The performances of restaurant and franchising companies listed on the JSE present a tale of contrasting fortunes.
On the one hand, Famous Brands, the largest listed restaurant group on the bourse, has shown a strong short-term recovery, with its share price rising 22.5% in the past six months.
This comes as the group aggressively closes loss-making restaurants and supports franchisees with alternative power solutions to mitigate the ongoing energy crisis.
On the other hand, the group’s long-term valuation remains under pressure, suffering a 16.8% decline over three years and 19.1% over five years, reflecting the effect of economic challenges including inflation and a decline in disposable income.
In contrast, Spur Corporation has shown resilience over the long term, with a 40.4% increase in valuation over three years and a 25.5% increase over five years, driven by strong brand loyalty and strategic expansion efforts. However, the past six months have seen a 2.65% decline, as inflationary pressures and cost-of-living concerns weigh on consumer spending.
Famous Brands’ short-term rally comes as the group implements a strategic reset to adapt to the economic climate. Despite inflation curbing consumer demand and severe load-shedding affecting profitability, the group has taken bold steps, such as launching innovative products and enhancing delivery capabilities, to maintain relevance.
It also added 137 new restaurants during the 2024 financial year expanding its footprint across 18 countries, including key growth markets in Africa and the Middle East.
Vertical integration remains a key advantage for Famous Brands, enabling greater control over supply chain operations and cost efficiencies. However, the group’s valuation struggles reflect the lingering effects of economic challenges and past strategic missteps, including an ill-fated foray into the UK market with Gourmet Burger Kitchen (GBK), which was abandoned in 2020.
Spur Corporation, by contrast, has built a reputation for consistency and loyalty. Its family-friendly atmosphere and nostalgic appeal have shielded it from the volatility that often affects trendy or upscale dining brands. The group’s recent acquisition of the Doppio Collection, which added 36 restaurants, reflects its efforts in expanding its specialist dining portfolio while retaining its core family-dining ethos.
In 2024, Spur saw franchised restaurant sales rise 11.5%, with strong performances across brands such as Panarottis, RocoMama and the flagship Spur Steak Ranches. Despite inflationary pressures, December sales were robust, driven by festive season demand and Black Friday promotions. With a market capitalisation of R3.19bn and a five-year return of 25.5%, Spur’s performance reflects a steady hand.
Meanwhile, Grand Parade Investments (GPL) and Taste Holdings have faced significant challenges in the quick-service restaurant sector over the years. GPL, which once owned Burger King SA, divested from the brand in 2021 to focus on its core investments. Taste Holdings, known for brands such as Domino’s Pizza and Starbucks, exited the food business entirely in 2020 following sustained losses, opting to focus on its luxury goods division.
According to GlobalData, SA’s broader food-service market, which was valued at R585bn in 2023, is projected to grow at a compound annual growth rate of over 6% from 2023 to 2028. Quick-service restaurants remain the dominant channel, supported by consumer demand for convenience and budget-friendly options. Famous Brands and Spur are likely to benefit from this trend.
Load-shedding, however, remains a significant challenge for restaurant operators and businesses at large despite the country having experienced 302 consecutive days without power cuts. Famous Brands previously reported that 95% of its leading restaurant brands have now implemented alternative power solutions, but the associated costs have weighed heavily on profitability. Spur has similarly felt the strain but continues to invest to maintain its competitive edge.
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