Simbisa adds 47 new outlets and records higher profits, but customer growth is slowing down as inflation fries incomes

Simbisa Brands, Zimbabwe’s biggest fast-food company, opened 31 new outlets in 2023 and plans 27 more, but the growth in customer count is slowing as inflation takes a bite out of consumer spending.

Of the 31 new outlets opened between December 2022 and December 2023, 20 went up in the last half of December. Another 27 will be opened by June, taking the total to 47. To drive growth, the company is targeted the high-end market, where there is higher average spend. The company is opening 14 casual dining outlets, which include Rocomama’s, Spur, Ocean Basket, Nando’s, Galito’s and Steers. A new Steers Drive Thru format is to be launched in Zimbabwe.

“The casual dining segment of Simbisa’s brand portfolio broadens our reach of customers in the upper Living Standard Measure (LSM) segment, attracts a higher average spend and gross profit margins and therefore offers attractive returns to stakeholders,” says the company in its half-year results.

In the six months to December, revenue grew by 10% to US$106.5 million, delivering a 31% increase in operating profit to US$16.1 million. However, Simbisa says the increased usage of the USD in the Zimbabwe economy led to a 19% in operating expenses.

“The cost of water and electricity was increased by 23% and 38%, respectively, in November 2023. More frequent power outages experienced in 1H FY 2024 further pushed costs up through increased generator usage and affected trading hours through stoppages due to increased servicing intervals, resting periods and generator breakdowns,” Simbisa says.

Still, Simbisa managed to grow revenue. Customers spent more in its stores, with the average spend up 9% compared to the same period of 2022. However, the growth in the number of customers was slow. This reflects the strain consumers are facing as inflation rises.

“Customer count growth was subdued, increasing just 1% in 1H FY2024 versus the prior year, a result of the challenging operating environment putting pressure on consumer disposable incomes,” Simbisa reports.