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South African company Taste Holdings announced Tuesday that it has halted the rollout of new Domino's Pizza and Starbucks stores after recording a loss in the first half of its fiscal year.
South African retailers have struggled to increase their profits this year in a recession-driven economy due to high household debt. Taste said that higher fuel prices, increased value-added tax and income taxes have drained consumers' pockets.
Taste, which has 48 Domino stores and 12 Starbucks outlets, said Domino's was the most underperforming of the period.
Taste also said that Starbucks, which opened its first store in South Africa in 2016, was not earning enough money to warrant further expansion.
"Domino's existing store network currently generates operating losses and, while the Starbucks store network is profitable at the Ebitda level, it does not generate the necessary return on in-store investments" , says the release.
Ebitda represents earnings before interest, taxes, depreciation and amortization, a measure of operating profitability excluding most expenses.
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