daniel chigunwe
Michael Tome
Business Writer
VICTORIA Falls Stock Exchange (VFEX) listed Simbisa Brands, says the relative steadiness of the ZiG since its introduction has been positive in retaining customers and preservation of operating margins.
Zimbabwe introduced a new currency, ZiG, early April and observers say its introduction has brought a modicum of stability in the economy compared to the exchange rate pressures and pandemonium that characterised the end days of the Zimbabwe dollar, the former currency.
Simbisa, however, argues that the long-term success of the ZiG and the contingent benefits will depend on market confidence and the Government’s commitment to consistent monetary policy.
This comes as Simbisa continues to witness average spend increase and new store rollout across the country.
Despite the operating challenges, Simbisa continues to grow its footprint in Zimbabwe and opened 25 new outlets in the first three months of 2024 to have a total of 325 counters in the country.
In total, Simbisa opened 48 counters in Zimbabwe between March 31, 2023 and March 31, 2024 including the awaited opening of Cork Corner in January and the first Bulawayo Spur restaurant which opened doors in February 2024.
This will undoubtedly widen the group’s reach and service delivery across the country.
These developments are being rolled out albeit a string of challenges that continue to frustrate global economic growth, including climate change-induced food insecurity and heightened geo-political tensions in Eastern Europe and the Middle East, which cause global supply chain disruptions.
“The Zimbabwean operations were negatively affected for a short period in April by disruptions that stemmed from the introduction on April 5, 2024 of the ZiG, which replaced the ZWL as the local currency.”
However, the relative stability of the ZiG since its introduction has been beneficial in retaining customers, preserving operating margins, and reducing borrowing costs,” revealed Simbisa group chief executive officer Basil Dioniso in the trading update for the third quarter to March 2024.
However, despite the reprieve in exchange rate pressures, Simbisa said it remains dedicated to maintaining stringent cost controls to safeguard margins, ensuring that top-line growth initiatives will translate into improved profitability.
Going forward, Simbisa Brands indicated that it remains focused on growing its revenue base from delivery channels through expansion in the number of stores and geographical reach to as many customers as possible.
In that regard, Simbisa has hinged on a short to medium-term strategy on increasing footfall into the existing store network through value offerings and intensified promotional and marketing initiatives.
“We will continue to grow our store footprint, with the Group intending to open a further 55 company-owned stores, up to December 31, 2024.
“There is still significant potential growth from the delivery segment and growing and improving this revenue stream remains a key focus area with significant progress made so far in the financial year.”
Operationally, Simbisa’s turnover in the third quarter grew 4 percent to US$48,3 million from US$46,5 million compared to the prior quarter.
In the nine-month, period to March 2024, Simbisa’s revenue increased by 8 percent credited to the increase in average spend, whilst customer counts remained flat.
This comes as real average spend grew three percent in third quarter of the 2024 financial year against prior year performance, with Zimbabwe operations effectively adjusting menu prices in line with inflation so as to preserve gross profit margins.
Bongani Ndlovu