A worker cleans the signage of a fast food restaurant as businesses slowly restart in Beijing on Sunday, March 8, 2020.  (AP Photo/Ng Han Guan)
A worker cleans the signage of a fast food restaurant as businesses slowly restart in Beijing on Sunday, March 8, 2020. (AP Photo/Ng Han Guan)

Famous Brands sales slow down as Covid-19 takes its toll on consumer activity

By Sandile Mchunu Time of article published Mar 24, 2020

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DURBAN - Famous Brands said yesterday that its sales had slowed down from the beginning of March as the Covid-19 outbreak took its toll on consumer activity and shortened trading hours.

The group said initial indications were that sales deteriorated steadily in the first three weeks of March as the government took measures that effectively restricted consumer activity.

It said markets where the virus had been prevalent for longer had been most affected.

“At this point, there has also been a concerning decline in sales in South Africa with some temporary restaurant closures locally, as well as in Mauritius and Kenya, due to the decline in trading volumes in those specific markets,” the group said.

However, the food franchisor’s supply chain operations had not experienced significant disruptions.

The group, which owns brands such as Steers, Debonairs Pizza, Wimpy, Mugg & Bean and Gourmet Burger Kitchen (GBK) in the UK, said it anticipates that measures by the South African government would have further significant implications for its signature brands.

“The new legislation specifies that all bars, restaurants and shebeens which serve alcohol must either refrain from serving alcohol from 6pm, or close between 6pm and 9am the following day,” Famous Brands said.

“Furthermore, such establishments are not permitted to host more than 50 people at the same time.”

The group's signature brands include Mythos, Tachas, Salsa Mexican Grill and Keg.

However, the group said this might provide an upswing for its online and delivery sales.

“In light of this legislation and the general impact of the virus on customer behaviour which has seen reduced footfall in shopping centres and restaurants generally, we anticipate that our online and delivery offering will experience higher than traditional levels of usage,” the group said.

In the UK, the group said in compliance with the instructions issued by the government last Friday regarding further preventative measures in the hospitality industry, all GBK company-owned restaurants and Wimpy franchised restaurants have been closed, effective from Saturday.

However, it said selected GBK and Wimpy restaurants will attempt to remain open to service the home delivery market, but the viability of this option is unclear at this stage.

“Management will monitor the situation closely for both operations,” it said.

Famous Brands said it was difficult to give accurate projections on the impact of the pandemic on its business given the prevailing instability in its trading markets.

“However, the board and management anticipate that trading in the coming weeks will become increasingly difficult and will undoubtedly result in significantly reduced like-for-like sales,” the group said.

But the group has committed itself to continue enforcing the necessary disciplines and protocols required to curb and slow the spread of the coronavirus and taking guidance from the national institute for communicable diseases, the World Health Organisation and the Department of Health to inform their approach.

Famous Brands shares declined 11.06percent on the JSE yesterday to close at R25.

BUSINESS REPORT 

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