Gourmet Burger Kitchen Owner Says U.K. Consumer Strain PersistsBy
Declining U.K. sales expected to reverse in second half
Next 18 months will still be ‘tough,’ CEO Darren Hele says
Famous Brands Ltd., the South African company that bought the U.K.’s Gourmet Burger Kitchen chain months after Britain voted to leave the European Union, said it sees difficult post-Brexit trading conditions persisting for at least the next year and a half.
“There are no green shoots at all” in the U.K., Chief Executive Officer Darren Hele said by phone Monday. “It’s likely that the next 18 months will be tough.” That’s even as new Gourmet Burger Kitchen outlets have performed well since opening, he said.
Shares of the owner of Steers burgers and Debonairs Pizza dropped 11 percent in Johannesburg on Oct. 10 after it said it would keep losing money at the U.K. burger chain until the next financial year. Gourmet Burger Kitchen is expected to have a better second-half as sales start to climb, Hele said.
Famous Brands sees fewer opportunities to open new stores in Africa, outside of its home market, than in past years as the property sector in several countries in the region has slowed, he said. The company plans to open 130 restaurants across its brands and the countries in which it operates in the next six months, it said in a statement Monday. It opened 77 outlets in its first half through August, while posting a 56 percent drop in net income to 171 million rand ($12.1 million).
In South Africa, the company continues to look at possible acquisitions in both franchise and brands and at some manufacturing opportunities. Even so, there is “nothing meaningful” to consider buying at the moment, Hele said.
The stock fell 0.9 percent Monday, to trade at 101.39 rand as of 2:15 p.m. local time, bringing its decline this year to 35 percent. The compares with a 3.5 percent slide in the broader FTSE/JSE Africa Mid-Cap Index.