Simbisa Kenya Limited, the company that owns Chicken Inn and Pizza Inn fast food outlets saw its earnings fall significantly in the year ended June in what its parent firm has attributed to the country’s economic woes.
Harare-based Simbisa Brands said the low profitability of the Kenyan operation was large enough to hurt the combined earnings of its regional markets excluding Zimbabwe.
“The region’s operating profit experienced a decline of 13 percent, primarily due to the challenging economic conditions in Kenya,” the multinational said in a trading statement.
“These conditions were largely influenced by the uncertainty surrounding the elections, high inflation, and business disruptions due to cost-of-living protests, which significantly impacted customers.”
Pre-tax earnings in Kenya, Zambia, Ghana and Mauritius fell to $7.3 million in the review period from $12.9 million a year earlier.
Sales in the region, however, grew to $92.8 million from $89 million.
Kenya held its General Election last year, with the voting taking place in August followed by a legal contest whose resolution paved the way for the installation of the new government on September 13.
The country was also rocked by protests in July over the rising cost of living, part of which has been driven by increased taxation including on commodities such as petroleum products.
“The Finance Act assented to by the President on 26th June 2023 and which came into force on 1st July 2023, has tax and cost of living implications, including a doubling of the fuel tax, which will put consumer spending under further pressure and impact the operational cost base from [first half of 2024 financial year),” Simbisa said.
“These economic headwinds have significantly increased the cost of living, and consumers are feeling the pressure.
Social unrest and protests, led by opposition politicians in response to the rising cost of living and alleged fraud during the August 2022 election, resulted in trading disruptions in [second half of 2023 full year].”
Despite the economic challenges facing consumers in Kenya, the fast food operator says it intends to continue expanding in the country which it says has strong long-term growth prospects.
“However, the group remains committed to growing its footprint in the region, particularly in Kenya, where growth opportunities remain abundant,” Simbisa said.