Food & Drink Americana scales back fast-food openings as profit drops again By Gavin Gibbon, Pramod Kumar July 30, 2024, 9:49 AM Reuters/Amr Abdallah Dalsh KFC, Pizza Hut and Hardee's restaurants in Cairo. Franchise owner Americana has almost 2,500 outlets across Mena Net profit down 41% in Q2 Boycott of Western brands goes on Had planned to open 225 outlets Americana Restaurants International, the Mena franchise owner for KFC, Pizza Hut and Hardee’s, has scaled back its growth plans for this year after another drop in profits. The Saudi-UAE company reported a 41 percent slump in net profit to $52 million for the second quarter of the year, as Mena diners turn their backs on Western brands over the conflict in Gaza. This followed a 51 percent drop in Americana’s net profit in Q1. Across the first half of 2024, profit is down almost 45 percent to $80 million. NewsletterGet the Best of AGBI delivered straight to your inbox every week Americana, which has 2,477 fast-food outlets across Mena, had planned to open up to 225 restaurants this year, but this has been reduced “in consideration of the evolving geopolitical environment”. It is now planning 175 to 185 openings for 2024. It added 81 outlets in the first half of this year and has another 36 under construction. “Additionally, the company will continue to focus on revenue recovery initiatives such as smart pricing, targeting, promotion and marketing, with a sharp focus on driving transactions along with increasing marketing investments,” Americana said in a filing on the Saudi stock exchange. PepsiCo growth defies Middle East boycott of Western brands Saudi brands cash in on Gaza boycott as food market grows Boycott hurts GCC workers, Apparel chief warns The company’s revenues were down 15 percent in the first half of the year, despite the 81 openings. Americana’s KFC and Pizza Hut outlets are being targeted for boycotts in part because Yum! Brands, the chains’ parent company in the US, has invested in Israeli startups. The Tadawul filing said Americana had been affected by lower sales “because of the geopolitical situation” as well as the “unfavourable currency impact” in Egypt and higher depreciation charges as a result of new store openings over the six-month period. Americana is listed in Abu Dhabi as well as Saudi Arabia. Its shares fell on both bourses on Tuesday morning – it was down 3.44 percent at 8:07am local time in Saudi Arabia and down 2.88 percent at 10:06am local time in Abu Dhabi. The boycott of Western brands has also hit McDonald’s. On Monday the fast-food giant revealed that sales in international markets fell 1.3 percent in the second quarter, compared to a 14 percent rise in the same period last year. “The continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America and Japan,” McDonald’s said in its financial statement. Unsplash/Uzenk DoezenkA McDonald’s outlet in Hong Kong. Its international sales are down 1.3% Boycotts of McDonald’s began after its Israeli franchise holder said it had supplied free food to Israeli soldiers. Franchise owners across the Gulf moved to disassociate themselves from the Israeli unit and the parent company is planning to buy back the franchise. Earlier this month Kuwait’s Alshaya Group announced plans to cut jobs at its Starbucks outlets as a result of the boycott. Homegrown restaurants in the UAE have also reported an increase in sales since the start of the conflict.
