Herfy dominates 6% of restaurant sector, expansion strategy focuses on market evaluation: CEO

Herfy CEO Sam Bader

Herfy Food Services Co. dominates nearly 6% of the Kingdom's restaurant sector that is valued at nearly SAR 18 billion based on studies and marketing research, CEO Sam Bader told Argaam over a phone call.

He added that the company has a market share in meat-processing plants and bakeries, indicating that estimates show that Herfy is among the largest foodstuff producers in the market, and is working to boost its market share in all sectors.

All the company's segments contribute to improving sales, but bakeries and meat-processing plants contribute a lower percentage to profit than restaurants business that is the main segment and dominates the largest portion of the firm's sales and profits, the CEO indicated.

Touching on Herfy's Q4 2021 financial results, Bader said they reflect the tireless efforts of the board of directors, the executive management, and all employees of the company to adopt the best practices to develop the operational segments.

Further, he attributed the strong financials to the administrative reorganization at the level of executive management, which is a continuation of the company's profit growth in the third quarter of 2021.

The fourth-quarter profit was also driven by a 11% year-on-year (YoY) increase in sales to SAR 31 million, as well as cost control that pushed the gross profit margin higher during the period compared with a year earlier.

This was also due to an increase in other revenues during Q4 2021, signing a commercial franchise agreement in Nigeria, and a decrease in the general and administrative, as well as financing expenses.

As regards the opening of new branches, the top executive said the company’s strategy is based on assessing and studying market needs, while taking into account the change in consumer behavior and their preferences towards digital solutions.

He indicated that future expansions will be disclosed through the board of directors' annual report, which will be issued before the end of Q1 2022.

As for the developments of franchise projects, the CEO said a new franchise contract was signed in Nigeria, and the first Herfy restaurant branch would be opened there in 2022. "It is too early to unveil the contribution of franchise contracts to the company's profits in terms of the number of restaurant branches and the number of current countries."

Bader attributed 2021 dividend freeze to the management's plan to strengthen the company's financial position and support its investment plans that are under study.

The food services producer posted an estimated net profit after Zakat and tax of SAR 161.7 million for 2021, a rise of over threefold from SAR 52.8 million a year earlier, according to data compiled by Argaam.

In Q4 2021, Herfy reported a net profit after Zakat and tax of SAR 49.5 million, compared to SAR 20.6 million in the year-ago period.