South Africa’s Taste Holdings said on Tuesday it had halted the roll out of new Domino’s Pizza and Starbucks stores after reporting a loss in the first half of its financial year.
South African retailers have struggled to lift earnings this year in the recession-bound economy as elevated household debts. Taste said higher fuel prices, an increase in value-added tax and income taxes have squeezed consumers’ pockets.
Taste, which has 48 Domino’s stores and 12 Starbucks outlets, said Domino’s was the biggest underperformer during the period.
Taste also said Starbucks, which opened its first South African store in 2016, was not making enough money to justify further expansion.
“At present, Domino’s existing corporate store network is producing operating losses and whilst the Starbucks’ store network is profitable at an Ebitda level, it is not producing the required return on the store investments,” it said in a statement.
Ebitda stands for earnings before interest, tax, depreciation and amortization, a measure of operating profitability excluding most expenses.