Related Articles
Top Stories
Feb 13 2012 07:58
Greek lawmakers have approved a new round of drastic austerity measures after a long day of street battles between police and protesters left dozens injured.
Feb 12 2012 15:59
Moral hazard, financial weapons of mass destruction, a huge mess - these were the words used by a founder member to sum up the collapse of the Pinnacle Point Group.
Feb 12 2012 15:58
Construction companies are now undertaking a second round of self-examination into uncompetitive behaviour.
Johannesburg - Restaurant and fast food group King Consolidated (Kingco) Kingco delivered disappointing results while its competitors succeeded in creating stronger brands, said analysts.
Kingco is the parent company of Bimbo's, Keg, McGinty's and Saddles. It reported a headline earnings loss of 93c per share on Tuesday, worse than its loss of 25c/share in 2008.
The group blamed lower consumer spending for its losses, saying the "tough economic climate" eroded its earnings.
However, competitors like Famous Brands and Taste have managed to remain a preferred choice for cash-strapped consumers.
"A strong brand benefits from consumers trading down from expensive restaurants to cheaper options like Spur," said Quinton Ivan from Coronation Fund Managers. "Famous Brands [parent group of Steers and Wimpy] is well recognised, whereas [Kingco's] Bimbo's isn't and therefore struggles in this environment."
Kingco stocks have lost 70% of their value during the last 12 months, trading at 30c/share on Tuesday, unchanged for the day.
Philip Smith of franchise consulting group Franchize Directions said not all Kingco's franchises are top brands and in a recession, consumers tend to prefer bigger, well-known brands.
"Famous Brands has a clear positioning for its brands in the markets, whether it's burgers or pizza, and a good marketing team, which is why its brands are so much stronger," said Smith.
Famous Brands reported an increase in headline earnings per share of 11% for the year ended in February 2009.
Likewise Taste Holdings, parent group of Maxi's and Scooters, reported an increase of 29% in headline earnings to 10.2c/share for the six months to end-February.
Taste said the re-imaged Maxi's sites resulted in an 18% increase in the franchise's revenue to R35.4m.
Ivan said despite the economic downturn, consumers will continue to buy fast food.
"People are time-poor, they don't have time to go home and cook," he said. "This - coupled with a value-type offering - means [fast food] is not that expensive, but the quality of [Kingco] brands on offer is just not particularly great."
- Fin24.com