Durban - Famous Brands, the owner of the Wimpy, Steers and Debonairs brands, has reported brisk trading over the festive season and anticipates a prosperous year for shareholders.
Paris Papageorgiou, Famous Brands' financial director, said yesterday that "the festive season was good. Trading was strong across the whole business."
The company's other brands are FishAways, House of Coffees and Brazilian Coffee.
Papageorgiou said: "We are expecting a very good year. We are confident about the economy and expect a prosperous year for our shareholders."
One analyst said there was a growing trend worldwide for an increasing number of people to eat out as their lives became busier. In South Africa "the outlook for consumer spending, in a low interest rate environment, appears to be very strong", he said.
Noelani King Conradie, an economist at NKC Independent Economists, said consumer spending would remain positive even if interest rates remained unchanged.
Consumer credit has surged in the last six months and if interest rates fell further, consumers could fall into a debt trap, she said.
In April 2004, private sector credit extension was at 2.5 percent and in November 2004 it stood at 10.5 percent, she said.
"As long as there are stories of the potential for interest rates to go down, people will spend more.
"In our view, interest rates are likely to remain unchanged this year," she said.
The repo rate, the rate at which the Reserve Bank lends to commercial banks, stands at 7.5 percent.
Famous Brands' share price has responded positively to strong trading during the festive season and the upbeat outlook, rising almost 9 percent in the last month to close at R7.20 yesterday, 5c down on the day.
The hotel and leisure sector was up 0.33 percent.
However, the stock is still shy of the annual high of R7.61 reached early in December. In mid-2003 the stock hit R1.60 after a fire at its Midrand warehouse. This was despite the fact that the company's butchery, bakery and sauce production was unaffected.
But since October 2003 the share price has surged, spurred on by the acquisition of Pleasure Foods, which owned the Wimpy and Whistle Stop brands, in 2003.
In October last year the group reported a 132 percent rise in headline earnings to R22 million for the six months to August following the smooth integration of Wimpy and Whistle Stop.