Gourmet Burger Kitchen (GBK) has been showing signs of strain for some time. The chain, owned by South Africa’s Johannesburg-listed Famous Brands, is among a group of casual dining businesses that have struggled to survive high rents, rising food prices and expensive staff in the UK. Now it joins the ranks of South Africa’s corporate offshore disasters. After being put into intensive care (Company Voluntary Arrangement for financially distressed companies) in 2018, in October Famous Brands reported that GBK (UK and Ireland) was “making good progress” after a restructuring. It reported revenue decreasing in rands (7%) and Sterling (13%), but also massive cost-cutting (76%) and an improved profit margin (6.6%). GBK, like all other UK restaurants, was forced to shut its doors, or focus on takeaways, as Covid-19 swept into Britain and the government imposed a nationwide lockdown. The pandemic has proved too much for GBK’s accountants, with Famous Brands announcing on Thursday that it won’t be putting anymore money into the company. Famous Brands is the owner of South African chains like Wimpy, Steers, Debonairs Pizza and Mugg & Bean. – Jackie Cameron
Famous Brands cautionary annoucement
FAMOUS BRANDS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1969/004875/06) Share code: FBR ISIN code: ZAE000053328 (“Famous Brands” or “the Group” or “the Company”)
Cautionary announcement GBK Restaurants Limited (“GBK”) United Kingdom (“UK”)
Shareholders are referred to the voluntary update (“Update”) published on SENS on Monday, 23 March 2020 in which it was advised that a deterioration in GBK’s store sales in the UK had commenced on 1 March 2020 due to the Covid-19 pandemic.
Shareholders were further advised that the respective Governments of the UK and Republic of Ireland had ordered all restaurants in those countries to close indefinitely and until further notice.
It was noted that while various measures of support were offered to the industry to mitigate the economic impact of this decision, the uncertainty regarding resumption of trading was cause for concern in both markets.
In light of the above mentioned directive in the UK and Ireland, the Board of Famous Brands (“Board”) has reviewed its investment in GBK, a wholly owned subsidiary incorporated in the UK. The Board has taken the decision to not provide any further financial assistance to the GBK business.
Accordingly, the Board of GBK will consider the options available to the business. The Board’s decision to withhold further financial support for GBK may result in an impairment of the full value of Famous Brands’ investment in GBK. The precise valuation of such an impairment would be determined in due course.
A further announcement will be issued as soon as reasonable certainty in this regard has been obtained.
These deliberations may have a material effect on the price of Famous Brands’ securities. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until a further announcement in this regard is made. The financial information on which this announcement is based has not been reviewed or reported on by the Group’s external auditors.
