Quick Service Restaurant (QSR) group, Simbisa Brands continues to consolidate its position In the Zimbabwean market following the addition of 25 outlets during the third quarter (Q3) to March 31, 2024.
For Simbisa, the environment has lately not been without its fair share of challenges. Exchange rate volatility, inflationary pressures, and structural tax changes, negatively impacted consumer spending power, which translated to depressed same-store customer volumes.
The Zimbabwean operations were also impacted by power outages stemming from low national power generation capacity, trade disruptions caused by significant roadworks in the Harare City Centre and adverse weather conditions causing a potato shortage during the quarter under review.
During the nine months to March 31, the group opened 62 new counters, further expanding its dominance as a leading fast-food chain. This brings the total store count for the group as at 31 March 2024 to 702, of which 591 are company-operated and 111 are in franchised markets.
“Despite the operating challenges, Simbisa continues to grow its footprint in Zimbabwe, opening 25 new outlets in the quarter under review, including the much-anticipated opening of Cork Corner in January and the first Bulawayo Spur restaurant, opened in February 2024.
“Zimbabwe opened 48 counters between March 31 2023 and March 31 2024 to close the quarter under review with 325 counters,” said chief executive officer Mr Basil Dioisio
According to the group, real average spend increased by 3 percent in the third quarter versus the same period the prior year.
The Zimbabwean operation was effectively adjusting menu prices in line with inflation thereby preserving gross profit margins which, boosted by improved procurement strategies, increased from prior year levels.
Turnover increased 4 percent to US$48,3 million from US$46,5 million during the same period in the prior year.
But during the nine-month year-to-date (YTD) period to March 31, 2024, revenue rose 8 percent year-on-year driven by an increase in average spend whilst customer counts remained flat. The delivery segment remains a key focus area and delivery volumes increased by 10 percent to 73 856 during the review period from 66 976 in the prior year.
Mr Dionisio said delivery times were successfully reduced to 55 minutes, quarter on quarter from 66 minutes due to remapping and optimisation of delivery zones, with the target to reduce delivery times further to under 40 minutes by the second quarter of the financial year 2025.
Overall group revenue increased by 3 percent year-on-year, to US$66,4 million from US$64,3 million during the same quarter in the comparable year driven by an increase in average spend.
Regional operations grew revenue by 1 percent, driven by an increase in customer counts in Kenya whilst regional real average spend fell 2 percent due to exchange rate weaknesses.
The Kenyan market was also affected by heavy rains causing damage to infrastructure and trade disruptions.
On the upside, the recent recovery of the Kenyan Shilling has benefited Kenyan operations through its positive effect on consumer spending behaviour and operating costs.
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In the 9-month YTD period to 31 March 2023, group customer counts increased 1 percent year-on-year to 44,3 million whilst real average spend grew 5 percent, resulting in a 6 percent increase in group revenue versus prior year.
“Growth was primarily driven by new store openings and higher real average spend in the Zimbabwean operations,” said Mr Dionisio.
While the economic environment is expected to be affected by challenges like the El Nino weather phenomenon, management at Simbisa still sees growth potential from the delivery segment and the growing revenue stream remains a key focus area with significant progress made so far in the financial year.
“Despite the reprieve in exchange rate pressures, the group remains committed to maintaining strict cost controls to ensure margins are protected and ensuring the top-line growth initiatives translate into improved profitability,” he said.
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