Famous Brands grows despite slow economy
The fast food company increased its revenue by around 16 percent in the six months to August.
JOHANNESBURG - Fast food company Famous Brands on Monday announced yet another set of positive results.
Revenue increased by around 16 percent in the six months up to August, while profits spiked by 23 percent.
The group runs 23 brands, including Steers, Debonairs and Wimpy, and is now worth nearly R10 billion on the Johannesburg Stock Exchange.
Earlier this year, Debonairs opened its first Indian store in Mumbai, with former Proteas cricketer Jonty Rhodes as its brand ambassador.
Famous Brands CEO Kevin Hedderwick says the pizza outlet's success in India has been so good that another store is planned for launch soon.
At the same time, Steers has also seen success with its launch in London's Clapham Junction and another store is being planned for Twickenham.
Hedderwick says Wimpy's good fortunes in the United Kingdom laid the groundwork for the burger outlet's success there.
Famous Brands is not alone in its success in the South African fast food market, despite the sluggish overall economy.
Taste Holdings, owners of Maxi's, the Fish & Chips Co and Scooters Pizza, has also maintained phenomenal growth.
Earlier in October, it announced a 25 percent increase in revenue.
The fact that Famous Brands is currently growing at around 18 percent faster than the Gross Domestic Product (GDP) of South Africa shows the extraordinary position the food service industry has found itself in.
But Hedderwick says this is a natural state for the industry, refusing to take full credit for his company's accomplishments.
"There's good evidence to suggest that, if you look at emerging markets generally, for every one percent growth in GDP, there's a two percent growth in food service. We believe food service is always going to outstrip GDP."
If his concept proves true and as more people rejoin the labour market, the industry is likely to climb to ever greater heights.
But with McDonald's well established in the country and competitor Burger King taking its first steps towards national expansion after its phenomenal successes in Cape Town, could South Africa be nearing its fast food capacity?
Moneyweb has reported that 78 percent or 26.5 million South Africans older than 16 eat fast food at least once a month, up 13 percent in five years.
Further, it's expected that the number will rise to over 34 million by 2017.
"We have a view that it's probably still a long way off [before growth
slows] if you compare it to what you see in global markets. We think
we're in a good space," said Hedderwick.
However, he says stronger economic growth would do more to sustain the industry.
"As the economy improves and people have more money to spend, they become what we call cash rich and time poor, so they gravitate towards convenience."
To listen to a full interview with Hedderwick, click here.