Famous Brands trading update, very good

This morning we received another trading update from one of our retailers, this time fast food franchisee Famous Brands. The update was only for the month of December which is nice because it gives us some important information about what kind of month December was, especially for holiday makers.


"System-wide sales across the Group's total brand portfolio (including South Africa and the Rest of Africa region) grew 13.2% while like-on-like sales increased 9%, up from 6.1% in December 2011. System-wide sales in South Africa alone grew 12.4% in December, while like-on-like sales rose 8.5%. In the Rest of Africa region, system-wide sales increased 25.6%, with like-on-like sales improving 15.1%."


This looks like a good outcome for the company who are at the same time the sole suppliers to this sales growth. It is a double edged sword in a good way. It also highlights how well the company has managed to integrate itself on our roads, keeping travellers full and satisfied. Targeting our petrol stations has been genius. And as you would imagine people on holiday eat out more.


Kevin Hedderwick reiterates this: "In contrast to the 2011 December trading period, there was a discernible migration of holidaymakers from Gauteng to the coastal areas. Our restaurants in KwaZulu Natal and the Western Cape outperformed the inland markets, delivering stand-out results. Further reflecting this trend are the record turnovers reported by our restaurants on transit sites, at casinos such as Sun City, and entertainment centres including uShaka Marine World in Durban and the V&A Waterfront in Cape Town."


There are two reasons for this in my opinion. Firstly it reflects the growth in our middle class/formal sector. People who have formal jobs work throughout the year and then go on holiday over December. That is what we do here in Sunny South Africa. And on that drive to the coast it is traditional to stop at a petrol station to fill up both your car and your stomach.


Secondly I think it shows that people have cut down on overseas travelling thanks to a weaker Rand and tough economic conditions. This has forced them to take advantage of the lovely country we have at our disposal. The great weather we had over December also helped, especially at Milky Lane which the update suggests. This also leads me to believe that retailers like Holdsport and Mr Price have also had good Decembers.


Other things to note from the update was how well Tasha's has done, growing turnover by 30%. Not only is this brand stealing market share because everyone loves them and it has become the fashionable go to for lunch and coffee, but it also shows peoples willingness to eat up and pay a bit more for a better dining experience.


And see how well Africa is doing, just like Shoprite and Massmart we are seeing growth well north of 20%. I was listening to the MD of Yum! Brands Africa on Bruce Whitfield's show last night and he was explaining how KFC has become aspirational in many of these countries. In Lagos people go out on dates to the KFC, one couple even got married there. This is no laughing matter, remember how excited everyone got when the first McDonalds arrived in South Africa. If you are not used to it, it is special and new. Plus the other restaurant options in these areas may be lacking.


We remain buyers of this company which has so much potential here in SA and throughout the continent. And they are certainly not hanging around having opened up 31 restaurants in the month, 21 in SA and 10 in the rest of Africa region. And this was over a slow period where builders go on leave and people go on holiday (to consume Steers and Wimpy on the way) which is even more impressive.