To buy shares in Americana Restaurants, you need a UAE stock broker that offers access to the ADX exchange like eToro.
Gaza ceasefire pushes Americana Restaurants share price higher
Badged as the number one platform for iconic casual dining brands in MENA, Americana Restaurants operates almost 2,500 venues across 12 different countries. Back in 1970, the company introduced the “Wimpey” burger chain to Kuwait, before adding KFC in 1973. Since then, the footprint has grown exponentially, with names such as Pizza Hut, Costa Coffee and Krispy Kreme all being brought into the portfolio. Americana now employs more than 40,000 staff from Morocco in the West to Kazakhstan in the East, with the highest concentration of restaurants being in the UAE.
A 2022 IPO, followed by strong gains
So, with such a large and diversified operation – and a growing market of increasingly wealthy consumers – what’s been behind Americana’s volatile share price run of late? The company IPO’d onto the Abu Dhabi Securities Exchange in December 2022, with shares values at 2.62Dhs each. Day one demand drove the price up to 2.95Dhs and that broad-based rally continued on until September 2023, when shares printed a record high above 4.50Dhs.
Conflict sees US brands fall from favour
Shortly afterwards, conflict broke out in the region and whilst this was centred around Israel and Gaza, fall out occurred on a wider basis, with genuine fears that this could escalate into a truly global war.
One of the impacts here was a general backlash against US brands and businesses by many consumers in the Middle East. The Americana share price fell 30% from those September 2023 highs, trading down to under 3Dhs by the end of the year, with reports circulating of many western chain restaurants across the MENA region being deserted. Whilst such boycotts had been seen in the past, the scale of the 2023 pushback was deemed unprecedented. Reuters noted that in Egypt, McDonalds (not under the Americana group) saw its sales fall by 70% year-on year in October and November 2023.
The sell-off continued until November 2024, with shares reaching a low of 2.1Dhs, around the time Israel and Hamas agreed to a four-day truce. This, combined with a change of administration in Washington, appeared to offer some hope that a lasting solution to the problem could be founds, enabling Americana’s brands to start rebuilding their propositions.
Can the company rebuild from here?
The Americana CEO noted on an investor call in November 2024 that whilst the company believed the worst was behind them, no hockey stick recovery was anticipated – building back would take some time and a cautious approach would be taken on new store additions. That’s been quite a set back for a company where an earlier investor report notes its combined market is expected to grow by an estimated CAGR of 14% between 2022 and 2026, underpinned by favourable macroeconomic conditions and solid foundations.
So just how bad has the decline been? In the first quarter of 2023, net profits of $58m were posted off the back of revenues of $589m. The corresponding period in 2024 showed revenues down to $493m and net profits of just $28m. Whilst that did mark something of a low, those latest quarterly filing showed sales rising but profit growth as sluggish, suggesting that margins may be suffering here.
The business has a robust operating model and as they assert themselves, Americana Restaurants is positioned to drive further growth and profitability, leveraging a powerful omnichannel and innovation-driven operating platform, increasing penetration and expanding the offering across attractive, structurally driven markets.
Time to broaden the palate?
The peace accord which came into effect on Monday 20th January has helped stabilise the share price around the 2.5Dhs level and it’s easy to imagine that the next results update, covering full year numbers for 2024, will be keenly awaited. That’s due in mid-February and investors will be looking for confirmation that diners are starting to venture back.
The geographic diversification here provides some valuable insulation to localised economic downturns and Americana appear very competent when it comes to running casual dining operations. But the episode has laid bare the dangers of a fast-moving, high-volume consumer product being bound quite so tightly to the supersized culture of a single country – in a foreign market with a more nuanced worldview. With so much great cuisine in the world, and especially across the MENA region, after five decades of leveraging American food, is it time to tempt investors with a more diverse palate?
Tony Cross is a seasoned market commentator with over 15 years of experience, delivering engaging and insightful content for both journalists and investors. Specializing in macroeconomics, UK blue-chip equities, and intermarket analysis, his commentary is highly valued for its clarity and its knack for eliminating unnecessary jargon.
You can contact Tony on tony@goodmoneyguide.com
