eBusiness Weekly
n Customer count down 5pc in Zim
n Company spreads wings into region
Kudzanai Sharara
A combination of escalating prices, cash shortages and erosion of disposable incomes saw the number of Zimbabweans eating out decline — at least in the books of the country’s biggest quick services restaurant company, Simbisa Brands.
Compared to the previous year, Simbisa’s customer count for its Zimbabwe operations — in year to June 2019 — was 5 percent lower as disposable incomes remained under pressure. Performance in the region was, however, better with customer count increasing by 6 percent resulting in an overall customer count drop of just 2 percent to 52,7 million customers.
As Simbisa, our number one measure is our customer count, said Simbisa Brands chief executive officer Basil Dionisio while presenting the group’s financial results for the full year to June 2019.
He said customer count is a critical measure for the business that is conducted daily in comparison to the previous month or year.
“That’s critical for us; how many people have come through our shops and how many people are eating in our businesses,” he noted.
The decline in customer count is thus a spot of bother for management.
In its food triangle, a model which places casual dining brands such as Nandos at the top and Chicken Inn at the bottom, Simbisa showed the lower end as the most affected.
Customer count at Chicken Inn and Creamy Inn was down 4 percent to 21,8 million, while at Bakers Inn the decrease was 2 percent.
Top end brands, such as Nandos, Rocomamas, Ocean Basket and The Grill Shack, however, performed better with customer count increasing by 8 percent to 1,5 million. It’s an area management is looking at growing.
Middle-income brands like Steers, Galitos and Pizza Inn also fared well with a 3 percent growth.
Management will, however, still be worried about performance of the lower end brands accounting for more than 40,7 million customers combined.
Dionisio called the segment “the bread and butter” of the business.
We lost some customers but we need to get on with it, he said.
He said the company would focus on optimal pricing as well as increase promotional and marketing activity in an effort to grow the business and shareholder value.
This strategy (charging optimal prices) seems to be paying off as the average spend for the period under review increased by 96 percent to ZWL$7,15 resulting in revenue growth of 91 percent to ZWL$390,8 million.
A growth strategy is also being pursued.
“Even if people think we are crazy (to continue opening outlets in Zimbabwe) we want to keep opening shops, we are not going to stop growing in Zimbabwe. We will keep opening stores,” said Dionisio.
During the period under review, the group had opened a total of 46 new counters with Pizza Inn getting 15 new outlets. In total the group now has 459 stores and still wants more.
Of the capital expenditure for the year ended June 2019, 41 percent went towards regional expansion, up from 24 percent prior year comparative.
In the period under review regional operations contributed 35 percent to revenue in line with management’s strategy to grow the regional business.
Dionisio highlighted significant opportunities for the group in the region.
He said African markets are developing and expanding amid a growing middle-income demographic backed by increasing levels of disposable income.
“Greater levels of diaspora have created an awareness for different foods, tastes and restaurant experiences,” he said.
He added that Simbisa will leverage off existing infrastructure to pursue opportunities and add casual dining brands to its portfolio.
“Our key strategic objective is to continue to grow our core QSR business, in existing and new African markets,” said Dionisio.
He added that the Group will develop and acquire other brands in the QSR and Casual Dining segment which will appeal to a higher income demographic while improving Group margins.
“In pursuit of this opportunity, we have acquired the master franchise rights for Rocomamas (Ghana, Zimbabwe and Zambia), Spur (Zimbabwe), Ocean Basket (Zimbabwe) and Grilll Shack (Kenya).
“In terms of performance, total group revenue came in at $390,8 million, which represented 91 percent growth on prior year.
“Profit before tax jumped 148 percent to $49,8 million from $20,1 million achieved in the prior year. An operating profit of $64 million was recorded which was 128 percent above prior year.
“At $32,4 million, profit for the year was 134 percent above the $13,8 million achieved in the comparable period.
“Basic earnings per share grew 127 percent to 5,77 cents. Net gearing ratio came in at 31 percent from 20 percent in the previous year.”
