Famous Brands to review its future in burger subsidiary GBK in UK
DURBAN – Famous Brands, Africa’s largest branded food services franchisor, said on Thursday that its board was still reviewing the options available to its business subsidiary, Gourmet Burger Kitchen (GBK) in the UK.
Famous Brands, owner of brands such as Steers, Mugg & Bean, Wimpy and Debonairs Pizza, with signature brands including Tasha, Mythos and Lupa Osteria, said in a trading update yesterday that GBK had generated nearly half the revenue in July from a year ago, due to the Covid-19 lockdown as it had forecast.
In a voluntary market update on July 24 it was forecast that last month, due to lockdown restrictions, GBK would generate 49 percent of the revenue earned in the prior comparable period last year.
“It is pleasing to report that this was accomplished; this creditable performance is a tribute to the resilience and resourcefulness of our teams," it said yesterday.
Famous Brands is trading under a cautionary note after it informed its shareholders last month that it was not going to provide any further financial assistance to GBK.
Famous Brands said GBK’s board was reviewing the options available to the business while deliberations were still under way following the group’s decision not to provide financial assistance.
Of the 62 GBK stores in the UK, 37 were open and offering full service, while 25 remained closed.
“Under the current prescribed trading restrictions, management is pleased to report that our customers have responded positively to the reopening of our restaurants within the government guidelines, and the board of GBK is satisfied with the operational performance of the stores currently trading,” the group said.
Famous Brands said GBK’s board was expected to continue exploring all options to ensure the long-term sustainability of the business in the wake of the severe impact of continued trading restrictions and the slow phased restart of the economy.
GBK has five stores in Ireland and only one is open, while the other four remain closed due to the lockdown.
GBK said it continued to operate despite the challenges and was focusing on navigating its recovery from the impact of the pandemic on the economy and industry.
“This includes flexing the model to capitalise on opportunities to gain market share and leveraging GBK’s equity as the leading burger brand in the UK…”
Famous Brands acquired GBK for £120 million (R2.73 billion) in 2016 to further its goal to diversify its earnings and expand its geographical footprint.
GBK has failed to live up to expectations and the group has suffered impairments of R873.9m pre-tax relating to GBK recognised at group level in 2019 and an impairment of R25.5m recognised in an associate company in which the group has a minority stake.
Famous Brands shares rose 1.59 percent to close at R46.73 on the JSE on Thursday.