The decision by Simbisa Brands to charge in US dollars seems to be working wonders. According to Newsday, the US dollar pricing model is bringing enough foreign currency to cover about US$1 million which is needed for the importation of raw materials. The company has also decided to increase its investment into expansion from an initial $10 million to about $15 million because of the improved foreign currency inflows.
In an interview with Newsday, Simbisa Brands Managing Director Warren Meares said, “What we have looked at is, because of the demand for our brand throughout the country, we have upped that investment from $10 million. We are still working out the finer details, but it may come closer to about $15 million or $17 million for 20 more outlets by the end of the year. Basically, the United States dollar pricing has helped in that it has made available the US dollars required to help us with our expansion and to import all the raw materials required to run our operations. In our operations, we require at least US$1 million a month and I would say for our raw materials it is largely covering that.” Apart from the increase in the number of outlets from the current 209, Simbisa will also introduce new brands from South Africa. And, the end of their financial year is only June 2019. Targeting to open 20 new outlets in just under two months is remarkably ambitious.
Under the US dollar pricing models, customers are offered what is commonly termed discounted rates if they are paying in US dollars. Many businesses have adopted this model as access to forex remains limited in the country.
Financially, Simbisa Brands is doing well. Their half year ended December 2018 results reflected a 44% growth in revenues from US$99.2 million in 2017 to US$143.24 million in 2018. Profit after tax grew from US$7.99 million in 2017 to US$16.37 in 2018. In addition, total assets also increased from Us$84.84 million to US$104.64 million, a 23.33% rise. These figures are impressive.
Simbisa Brands operates Chicken Inn, Nandos, Rocomamas, Galitos, Bakers Inn, Creamy Inn and Fish inn outlets.
Without a doubt, Simbisa Brands seems to be successfully navigating through the current economic challenges. For a company to go on an expansion drive in such a time shows signs of a healthy balance sheet and a strong belief that the company’s future is bright.