Key risks
The Group’s top 10 key risks are defined below, along with their potential impact, the mitigating actions we have taken, and the potential opportunities they present. We have identified both internal and external risks. We consider impact categories based on the tolerance levels across the four areas: finance, reputation, consumer and employee. The likelihood is based on the probability of occurrence. In 2025, risks related to an increasing regulatory environment, inability to respond appropriately to business disruption and inefficient financial systems and processes moved out of our top 10 key risks.
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Group revenue growth sensitive to market uncertainties
Persistent economic headwinds in key markets, including SA, Botswana and the UK, negatively impact consumer confidence and spending. Geopolitical instability is likely to hurt global trade relations. In SA, our prospects will be influenced by GNU stability.
Competition in the restaurant sector is increasingly fierce, driven by convenience, value offerings and online delivery. Major retailers also compete with restaurants for AME restaurants and Signature Brands portfolio continue to perform below our expectations.
These conditions put pressure on our operating margin and market share, which could weigh down shareholder returns.
Our response
- We are driving new restaurant openings in SA and SADC to achieve system-wide growth.
- Our focused media spend for Leading Brands will generate new sales and customer acquisition.
- We continue to explore acquisitive or organic growth opportunities in our Leading Brands portfolio.
- We are pursuing growth for our Retail products, led by new product development.
- Capital allocated to our supply chain to drive efficiency through yields and effective labour management.
Opportunities
- Growth through agile trading formats, including drive thrus.
- Expansion of own home delivery capability through the delivery hub concept.
- Leverage insights from business intelligence and customer relationship management (CRM) technology.
- Innovation in menu and basket offerings.
- Improved Retail product offerings and investment in new product development capabilities.
Information security breach through cyber-attack in key markets
The cybercrime landscape continues to evolve with increasingly sophisticated threats. Failure to keep up with cyber security trends, address known security weaknesses, and manage third-party service providers' IT security could expose the Group to threats. The Group's IT infrastructure in SA and key markets is increasingly interconnected, which poses new vulnerabilities.
A cyber-attack could result in a loss of intellectual property, regulatory intervention and fines, system downtime and reputational damage.
Our response
- We are implementing an IT security plan in key markets.
- We have adequate risk transfer strategies.
- We make use of ongoing independent cyber assurance services.
Opportunities
- Investment in technology to enhance security.
- Increased business resilience.
Consumer-facing technology investments lagging consumer shifts and competition
Our sector is experiencing an accelerated consumer shift to convenience through technology and competitors are investing to gain market share. We are also highly reliant on third-party technology providers.
Key consumer-facing technology threats include loss of market share, low return on capital investment and loss of revenue.
Our response
- A Group-wide enterprise architecture and structure strategy is in place to cover operating system architecture and consumer-facing technology.
- We are executing our roadmap of key consumer-facing technology projects with oversight from Exco and the Board.
- We are clearly articulating the Munch POS rollout to ensure we extract the maximum value from this solution.
Opportunities
- Market share gains.
- Greater insights to enhance consumer experience across multiple touchpoints.
Supply chain disruptions
We are experiencing production inefficiencies due to shipping delays and higher input costs driven by geopolitical and security instability. In SA, local port infrastructure failure hampers the efficient delivery of products.
We face other potential disruptions due to changing weather patterns related to climate change, animal disease outbreaks, wage disputes and water shortages.
Supply disruptions could lead to margin erosion, operational inefficiencies, working capital pressures while negatively impacting service levels.
Our response
- We are building procurement capacity to focus on the strategic procurement of key commodities.
- We ensure supply chain resilience by diversifying our supplier base.
- We are redeveloping our Midrand Campus to provide more supply chain capacity and agility in the medium to long term.
- We are developing a water risk mitigation plan in SA operations to address water supply and quality issues.
Opportunities
- Invest in product innovation.
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Leverage our vertically integrated business model offering our franchise
partners an increased competitive advantage. - Technology implementation for operational efficiencies.
Climate change resulting in business disruption
Many of our markets experience climate change impacts, including severe weather events, drought and extreme heat. Climate change may be exacerbated should governments fail to introduce and enforce regulation to reduce carbon emissions.
Climate change threats to Leading Brands include major natural disasters resulting in business disruptions, damage to infrastructure and a hardened insurance market. If we do not maintain our emissions reductions pathway, we may lose the trust of our eco-conscious consumers.
Our response
- We are addressing climate risk as part of our ESG Framework and targets.
- We have planned energy and water recycling projects.
- We maintain adequate cover for natural disasters for our assets and business interruptions.
- We are lobbying the South African government through the CGCSA and other forums to drive local ESG commitment.
Opportunities
- Enhanced positioning as a sustainability leader.
- Invest in technology and machinery to improve cost savings.
- Increased business resilience.
Unreliable electricity supply negatively impacting Supply Chain and restaurants
In South Africa, we face an overdependency on a single energy provider with unreliable electricity generation and transmission infrastructure. In Zambia, our supply of electricity is threatened by drought, impacting hydro-power generation by the national utility.
Unreliable power supply and cuts result in operational inefficiencies, margin erosion and reduced day stock cover. These issues may result in lost revenue.
Our response
- At year-end, 96% of Leading Brands restaurants had some form of back-up power.
- We are converting kitchens to smart equipment, which is more energy efficient and implementing gas conversion of key equipment to mitigate risk.
- We are exploring hybrid energy solutions in Zambia.
Opportunities
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Alternative energy sources and energy efficiency drive will
cut costs, reduce emissions and increase business resilience.
Uncertainty over franchise partner profitability and sustainability
Franchise partners face an increasing cost of doing business, including onerous leases, higher input costs and energy and water insecurity. Poor economic conditions and high interest rates in South Africa and other markets have resulted in constrained consumer spending. Other pressures include uncertainty about the employment of foreign labour and a minimum wage increase in South Africa.
These trading conditions erode margins and make it difficult for franchise partners to reinvest in their businesses and may result in franchise failures. For the Group, this may negatively impact net restaurant growth.
Our response
- We provide business sustainability relief packages to franchise partners for the short to medium term when required.
- An energy relief package is implemented in South Africa for sales delivered during load shedding.
- We support our franchise partners with lease renegotiations.
- Our consumer-facing technology projects will ensure ongoing competitiveness.
- We are allocating media spend in Leading Brands to drive growth.
Opportunities
- Negotiate favourable rental terms and greater access to new sites.
- Innovation in menu and basket offerings.
- Innovative thinking around cost savings.
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Our vertically integrated business model offers our franchise
partners a strong competitive advantage.
Failure to prevent and appropriately respond to major health and safety incidents
Failure to implement or monitor measures to correct health and safety programme control weaknesses may result in a major health and safety incident. This threat could be exacerbated by inconsistent legal compliance and aging plant infrastructure. Our own delivery motorcycle drivers may be involved in accidents.
These issues may lead to a loss of life, regulatory fines and penalties and reputational damage.
Our response
- Continuous monitoring of health and safety issues by Exco and the Board's Social and Ethics Committee.
- An occupational health and safety risk specialist drives the Group-wide health and safety programme.
Opportunities
- Continual enhancements to health and safety protocols.
- An improved work environment for employees.
Loss of reputation and severe brand damage
Unethical conduct by any key stakeholder, locally and abroad, or non-adherence to agreed procedures and escalation framework may result in a reputational fallout and severe brand damage. This may lead to trust deficit, a loss of confidence in management and market share declines.
Our response
- We promote ethical practices amongst our key stakeholders based on our ethics framework.
- We ensure that all business policies are regularly updated and communicated.
- We are implementing an ethics strategy and management plan to further entrench an ethical culture.
Opportunities
- Enhanced stakeholder value and strong ethical culture.
Breach of food safety standards and regulations in Supply Chain and restaurants
Failure to comply with our total quality and food safety management system and inconsistent application of legal compliance could result in unsafe food and widespread product recalls.
A food safety incident could result in reputational damage and poor consumer confidence and regulatory fines and penalties.
Our response
- We continue to drive compliance with our total quality and food safety management system and recognised food safety standards.
- We conduct regular food safety inspections at restaurants.
Opportunities
- Better food management practices result in less food waste.
Emerging risks
Our risk management process considers emerging risks and their potential impact on the Group. In 2025, we evaluated the potential impact of the following emerging risks:
Economic
- Low growth forecast for South Africa.
- The possibility that South Africa remains on the Financial Action Task Force's (FATF) grey list.
- Fiscal outlook deteriorating.
- Interest rates remain high for longer, placing continued pressure on consumers.
Political
- Higher tariffs on products exported to the United States affecting our economic growth.
- South Africa's current position in the United States AGOA remains precarious.
- Rising geopolitical tensions with the possibility of increased armed conflict and security confrontations.
Sustainability
- More severe weather conditions, including frequent droughts, which may lead to food shortages and higher prices, and a higher incidence of flooding, damaging infrastructure.
People
- Retention of key human resources.
- Employees coping with increased financial stress and mental health issues.
- Uncertainty around the employment of foreign nationals in South Africa.
Infrastructure
- General collapse of local water infrastructure.
- Deterioration of South African port infrastructure leading to increased logistics costs and delays.
Other
- The potential for increased crime and a breakdown in the rule of law.
- Animal disease outbreaks, including foot and mouth and avian flu.