Americana Restaurants, the Middle East franchisee of fast-food chains, including KFC and Pizza Hut, on Monday said its profit halved for the first quarter of 2024 compared to the same period last year.
Americana Restaurants said the decline was due to the “ongoing geopolitical tensions” in the Middle East and the effect of the Ramadan period, which was between March 10 and April 9.
The company is also the franchisee of Hardees, Krispy Kreme and TGI Fridays in the Middle East and North Africa region.
On Monday, Americana Restaurants posted a profit of $28 million for the three months ending March 31, 2024, nearly half of its Q1 2023 profit of $58.8 million.
The company, which is dual listed on Abu Dhabi's ADX and Riyadh's Tadawul exchanges, saw its revenue for Q1 2024 sink by 16.3% to $493.5 million, down from $589.4 million for the corresponding period in 2023.
Adjusted earnings before interest, taxation, debt and amortization (EBITDA) fell by 18.6% to $101.1 million for the first quarter, from $126.9 million for the same period in 2023.
“Decline in revenues [was] primarily driven by lower like-for-like sales due to ongoing geopolitical tensions in the region, as well as the seasonal effect of [the] Ramadan period,” the company said in a statement.
The firm added that higher depreciation charges and rent expenses due to new store openings hit its bottom line.
Americana Restaurants plans to expand in markets less impacted by global economic and political volatility, and the company looks to open 200 to 225 net new stores in 2024 in the MENA region. The company added that it expects to improve its profit margins later in 2024.
Americana Restaurants is owned by Saudi Arabia's $700 billion Public Investment Fund and an investment consortium, Adeptio, led by Dubai-based businessman Mohammed Alabbar, founder of Emaar Properties. Americana Restaurants was acquired by Adeptio in 2016, and PIF bought a 50% stake in Adeptio later that year.
Gaza-related boycotts
Several US brands perceived by activists as supporting Israel in its war against Hamas in Gaza since Oct. 7 have been boycotted by pro-Palestinian protesters in recent months, among them KFC and Pizza Hut.
Last week, Starbucks, McDonald's and KFC continued to see the boycotts over the Gaza war affect their businesses, with lower-than-expected financial performances and the shuttering of scores of struggling franchises.
In March, AlShaya Group, the Kuwait-based company that owns the Starbucks Middle East franchise, said it had to cut 2,000 jobs due to the boycotts, amounting to around 4% of its workforce.
In an attempt to repair the reputational damage, Starbucks' charitable arm last month announced a $3 million donation to World Central Kitchen to provide food aid in Gaza.
