Simbisa sees jump in sales in 2024

Quick Service Restaurant (QSR) group, Simbisa Brands, is projected to see a jump in sales for the financial year 2024 as the company leverages product diversification and counter expansion, according to analysts’ projections.

The group has indicated its focus on organic growth rolling out new counters and store expansion to tap into the growing markets for fast foods.

“The group’s increased focus on the casual dining sector will not only ensure diversified revenue going forward, but also increase average spend,” said brokerage firm IH Securities in an earnings review for the group.

“Rollout of brand-specific mobile delivery applications, which started in Kenya during the period, will continue into FY24 to other markets, leveraging the increased adoption of technology in the region for increased sales.

“We therefore anticipate increased customer counts across the region on the back of counter expansion, product diversification and strategic innovations in line with technology adoption,” said IH Securities.

As part of its expansion programme, the group indicated plans to invest US$22 million in 92 new stores in the current financial year, with a primary focus on Zimbabwe and Kenya markets.

Group chairman, Addington Chinake, said the group sees significant growth opportunities in its largest markets for its flagship brands.

Simbisa Brands has an extensive footprint in Africa, with outlets in Zimbabwe and 10 African countries, including Kenya, Ghana, Mauritius, Botswana, the DRC, Malawi, Swaziland, Lesotho, and Zambia.

“A substantial investment pipeline, with 92 net new counters set to open in FY 2024, will drive growth and unlock shareholder value.

“In the short to medium term, the primary growth markets will be Kenya and Zimbabwe. However, Simbisa remains vigilant of new growth opportunities in existing and potential new markets and continues exploring business development options,” he said.

Following the successes of the re-modeling exercise undertaken in Mauritius, Simbisa embarked on an exercise to re-organise the regional business excluding Kenya to streamline the brand portfolio in each market to operate only the most successful core brands to give complete focus and attention to these brands, optimize the customer experience, and maximize shareholder returns.

This, Chinake said, resulted in 28 counters in the non-core brand category, closing the period with 646 counters (578 company-operated and 68 franchised) as of June 30, 2023.

Despite the economic headwinds in the form of power outages, rampant inflation, economic policy uncertainty and exchange rate instability, the Zimbabwe market experienced a good 2022/23 summer cropping season and increased gold production by small-scale miners.

This coupled with a net expansion of 18 new counters contributed to a 24,2 percent increase in customer count, 53 percent increase in deliveries and a 7,9 percent growth in average spend.

Regional operations, however, remained under pressure from high inflation levels which cut across the region and supply chain disruptions. This resulted in a 2,5 percent decline in customer count.

Notwithstanding, real average spend rose 1,7 percent on the back of phased nominal price increases necessitated to keep up with inflation.

Simbisa remained focused on organic growth and opened 69 new counters across all markets during the period, bringing the total store count to 646 at the close of the past financial year

But expansion of the group’s store footprint and the continued development of its digital channels led to an increase in customer count overall, which resulted in revenue jumping 23 percent to US$286,98 million.-ebusinessweekly