HARARE – Popular fast foods outlet, KFC on Thursday said it had suspended operations in Zimbabwe due to the volatility of the foreign exchange market in the past week which has badly affected business.
The upheaval in the foreign exchange market was triggered by last week’s Monetary Policy statement by the Reserve Bank in which major changes were announced.
This drove up rates on the black market, a major source of foreign currency for most firms in the country as the economy faces shortages.
While the official exchange rate for the United States dollar against the local bond note remains pegged at 1 to 1, it shot to as high as 1 to 5 after last week’s announcements that separated bond note bank accounts from foreign currency accounts.
This resulted in a spike in the prices of goods and services across the board, with some in the fast foods sector players such as the Simbisa Brands subsidiaries Chicken Inn and Slice Inn, hiking prices by nearly 100 percent.
But KFC Africa said it had taken the decision to “temporarily close our restaurants in Zimbabwe as we are unable to continue to trade due to the current pressure on Zimbabwe’s economy.”
“The currency challenges have affected our operations and supply and we are exploring various ways to open our restaurants soon.”
KFC re-entered the Zimbabwean market four years ago and was operating six outlets in the country, four in the capital Harare, and one in Bulawayo and in Victoria Falls.
But KFC is not the only player to suspend its operations due to the current unpredictable trading environment.
Another high end restaurant chain, St Elmos, had a day earlier also announced suspension of its operations.
“Unfortunately we are unable to source stock unless we pay suppliers in US dollars,” the chain said, adding “we will hopefully open as soon as possible.”
The foreign currency shortages have had a cross sector impact. – New Ziana