Pizza Hut franchisee Americana Restaurants to focus on 'value' offers to counter sluggish demand
Middle East crisis, weak consumer demand cited as factors in 9-month results
Dubai: The Middle East’s biggest F&B operator Americana Restaurants has pointed to the geopolitical situation as one reason for a 15.3% drop in nine-month revenues to $1.61 billion. Another factor is the ‘slowness in consumer demand’ which is noticeable in some of the markets it operates in, the company added.
Americana, which operates high-profile franchises of Pizza Hut, KFC and TGI Friday’s among others, had an even bigger decline on the profit side, by 48.2% to $117.4 million. The ongoing Middle East crisis has been a drag on the wider F&B sector, especially for global brands with a region-wide presence.
In response, Americana Restaurants will ‘remain flexible and strategic’ to the changing nature of F&B and consumer dynamics, it said. The company is listed on ADX and Tadawul.
Corporate tax as a factor
On the profit drop, it cited the incremental depreciation charges from new store openings during the period as well as the implementation of corporate tax in the UAE.
Americana is 'implementing a strategic blend of revenue enhancement initiatives, store expansion
program, cost-saving practices, and technology integration to enhance operational performance'
Value meals
There will also be a heightened focus on value meal propositions, such as ‘everyday value offers across markets to increase order frequency’. There will also be more ‘competitive deals to attract new customers’.
This is already being seen in the F&B sector as a whole as operators try to jack up demand in the crucial final weeks of the year. They will also get some respite from increased tourist arrivals in markets such as the UAE.
Cash situation
Americana Restaurants currently carries no leverage and has the backing of 'strong' cash reserves. With an adjusted free cash flow of $56.2 million, the company is 'adequately positioned to meet its capex requirements'.
After the first nine months of 2024, it had 113 overall new store openings taking the total count to 2,504 restaurants in operation.
Q3-2024 numbers
During the July-September period, Americana Restaurants did feel a 'noticeable recovery' in average daily transactions as well as average daily sales per store compared to Q2-2024 numbers.
In Q3-24 alone, it tallied $555 million in revenues, 0.8% down on Q2-2024, 'reflecting business resilience amidst continued conflict'.