Famous Brands sales skyrocketed – but so did its load-shedding costs

Famous Brands recently reported that its diesel costs to keep the lights on during load-shedding increased by 880% in the first quarter of this year.

In a voluntary trading update released on 20 July, the company reported that it had spent R8.8 million on diesel between March and June 2023.

This is a significant increase from the R1 million the company spent on diesel in the first of quarter of the previous financial year. 

The company’s diesel usage grew from 48,000 litres in Q1 FY2023 to 397,000 litres in Q1 FY2024.

Famous Brands said it had felt the impact of load-shedding across all four of its division. Its restaurants, in particular, are highly exposed.

The company listed lost revenue, an increased risk of food waste, and an increased risk of operating and capital costs as the effects of load-shedding on its restaurants.

Famous Brands said that higher load-shedding stages increase the chance of generator failures, and at stage 6, some of its plants run on generators for more than 40 hours a week.

However, the company’s sales also skyrocket during load-shedding. 

Famous Brands reported that between March and May – when the country experienced high stages of load-shedding – restaurant sales from its leading brands during load-shedding made up 22.16% of overall sales. 

In June, when the country saw less intense power cuts, restaurant sales from leading brands during load-shedding constituted 10.56% of total sales.

For Famous Brands’ signature brands, these numbers change to 24.36% from March to May and 12.55% in June.

Famous Brands said its leading brands performed marginally below the company’s expectations for the first quarter. 

The company’s casual dining segments improved significantly, with its leading brands, which include Wimpy, Debonairs, Steers and Mugg & Bean, growing by 9% in June 2023 compared to June 2022.

However, there was a lag with its quick-service restaurants this quarter, which the company attributed mainly to load-shedding.

Famous Brands’ signature brands, which include Fego Caffé, NetCafé, Mythos, and Salsa Mexican Grill, shrank by 1% in June 2023 compared to June 2022.