Consolidating the brand
DE-MERGED from Innscor Africa only four years ago, Simbisa Brands has managed to hold its own to become the best performing company in this year’s Top Companies Survey.
Welcome Mavingire, one of the Top Companies Survey judges, tells us it comes down to the food, although the quick service restaurants group should be wary of the headwinds ahead. Simbisa Brands Limited emerged the Top Companies Survey 2019 winner on the back of consistent growth and strong performance since its birth out of a de-merger from Innscor Africa Limited in 2015.
The holding company for a number of quick service restaurants such as Chicken Inn, Pizza Inn, Nandos and Steers, which formed the bedrock of the Innscor Africa Group at its formation in 1987, is now synonymous with food both in Zimbabwe and the region where it has established a significant footprint.
Strengthening the brands
As the name implies, Simbisa (a Shona word for making strong or strengthening), Simbisa has over the years invested in strengthening its brands to make them ripe for franchising as well as acquiring new brands.
The footprint for these brands have been extended geographically beyond Zimbabwe to such countries as Zambia, Kenya, Democratic Republic of Congo, Ghana, Malawai, Mauritius, Namibia, Kenya and Swaziland.
The company recently added new brands to its portfolio including RocoMamas, Ocean Basket and Grill Shack which has been performing well to date.
Apart from increasing its footprint through adding store counters across its various markets, the group has also introduced dial-a-delivery augmented through a mobile application as initiatives to reach more customers and build brand loyalty.
Latest financial performance
Interim results for the six months to December 31, 2018 released by Simbisa recently showed turnover up 44 percent to $143 million on the back of increased number of stores.
Improved margins saw operating earnings and attributable earnings rising 82 percent and 99 percent respectively. Being a highly cash-generative business, the company has been able to offer a generous dividend despite its ambitious expansion plans.
Despite not being spared the adverse effects of foreign currency shortages, Zimbabwean operations continued to perform strongly with increased customer count and higher average spent.
Some regional markets, especially Zambia and Ghana, were affected by their own currency volatility whilst Kenya had a more stable currency but consumer spending power was affected by increased taxation on fuel.
Correcting governance shortcomings
Board changes and retirements over the past year have corrected the previous anomaly where the board had a higher number of executive directors at the expense of non-executive directors.
Following the retirement of Leighton Shaw and Manoli Vardas in the past year, the board of directors now comprise majority non-executive members. However, there is still need to increase the size of the board and ensure more independent directors as well as addressing gender diversity within the board.
The bumpy road ahead
With the bulk of its earnings still derived from Zimbabwe, Simbisa remains vulnerable to the vicissitudes of the local economy. Rising inflation and a collapsing local currency has drastically affected consumer disposable incomes and fast foods and eating out is now considered a luxury.
To hedge itself against value loss, Simbisa outlets had since October 2018 been offering dual pricing — in United States dollars and local RTGS dollars — although it has been difficult to harness enough hard currency. Efficient procurement, responsive pricing and wide distribution network remain key pillars for Simbisa going forward and should help sustain the company through the lean years.