The verdict is still out on whether SA food companies can successfully operate company-owned restaurants, but we think FBR may have the best chance of succeeding.
The aggressive roll-out of GBK will require significant capex and due to this we are unlikely to see significant improvements in its operating margins in the near term.
We think its diversified brand portfolio enables it to capture the effect of customers trading down as 60% of its outlets trade in the takeaway segment. With the growth of the Steers brand tapering off, FBR has sufficient high growth from brands such as Debonairs to offset it.