Speculation rife on Famous Brands talks

The fast-growing food franchising group is in negotiations with another party, which commentators suggest could be a chicken company.

The company has promised shareholders it will bring a chicken brand into its portfolio, the one area in which the company is lacking and that encompasses about 45% of the fast food market in South Africa.

Kevin Hedderwick, chief executive of Famous Brands, has said the company would only buy a business that was first or second in its market segment, or that had the potential to become a front-runner.

Famous Brands buys existing brands rather than starting from scratch.

The biggest brands in the local chicken fast-food market are KFC, which is owned by US-listed Yum Brands, and privately owned Chicken Licken and Nando's, which commentators say are unlikely to be sold to a local player.

Famous Brands bought a controlling stake in Tashas, which currently has three premises and is rolling out more.

But the purchase of a single restaurant of this nature is unlikely to materially affect a group of this size, with market capitalisation approaching R1.8-billion.

Hedderwick believes consumers will continue to target well-known and trusted brands in the face of tough economic times.

Famous Brands' most recent results showed the resilience of its brands in the face of the tough economic environment for the year ended February.

The group also manufactures and supplies its franchisees, the retail trade and hospitality industry with meats, sauces, bakery items, ice cream, fruit juice and mineral products.

The food services division, set up to source quality business for the group's brands where spare manufacturing capacity exists, is doing well.

Hedderwick declined to comment on the cautionary because of JSE regulations.

Source: The Times

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