Simbisa Brands achieves top-line growth despite ch...

Simbisa Brands achieves top-line growth despite challenging environment

Nyashadzashe Ndoro

CHIEF REPORTER

Simbisa Brands Limited, one of the largest quick service restaurant groups in Sub-Saharan Africa, managed to achieve a 3% year-on-year growth in revenue for the third quarter ended 31 March 2024, reaching US$66.4 million.

The growth was primarily driven by new store openings and firmer real Average Spend in Zimbabwe.

“The Group managed to achieve top-line growth in the quarter under review, which continues to be driven by new store openings and firmer real Average Spend in Zimbabwe,” said Simbisa Brands in a trading update.

However, the operating environment remained challenging, particularly in Zimbabwe. The company highlighted increasing inflation, ZWL exchange rate devaluation, and new tax measures which took effect from 1 January, 2024 as negative factors impacting consumer disposable incomes.

Despite these challenges, Simbisa Zimbabwe managed to grow its footprint by opening 25 new outlets, including the much-anticipated opening of Cork Corner and the first Bulawayo Spur restaurant. Revenue in Zimbabwe increased by 4% to US$48.3 million.

Simbisa’s performance in Kenya was mixed. While customer counts increased by 4% year-on-year, driven by new store openings, exchange rate weaknesses impacted revenue negatively. However, the recent appreciation of the Kenyan Shilling is expected to benefit the company in the coming quarters.

“The Kenyan government’s issuance in February 2024 of a new US$1.5bn Eurobond to refinance the US$2bn Eurobond due in June 2024, reduced pressure on Kenya’s foreign exchange reserves and propelled a rally in the Kenyan Shilling exchange rate,” the company noted in the update.

Simbisa Kenya also reported a significant increase in delivery volumes, up 39% compared to the prior year. This growth was driven by the company’s successful use of App-exclusive offers and marketing support to drive deliveries through their in-house mobile application platforms.

The company noted that the introduction of the new Zimbabwean currency, the ZiG, brought some stability and is expected to benefit Simbisa’s operations in the long term.

“The relative stability of the ZIG since its introduction has been beneficial in retaining customers, preserving operating margins and reducing borrowing costs,” the company said.

However, long-term success will depend on market confidence and the government’s commitment to consistent monetary policy.

In the regional operations, the recent strengthening of the Kenyan Shilling is expected to contribute to market stability and a more favourable trading environment for Simbisa Brands.