Simbisa Brands invests US$23m in new stores

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Quick Service Restaurants (QSR) group – Simbisa Brands Limited, is investing US$23 million towards the opening of new stores across its markets, to consolidate its market share in Zimbabwe and the region.

The new stores will be opened mainly in Zimbabwe and Kenya, which will have 45 and 30 new stores, respectively.

Group chairman Addington Chinake said the group had set a target of 87 new stores during the financial year 2023 as it implements a strategy to maintain its growth trajectory.

“The upcoming financial year has exciting prospects for the group. The group has a significant pipeline of new stores and expects to open 87 new stores in financial year 2023, mainly in Zimbabwe (45) and Kenya (30) at a cost of about US$23 million.

“The Board intends to implement a number of initiatives to invest any additional free cash generated in additional areas, in order to achieve the groups’ overall target growth trajectory,” he said in an update for the financial year 2022 (FY22).

The group also indicated it had a solid investment pipeline, with 180 potential projects identified over the next two financial years. These projects are expected to drive growth and unlock shareholder value.

According to the group, Kenya and Zimbabwe are the primary growth markets in the short to medium term with a focus among others on delivery services. This is despite the volatile economic environment obtaining in the region with Zimbabwe battling foreign currency shortages in addition to the adverse impacts of the Covid-19 pandemic.

For the Zimbabwe market, the group will focus on increasing delivery capacity by scaling operations across the country by acquiring more bikes and increasing the number of call center agents. This will bolster delivery revenue streams for the market. The group also made a strategic decision to transition Pizza Inn to deliver exclusively on the Dial-a-Delivery platform in Kenya, effective 1 September 2022.

“However, the group remains vigilant of new growth opportunities in existing and potential new markets and continues exploring business development options.

“Between 2022 and 2024, Simbisa Brands intends to make significant progress in firmly establishing itself as a corporate that bridges the gap for people in various communities,” said chief executive officer Basil Dionisio.

According to the group, establishing Dial-a-Delivery as the premier pizza delivery service in Kenya will allow the group to continue dominating this market segment against third-party delivery services and QSR competitors through the continued growth of the Pizza Inn brand.

“It will bolster delivery revenue streams to Simbisa Kenya through the growth of Pizza Inn delivery volumes and enable improvements in service quality. In both markets, initiatives in the financial year 2023 will focus on improving order and bike tracking, thereby reducing delivery times and improving the overall customer experience,” said Mr Dionisio.

During financial year 2022, new stores growth, improved trading hours for the Kenya market, and promotional activity resulted in a 32,8 percent increase in customers and the customer base reached a record high and grew against pre-Covid-19 trading periods (+13 percent versus customer counts recorded in FY2019).

In Zimbabwe, the business continued to navigate operating challenges emanating from policy uncertainty, currency volatility, and inflationary pressures, with June 2022 annual inflation rates recorded at 257 percent resulting in depressed consumer spending behaviour.

Despite these challenges, customer counts grew 28 percent year on year whilst average-spend grew 15,7 percent to deliver a 48,1 percent increase in inflation-adjusted Zimbabwe dollar revenue in financial 2022 from the prior year.

Topline growth in this segment was driven by new store openings, with 27 counters opened in the financial year under review to close with 261 counters in operation.

The market also achieved same-store revenue growth in existing outlets through promotional activity, value offerings and increased sales through delivery channels, with total deliveries growing by 55,5 percent year-on-year.

Overall, the group reported customer counts grew 28,6 percent versus the prior year, driven by continued investment in new store rollouts and successful marketing and promotional initiatives in the review period.

SReal average spend grew by 10,3 percent year-on-year as revenue rose 76 percent to $72,9 billion amid a challenging operating landscape. – Herald