Botswana’s struggling economy is weighing on the performance of restaurant and retail businesses with Famous Brands Limited warning that its Botswana operations continue to underperform amid difficult market conditions.
The South African restaurant group, whose brands include Wimpy, Steers, Debonairs Pizza and Mugg & Bean, operates through a network of 42 outlets and retail stores across Botswana.
Its latest trading statement points to mounting pressure on profitability as economic conditions in the country remain challenging.
In a trading statement issued on October recently, Famous Brands said its Retail Group Proprietary Limited business in Botswana had continued to perform below expectations, primarily because of prevailing economic conditions.
In a trading statement issued on October recently, Famous Brands said its Retail Group Proprietary Limited business in Botswana had continued to perform below expectations, primarily because of prevailing economic conditions.
“Although Retail Group has continued to underperform against the Group’s expectations primarily due to the prevailing economic conditions in the Botswana market, the Group continues to see long-term potential in that market, where our brands remain well established and relevant to consumers,” the company said.
The disclosure comes as the group expects earnings per share (EPS) for the six months ended August 31, 2026, to decline by between 13% and 33% compared with the corresponding period last year.
Famous Brands attributed the expected decline largely to a R40.9 million goodwill impairment relating to Retail Group in Botswana, following its decision to reduce its shareholding in the business.
The company expects reported EPS to fall to between 157 cents and 205 cents, from 236 cents in the six months ended August 31, 2025.
Headline earnings per share, which exclude certain items, are expected to range between 205 cents and 252 cents, compared with 236 cents previously.
This represents a potential movement ranging from a 7% increase to a 13% decline.
The group said revenue performance had remained resilient, supported mainly by improvements across its value chain. However, elevated fuel prices arising from the conflict in the Middle East, coupled with higher interest rates, had created a difficult economic environment and adversely affected profitability.
For Botswana, the assessment raises questions about the resilience of consumer-facing businesses operating in an economy grappling with subdued economic conditions and pressure on household spending.
Restaurants and retail outlets depend heavily on consumers’ disposable income, making discretionary spending vulnerable when living costs and borrowing expenses rise. It is understood that under such conditions, customers may cut back on eating out or reduce the frequency of visits, putting pressure on sales and operating margins.
Restaurants and retail outlets depend heavily on consumers’ disposable income, making discretionary spending vulnerable when living costs and borrowing expenses rise. It is understood that under such conditions, customers may cut back on eating out or reduce the frequency of visits, putting pressure on sales and operating margins.
Famous Brands is responding by reducing its direct financial exposure to the Botswana business while retaining a stake in the market.
The group plans to dispose of a 21% interest in Retail Group, reducing its shareholding from 51% to 30%. The transaction is expected to be completed during the 2027 financial year, subject to the fulfilment of conditions precedent, including regulatory approvals.
“The disposal will reduce the Group’s direct exposure to operating losses while maintaining ongoing economic participation in the Botswana market through its remaining 30% interest and the continued receipt of master licence fees under the existing arrangement,” the statement said.
The move is consistent with the group’s capital-light expansion strategy outside South Africa, which seeks to limit direct exposure to operating losses while maintaining commercial participation in markets where its brands are established.
Excluding the goodwill impairment, Famous Brands said reported EPS would have been between 199 cents and 247 cents per share, highlighting the significant effect of the Botswana-related charge on its earnings outlook.
Despite the difficulties, the group has maintained that Botswana remains a market with long-term potential.
