Famous Brands, the South African owner of Wimpy and Gourmet Burger Kitchen, is anticipating softer margins after acquiring the UK better burger group in September 2016.
The listed casual dining group described GBK as a “market leader in the premium burger category” with a secure pipeline of sites that would support a “bold restaurant expansion programme”.
In interim financial results, which reported revenue growth up 23 percent in the six months to August, Famous Brands said the GBK deal would allow the group to earn hard currency outside of Africa.
The results show the group grew operating profit by 17% to R404m (£23.8m) – however its operating margin declined to 16.5% from 17.4%.
The company said with the integration of 80-strong GBK in a deal believed to be worth £120m “softer margins were anticipated”.
In its integrated financial report 2016, signed off by chief executive Darren Hale, the group reported a “tough summer trading period” in the UK, with August in particular a “testing month” for Wimpy UK.
Revenue in Sterling declined 2.6%, but grew 7.7% to R57.6 million in Rand terms (2015: R53.4 million) as a function of foreign exchange translation.
Operating profit rose by 2.9% to R10.1 million (2015: R9.8 million) while the operating profit margin declined to 17.6% (2015: 18.4 %).
The financial results covered the period before it took on GBK and had c83 Wimpy restaurants in the UK.
At the time of the deal, Famous Brands said it planned double GBK’s 80-strong estate in five years and bring the brand to South Africa.
Famous also plans to open five Wimpy and two Steers restaurants in the UK over the next year.
