After solid Q1-23, Americana Restaurants has its eyes set on Saudi expansion
F&B operator opens in Baghdad while Saudi Arabia is touted as ripe with opportunities
Americana, the fast-food chain with a market value of Dh32 billion, set a milestone by becoming the first company to be dual-listed in the UAE and Saudi Arabia. It has delivered a 28 per cent increase in the stock price year-to-date.
Through its 50 years of operations, Americana Restaurants has managed restaurants and outlets under the KFC, Pizza Hut, Hardee’s, Krispy Kreme, and TGI Fridays, as well as its own Chicken Tikka throughout the MENA area and Kazakhstan. The company raised $1.8 billion through its public offering in November, and there was such a strong response that the stock was oversubscribed 58 times. After elevating its global presence as a listed company, Americana is on course to achieve its vision as one of the profitable, growth-oriented and diversified F&B operators.
A minor setback
While revenue for Q1-23 increased by 2.1 per cent to $589.4 million, net profit attributable to shareholders dropped from $72 million to $58 million. Due to Ramadan this year being marked in Q1, there was a drop in the in out-of-home dining throughout MENA, contributing to the quarter’s earnings shortfall. From January 1 to March 22, which was the start date of Ramadan, income increased by a respectable 7.5 per cent over the same time in 2022.
The business keeps making strides on several strategic fronts. The KFC and Pizza Hut launches in Baghdad was one of the significant achievements. Americana sees Iraq as an untapped opportunity that would help them strengthen their regional presence and create a solid pipeline to speed up expansion for the rest of the year.
Americana Restaurants maintains a robust balance-sheet and is in a strong position to achieve its commitments on growth and capex and to uphold its dividend policy, with cash and cash equivalent for the quarter at $329 million.
Favourable macro environment
The sizeable youth population, rapid urbanization, and strong economic tailwinds all contribute to an appetite for dining out. Americana, a significant participant in the food sector, may profit from these trends.
Outlook
Americana Restaurants’ medium-term objective is to double revenues while targeting healthy mid-single-digit like-for-like growth in sales, while opening 250-300 net new restaurants per year. The management believes that Saudi Arabia provides a particularly compelling opportunity, and it aims to develop its digital capabilities and optimize off-premises revenue channels while scaling up new brands, including Peet’s Coffee and Wimpy.
The goal is to capitalize on the power of its platform to develop geographically, through exploring new regions and boosting the presence of its brands. The company has a current indicated dividend yield of 2.31 per cent.