The latest results from AVI and City Lodge reflect a similar story — constrained profits in a tough consumer environment. However, a closer look reveals a more positive tale.

What do AVI and City Lodge have in common? These days, more than you might think.

AVI is primarily a consumer brands business, although it plays further up the value chain. Its primary focus is on food and beverage brands. Things are not easy for the company, as the South African consumer environment is a tough place. It also has some legacy businesses that aren’t a good fit with the group, so some cleaning up is needed there.

Over at City Lodge, management has been actively executing a food and beverage strategy designed to improve margins and asset utilisation at the hotels. Aside from attracting people to stay at the hotels, this strategy also encourages people to meet there for meetings or social occasions. Pursuing a higher “occupancy rate” on the ground floor at those restaurant tables is a winning strategy, as the actual occupancy rate from the second floor up can be much harder to get right.

Overall, I think that both management teams have done a solid job with the cards they’ve been dealt. The share price over the past year tells a different story, with AVI down 6% and City Lodge down 13% as the shine came off the GNU-inspired SA Inc rally.

Do they deserve better? Perhaps.

Read the full article by The Finance Ghost here: https://www.dailymaverick.co.za/article/2025-09-14-finance-ghost-avi-city-lodge-show-power-of-coffee-and-good-management/?dm_source=top_reads_block