Simbisa Brands reports growth despite challenging ...

Simbisa Brands reports growth despite challenging market conditions

Nyashadzashe Ndoro

Simbisa Brands, the operator of fast-food chains across Africa, reported a 7% increase in revenue for the first half of the 2024 financial year, despite facing a number of challenges in its operating environment.

The growth was driven by a 2% increase in customer counts and a 5% increase in average spend.

In its unaudited abridged Financial Results for the half year ended 31 December, 2023, the company highlighted its decision to convert its Zambia, Ghana, and Mauritius operations from company-owned to franchised businesses, citing their minimal contribution to overall performance. This move is expected to streamline operations and reduce costs.

Simbisa’s performance in Zimbabwe, its largest market, was mixed. While revenue grew 10% year-on-year, customer count growth was subdued due to economic pressures. The company implemented cost-saving measures and leveraged economies of scale to maintain profitability despite rising inflation and currency fluctuations.

“To counter the inflationary pressures on Gross Profit and Operating Margins, management has been leveraging the brands economies of scale to negotiate competitive prices from suppliers and service providers, engaging landlords to negotiate favourable rentals and aligning staff numbers to shop size to manage staff costs. The results have been favourable, and margins improved on the prior year, resulting in increased profitability,” the company says.

Looking ahead, Simbisa expects Zimbabwean authorities to take steps to stabilise the currency and control inflation.

“Whilst exchange rate disparities and inflationary pressures persisted during the period under review, the monetary authorities are expected to take measures that will stabilise the currency and rein in inflation,” Simbisa notes.

The company plans to further expand its delivery channels, launch new brand apps, and implement targeted marketing campaigns to counter the decline in customer spending power. Additionally, 27 new counters are planned to be opened in Zimbabwe in the second half of the financial year.

Simbisa says its performance in the first half of 2024 demonstrates its resilience in the face of a challenging economic climate. The company’s pledges to focus on cost control, brand development, and expanding its delivery channels positions it well for continued growth in the future.