Quick Service Restaurant (QSR) group, Simbisa Brands Limited, is upbeat the easing of lockdown restrictions across its markets will continue to improve customer counts leading to enhanced profitability.
This comes as the Covid 19 pandemic had caused disruptions to businesses across sectors and economies due to reduced trading hours in line with observing lockdown restrictions.
Zimbabwe implemented various levels of lockdowns since March 30, 2020, which had an adverse effect on businesses.
For Simbisa, with businesses across the region, the relaxation of restrictions across markets should see improved trading hours as well as customer counts.
“With the gradual easing of trading restrictions in our operating markets, trading hours are scaling up and with that, customer counts are recovering,” said the group in a trading update for the third quarter to March 30, 2021.
“Considerable effort has been put into managing our cost base which has seen a considerable improvement in group operating margins. Thus, a recovery in revenue will translate to growth in profitability and improved Shareholder returns and value delivery.
“The Group continues to pursue a short to medium term growth strategy hinged on new store openings and growth in the delivery
business,” said Simbisa.
During the third quarter to March 30, 2021 Simbisa’s revenue increased 68 percent on prior year in inflation adjusted terms and 87 percent on a year to date basis.
Group operating profit margins dropped from 17 percent in Q3 FY20 to 12 percent in Q3 FY21 as a result of the impact of lower revenue recorded in the Zimbabwe operations in January and February, against a relatively fixed cost base.
Revenue for the Zimbabwe operations marginally grew 2 percent and 30 percent on YTD basis.
Whilst YTD customer counts were down 16,7 percent versus prior year, with the Zimbabwe operations trading on 25 percent less counter hours than at full capacity, average spend increased by 56 perfect year-on-year in real terms, driving the growth in revenue.
The adverse effects of Covid 19 have confined to impact the business.
“The Covid-19 pandemic continues to impact customer counts, particularly in Zimbabwe which went into a stricter 30-day, level-4 national lockdown from the 3rd January, which was subsequently extended by a further two weeks to 15th February 2021.
“This had a significant impact on counter trading hours; the Zimbabwe operations traded on 45 percent less counter hours than would have been realised when trading at normal operating hours,” said Simbisa.
According to the group, sit-in capacity was reduced to 50 percent resulting in customer counts going down 34,4 percent during the third quarter under review.
Footfall has recovered since trading restrictions were relaxed from March and the business grew customer counts by 12 percent that same month.
Average spend during the quarter increased 32 percent in USD terms and 417 percent in ZW dollar although consumer spending power remains under pressure in Zimbabwe.
The relaxation of Covid restrictions has also seen gradual improvements in customer counts on regional operations which recorded revenue growth of 504 percent.
The regional business continues to operate amidst Covid-19 related trading restrictions. In Kenya, counter trading hours were down 17 percent, Zambia’s down 21 percent, Namibia down 12 percent and Mauritius down 13 percent versus the comparable prior year period.
Despite trading on fewer operating hours, the Regional business managed to grow customer counts through new store openings, increased promotional activity and value offerings to customers. Aggressive cost containment measures have been put into effect, resulting in improved operating margins.