Famous Brands Plans To build New Warehouses

Busrep:

Durban - Capital expenditure by Famous Brands, the owner of Wimpy and Debonairs Pizza, rose 210 percent to R61.5 million in the year to February to increase food production capacity and keep up with the expansion of its 1 165 outlets.

This year the group will spend R33.5 million on new warehouses in Durban and Port Elizabeth, fitting out its sauce factory and replacing up to one-third of its fleet.

Chief operating officer Kevin Hedderwick said yesterday: “The investment last year included a new bakery and butchery, upgrades to the sauce plant and increased capacity at Baltimore ice cream. Before we did these expansions we were bursting at the seams.”

Investment was initially driven by the acquisition of Wimpy and Whistle Stop in 2003, but increased sales across all brands have created the need for extra capacity.

The group also owns Steers, FishAways, Brazilian and House of Coffees. In the year to February sales increased by 23 percent. Like-on-like sales, which exclude new outlets, rose 14 percent.

Headline earnings rose 39 percent to R72 million and revenue increased 44 percent to R669.2 million.

Competition is fierce in the R10 billion a year fast food industry and Famous Brands is expanding its footprint. A further 140 outlets will be opened this year and then 100 stores a year until 2010. Each new store creates about 30 jobs, meaning that last year Famous Brand franchisees created over 1 920 jobs.

By September all relish, mustard and tomato sauce for the 432 Wimpy outlets will be made in-house.

Hedderwick said the group would decide by August on distribution to Wimpy outlets, which is currently handled by third parties, without eroding margins.

The group distributes to all its other franchises.