressed and nowhere near the levels required to boost employment, reduce inequality and grow a middle class.
Impacts of poor infrastructure
South Africa is an increasingly tough market to operate in, with high costs of doing business and deteriorating infrastructure. In July 2024, Eskom's electricity tariff increased by 12.7%, and in July 2025, pricing is expected to escalate by an additional 11.32%. We expect a trend of higher electricity price increases in the future.
Logistics challenges at our ports directly impact our Supply Chain as we need to hold stock or buy from more expensive suppliers to avoid stockouts. Additionally, deliveries to the franchise network and consumers are impacted by poor road conditions. While it is difficult to quantify, infrastructure failures, including potholes and broken traffic lights, also impact consumers, who are less likely to venture out. This is seen in the reduction of late night sales and earlier seatings at restaurants.
Having a consistent supply of quality water is becoming increasingly challenging in South Africa, which affects our Manufacturing plants and restaurants. We are investing in water filtration, recycling and storage solutions for our plants with a focus on our most water-intensive operations. We are also working with our franchise partners to secure alternative water solutions. At year-end, water solutions coverage across our South African restaurants is 56%.
Strategic highlights
"We seek to gain greater strategic control over key systems to enhance our ability to measure and act on consumer and franchise partner insights."
The trend towards convenient consumption is well-established, with convenience formats such as drive thrus and delivery becoming more important. We have also seen some cooling-off of demand for third-party aggregators, which benefits Famous Brands due to our own home delivery capabilities. We also benefit from the attrition of smaller brands and independents, and more cash-strapped consumers selecting from a smaller range of trusted brands. However, the rapid rise in online supermarket retailers is disrupting the traditional food service category.
In 2025, we introduced 22 new delivery hubs, where a single franchise partner assumes delivery responsibilities for multiple restaurants within a designated area. This proven concept enhances consumer satisfaction and ensures on-time deliveries while minimising the 'hassle factor' for franchise partners. We have 51 delivery hubs in South Africa and three in SADC.
We are investing in consumer-facing technology to meet consumer expectations and deliver efficiency and customer experience gains in the medium term. The acquisition of a strategic shareholding in Munch Software, completed in 2024, is already yielding results. We are rolling out the Munch Software POS across our distribution centres. Munch is more than just a supplier – our investment enables us to influence their development pipeline. They are also highly responsive to our needs, allowing for more frequent software updates and greater transparency and standardisation across the network. Our franchise partners also benefit from cost savings. We will continue to leverage Munch's capabilities, including exploring options for integrating their solutions with our Supply Chain.
In several AME markets, urbanisation, combined with greater consumer interest in the QSR category, will continue to drive growth. Several of these countries have significantly stronger growth forecasts than South Africa. However, our performance in AME was disappointing, with restaurant closures, especially in Nigeria, and unprofitable operations in some markets. We have struggled with poor performance and quality in the UAE due to management issues with our franchise partner.
Our investment approach to AME remains cautious but optimistic – we plan to grow our brands and networks with a responsible, deep and narrow focus. This means investing ahead of revenue to develop on-the-ground capacity and scale. We opened nine new franchised restaurants across eight AME markets. This includes opening our first two Debonairs Pizza restaurants in Egypt and the opening of a Mugg & Bean in Kuwait, both markets are franchised. In the Middle East, we are experiencing renewed interest in our brands due to shifts in global trade.
Our revised AME management structure, introduced in October 2023, has provided a much-needed focus for the region, which is more challenging than SADC. It also provides our investors with greater transparency into the true costs and returns of our investment in these markets.
In February 2025, we completed the last site implementation for our new warehouse management system. We now have a single system across our distribution centres. The implementation was not without its challenges, but we are leveraging the real-time insights on the performance of inventory holdings, employees and facilities. In June 2025, we opened our new cold storage facility at our Midrand Campus, completing the final phase of our programme to optimise our Logistics footprint. The new facility will increase capacity, reduce transport costs and result in cost savings from more energy-efficient refrigeration technologies.
Our Manufacturing Way programme is well-established and fosters a culture of continuous improvement. In 2025, we focused on optimising our plants’ operating structures, deploying manufacturing technology to boost capacity and improve production yields, and developing our internal procurement capabilities to manage the costs of ingredients and develop strategies to overcome product shortages.
In the first half of 2024, we acquired the remaining 38% minority interest in the Famous Brands Coffee Company, making the business a wholly owned subsidiary. The transaction expands our asset base and provides us with increased exposure and operational control of a highly successful business. This also gives us better operational control over the important coffee commodity, including pricing.
Level 1 B-BBEE status
We support a more equal and inclusive South Africa through the ongoing transformation of our business and value chain. This year, we achieved a Level 1 B-BBEE status for the first time, increasing our overall score to 93.69 points from 90.37 in 2024. This is the result of concerted efforts across the five pillars of the B-BBEE scorecard, except for the ownership pillar, over which we have no control. In 2025, we purchased R2.6 billion from >51% Black-owned businesses, including R2.1 billion spent with Black women-owned suppliers. The Group’s B-BBEE status has shown sustained improvement, having moved from non-compliance in 2018.
We see strong commercial value in our high B-BBEE status. A transformed and diverse workforce gives us deeper perspectives that allow us to understand and connect with consumers and other stakeholders. We also benefit from a diversified and increasingly localised supply base. Supporting transformation in the value chain has resulted in access to higher-quality products, including key products like beef and potatoes, and alleviates disruptions related to port infrastructure and geopolitical instability. South Africa is our core market and where we generate 92% of our revenue. We are committed to further local investment and making a difference to South Africa’s people, including our youth, through the incredible YES Programme.
Trade-offs for 2025
Reducing the bonus pool: In December 2024, we made the difficult decision to reduce the bonus pool for administration employees. This decision was taken based on the Group’s performance, persistent economic headwinds and the need to preserve capital for our growth initiatives.
Staying invested in Nigeria: Nigeria experienced another challenging year, marked by high inflation levels and a depreciating Naira. We still believe in the potential of this market and in UAC, our associate. In 2025, 19 restaurants closed in Nigeria and we fully impaired our invested capital. However, we believe that the costs associated with remaining in Nigeria with UAC would be lower than re-entering Nigeria in the future.
Exiting Saudi Arabia: In Saudi Arabia, the master licensee failed to meet its development plan objectives during the initial five-year term of the master licence, which expired in December 2023. We could not find a suitable master licensee replacement and decided to exit Saudi Arabia, which resulted in the closure of the restaurant opened.
Deferring investments: In some instances, we decided to defer or reduce the scope of some investments. These were not deferred due to funding constraints, but rather because of business considerations. We considered payback periods and preferred timing when making these decisions.
Other events
Dial n Dine disposal
On 28 February 2025, the Group disposed of its 69% shareholding inrerest in Dial n Dine (pty) Ltd to our non-controlling interest shareholder. The business offers a call centre service for consumer ordering, which will continue to be provided under contract.
Exiting the selling of coffee-related equipment
With effect from 1 May 2025, Famous Brands Coffee Company exited the activity of selling coffee-related equipment as well as servicing and managing the spares of this equipment. These activities were taken over by two private companies. This was a low margin activity and did not align with the Group’s manufacturing focus.
Our next moves
Our strategy remains appropriate and resilient to the difficult business and economic conditions we face. There are some silver linings, including anticipated low levels of load shedding, further interest rate cuts and manageable food inflation.
We will continue with our new restaurant openings for Leading Brands, including a focus on growing our drive thru footprint. Our new restaurant pipeline is healthy, and we have continued interest from new and existing franchise partners. We are committed to sustainable franchising, which includes avoiding marginal sites. Around 72% of new Leading Brands restaurants go to existing franchisee partners, strengthening the desired multirestaurant ownership model. Supporting our franchise partners’ profitability and sustainability remains paramount.
As our revenue comes under pressure, we must look to become a more efficient Group. We began refurbishing our Manufacturing plants with investments phased over the next three years. These include investments in modern manufacturing technology to improve capacity, processes, and yields and reduce waste. In many instances, these solutions have attractive payback periods mainly due to the operational savings they offer. We will invest to boost our resilience to energy and water challenges while striving to meet our ESG objectives.
While our Retail division did not meet performance expectations for 2025, we still believe in its potential to extend our brands into at-home consumption. We have appointed a specialist trade marketing agency to support us in market penetration.
Appreciation
"We recognise that our sustainability is intertwined with the success of our franchise partners. We appreciate their commitment, ongoing investment and faith in our brands. This year, they have demonstrated incredible determination and flexibility to respond to tough trading conditions."
Thank you to our Chairman, Chris Boulle, for his decisive leadership of the Board and to our non-executive directors for their guidance, support and insight. The transition from Santie Botha to Chris Boulle was seamless, thanks to Chris’s deep understanding of our business. I thank our Exco members and employees for their dedication and delivery against our strategy over another year.
Our success would not be possible without our long-serving suppliers. Thank you for your commitment to quality and service over the years. We look forward to another year of making a positive impact on our stakeholders, including the consumers we serve and the communities where we operate. This includes attracting new talented franchise partners and working with our dedicated franchise partners to grow our brand footprint in 2026.
Darren Hele
CEO
20 June 2025
Key features of 2025
Innovation, value and convenience protect market share
Despite the consumer being under pressure, we experience steady demand for both our QSR and CDR brands.
Continued expansion of restaurant networks
We opened 153 new restaurants, including seven new drive thru restaurants in SA and one in Zimbabwe and converted an additional five Fego Caffès to Mugg & Bean restaurants. This takes our total restaurant numbers to 2 979.
Investing for future growth and efficiencies
We are growing capability, capacity and scale across the Manufacturing, branded franchised and food services spaces.