Leading quick service restaurant (QSR) operator, Simbisa Brands witnessed solid growth in the half year to December 31, 2022, driven by its expansion drive and implementation of a an effective pricing strategy.
The interventions spurred growth in customer counts and real average spend.
As a result, the group achieved top-line growth of 31 percent year-on-year, albeit in a challenging operating environment.
At US$146 million, top-line growth of 24 percent was achieved in the half-year period versus the prior year, and real-term average spend increased 6,8 percent year-on-year due to the pricing strategy and the increased contribution from deliveries with inherently higher average spend.
Despite the power challenges experienced in Zimbabwe, Simbisa Brands has managed to open 30 new counters between 31 December 2021 and 31 December 2022, resulting in a 38,4 percent increase in customer counts in the first half of FY2023 in the Zimbabwe market compared to the prior year.
Group chairman, Addington Chinake said the expansion drive, together with a relaxation in trading restrictions, has contributed to the impressive growth in the group’s performance.
Simbisa Brands also implemented a pricing strategy during the period under review that resulted in menu price increments executed in a minimal and phased approach to minimise the impact on the price-sensitive consumer.
“This enabled the group to keep pace with inflation and exchange rate devaluation, resulting in real average spend growth in all markets, with the exception of Ghana,” he said.
Despite the inflationary escalation in operating costs outpacing revenue growth, resulting in slightly softer operating margins compared to the prior year period, the group still achieved 38 percent growth in profitability and increased shareholder returns.
According to Simbisa, the total number of deliveries and revenue per delivery increased 54 percent and 34 percent, respectively, in 1H FY2023 versus the prior year, despite generally depressed consumer income levels in the market.
In terms of regional operations, currency devaluation affected all regional operations except for Zambia, where the Kwacha has strengthened against the US dollar.
Most severely impacted was Ghana, where the Cedi depreciated 64 percent against the US Dollar between 31 December 2021 and 31 December 2022.
Customer counts in the regional business increased 8,3 percent in 1H FY2023 versus prior year, on the back of new store openings and the resumption of trading at full capacity in Kenya, versus the prior year period in which the market’s trading hours were 13 percent below capacity.
“Regional deliveries continued to be impacted by reduced consumer disposable income due to economic hardship,” said Mr Chinake.
Total deliveries in the region dropped 14 percent year-on-year, and the contribution of Net Merchandise Value from deliveries to regional turnover fell from 18 percent in 1H FY2022 to 15 percent in 1H FY2023.
Growing the Simbisa brand footprint was a key focus area in the period under review, and between 31 December 2021 and 31 December 2022, a net of 35 new counters were opened in the region.
The group will open 49 stores until the close of its financial year in June 2023.
“There are exciting prospects for the group for the remaining six months of the current financial year ending 30 June 2023. The group expects to open a further 49 stores to close the financial year with 680 stores,” he said.
According to the chairman, the group will continue to invest any additional free cash generated in strategic assets to achieve the group’s overall target growth trajectory.
Simbisa also seeks to expand its delivery business across the group and says this initiative remains a priority as a way to cater for more customers.
“The group is rolling out brand-specific delivery applications for its flagship brands to supplement the Group’s Dial-A-Delivery application. Through these brand-specific applications, customers will have access to exclusive offerings from their favourite restaurants,” Mr Chinake added.
Zimbabwe’s economy is projected to grow this year premised primarily on improved performance from mining and construction and supported by international remittances. Likewise, the Simbisa board hopes that the authorities will continue to implement prudent monetary and fiscal policy measures.
