GBK’s parent company left frustrated as chain runs up operating losses of £2.2m

Gourmet Burger King has recorded an operating loss of £2.24m for the five months to 31 July, its South African owner Famous Brands has revealed.

The loss is a substantial increase on the £680,000 deficit it suffered during the same period the year before. Sales, meanwhile, plunged 6% year-on-year and 11% on a like-for-like basis over the same 22-week timeframe.

Famous Brands, a specialist in foodservice franchising, snapped up GBK for £120m two years ago in what represented the largest deal it has ever been involved in.

At the time it said GBK “ticked all the boxes” and it planned to transfer many of the casual dining brand’s best practices back to its home market.

But its latest performance update illustrated that it has struggled to make the 75-strong chain a profitable part of its business.

Bosses at Famous Brands admit they had hoped the UK operation would be faring better by now.

“We are mindful that GBK’s contribution to group profitability has taken longer than initially anticipated, hampered by the adverse trading environment,” the company stated.

Famous Brands’ challenges are not just limited to the UK. The company said “difficult” trading conditions had persisted across all of its markets during the past five months, with common features including intensified competitor activity and margin pressure in the context of economic hardship and constrained discretionary spend.

The group said its results for the six months ending 31 August 2018 would be published at the end of October. It conceded that GBK would report a larger operating loss than the prior comparable period.

Meanwhile, in a separate ‘cautionary announcement’ issued to the Johannesburg Stock Exchange, Famous Brands said it was “giving consideration to strategic options relating to a subsidiary that may have a material impact on the price of the company’s share price”.

It did not indicate whether the subsidiary in question was GBK or another part of its business.

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