FRESH tax increases introduced this year could weigh heavily on consumer spending and slow growth at fast food giant Simbisa Brands Limited, a new analysis by IH Securities has warned.
The brokerage says the cumulative effect of a higher value-added tax (VAT) rate and Zimbabwe’s fast food levy is likely to squeeze disposable incomes in the group’s core market, just as Simbisa pushes ahead with an aggressive expansion drive.
Government raised VAT to 15,5% from 15% at the start of 2026, while maintaining the 2% Intermediated Money Transfer Tax on US dollar transactions and introducing a 15% rental income tax on business premises — measures analysts say collectively tighten consumer spending power.
In its half year results to December 31, 2025, Simbisa flagged the risk, warning that the new taxes could dampen demand in the second half of its financial year, even as it commits US$10,64 million towards opening new outlets and refurbishing existing stores.
The group plans to roll out 31 new outlets and refurbish 21 stores by June 2026, part of a broader strategy to deepen its footprint across the region.
However, Zimbabwe — which contributes about 70% of Simbisa’s revenue — remains the key swing factor. The group also operates in Kenya and Eswatini, but performance at home continues to anchor overall earnings.
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“The 0,5% VAT increase, effective January 2026, layered on top of the still-unabsorbed fast food tax, compounds fiscal drag on Zimbabwe’s consumer disposable income,” the firm said.
Despite these headwinds, IH still expects growth, albeit at a more measured pace. It projects revenue of US$361,1 million for the 2026 financial year, up 18% year-on-year, with an earnings margin of around 17%.
That outlook assumes some resilience in consumer demand, supported in part by a stronger agricultural season and firm global gold prices.
Even so, IH cautioned that margins could come under pressure in the second half as consumers adjust to higher taxes.
“The question for the second half of the financial year is whether cost execution can sustain the margin gains made in the first half against an incrementally more taxed consumer,” the firm said.
Simbisa has, in recent years, leaned into scale, technology and decentralised management to drive growth and efficiency.
IH noted that the group’s delivery business — supported by its Dial-a-Delivery platform and the InnBucks payment ecosystem — is emerging as a key growth engine. Orders in Zimbabwe and Kenya grew 74% and 60% respectively from a low base, suggesting significant room for expansion.
The broker also highlighted the group’s shift towards a decentralised operating model, which gives individual brands greater profit and loss accountability, as a source of improving margins.
Additional efficiency gains are expected from solarisation projects, supplier renegotiations and ongoing digitisation. If rolled out at scale, solar power could ease energy costs in Zimbabwe and lift margins over time.
Still, near-term risks remain.
“Against this, the outlook for the second half is not without friction,” IH said, pointing to tax pressures, rising fuel costs and competitive intensity in key markets such as Kenya.
Simbisa’s latest results reflect a business that has so far managed to grow through cost discipline and steady demand. Profit after tax for the half year rose 78,34% to US$15,84 million, supported by a 16,1% increase in revenue.