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The downturn in Botswana’s diamond industry has emerged as a major concern for restaurant group Famous Brands, which says the slowdown has crimped revenue from one of its most important markets outside South Africa.In its latest annual report, the JSE-listed food services group highlighted Botswana as a key area of underperformance, citing the country’s weakening economy and reduced consumer spending.Famous Brands operates its largest network of company-owned restaurants outside South Africa in Botswana. With 51 restaurants, the market is strategically important to its regional operations. However, the country’s heavy dependence on diamonds exposes it to global market pressures, creating a ripple effect across sectors that rely on consumer spending. According to Famous Brands, Botswana’s economy is grappling with both cyclical and structural challenges despite its reputation for strong governance, political stability and middle-income status. Economic growth has slowed considerably as a result of weakness in the diamond sector, which remains the country’s primary source of export earnings and government revenue.Diamonds account for about a quarter of Botswana’s GDP and 80% of its exports. Famous Brands, which owns brands such as Mythos and Wimpy, said reliance on diamonds has left the economy vulnerable to fluctuations in global demand. At the same time, the growing popularity of lab-grown diamonds is creating a longer-term structural threat to the industry, raising concerns about future revenue streams and employment prospects.“Growth has slowed significantly due to a downturn in the diamond sector, a key driver of exports and government revenue,” Famous Brands said.Limited economic diversification has compounded the problem. With fewer alternative growth drivers available, broader economic expansion, job creation and household spending have come under pressure, directly affecting consumer-facing businesses such as restaurants.Famous Brands reported that the downturn has materially affected revenue generation in Botswana, forcing management to implement a series of cost-containment measures to protect profitability.Growth has slowed significantly due to a downturn in the diamond sector, a key driver of exports and government revenue.— Famous Brands Among the interventions introduced were the postponement of expansion plans and reductions in staff numbers. Despite the current difficulties, the group remains optimistic about Botswana’s long-term prospects. It believes its established brand portfolio and extensive restaurant footprint position it well to benefit when economic conditions improve.“Our performance will improve as the economy recovers, supported by our strong brand presence,” the company said.The Botswana challenges come against a backdrop of broader operational adjustments in Famous Brands’ international portfolio.The company’s Africa and Middle East (AME) division, traditionally viewed as a growth region due to rapid urbanisation, population growth and changing consumer habits, also underperformed during the year. Restaurant closures, unprofitable operations in certain markets and legal disputes with a former franchise partner in the United Arab Emirates weighed on performance.Although the legal matter is expected to be resolved in 2027 and carries no material financial implications, it has required considerable management attention and resources.To improve returns, Famous Brands has repeatedly restructured its AME operations. Effective March 2026, the company implemented another cost-cutting exercise that included relocating Dubai-based operations back to South Africa. The AME portfolio has since been fully integrated into the company’s Leading Brands division as part of a strategy to reduce exposure and lower costs in the region.The group is also facing challenges closer to home. In its Signature Brands portfolio, which includes Lupa Osteria, Salsa Mexican and PAUL, subdued consumer demand in South Africa has affected restaurant performance and dampened interest from prospective franchise partners, particularly in the Fun Dining category.Meanwhile, the Retail division fell short of expectations amid intense competition in the frozen potato chips segment and pressure on coffee sales caused by elevated global coffee prices.To counter these pressures, Famous Brands plans to pursue expansion outside South Africa cautiously, prioritising selected markets and city-level opportunities rather than broad country-wide roll-outs. Last month, Famous Brands CEO Darren Heale said the company was in discussions to enter two new countries on the continent.The JSE-listed restaurant group operates more than 3,000 restaurants in 22 markets. It is also investing in the refurbishment of manufacturing facilities through a phased programme aimed at boosting productivity and supporting future growth.Famous Brands expects some of the corrective measures implemented during the second half of 2026 to begin reflecting in its 2027 financial performance.Business Times
