HERFY FOODS
Herfy Food Services Co.
As of: May 28, 2026
Company Profile
Herfy Food Services Company is a Saudi Joint-Stock Company engaged in establishing and operating restaurants, providing cooked meals, production and sale of bakery and pastry products, the sale and purchase of lands for constructing buildings and own use, and maintaining and leasing stores and food store fridges. It operates restaurants under the trademark 'HERFY' and bakeries under 'Herfy Bakeries / Doka'. The ultimate parent is Savola Group Company, which owns 49% of the share capital.
The Story
Herfy Foods is a pioneer in the Saudi fast-food and food processing sectors currently undergoing a challenging operational restructuring marked by declining revenues and net losses.
Source: Annual 2025 (2026-05-18)
Performance & Distributions
Market Pricing Multiples
Growth Story
Herfy's growth trajectory has shifted into reverse, resembling a strategic pruning of its operational footprint. Revenue has steadily contracted over the last three fiscal periods, falling from 1,173,695,530 SAR in FY 2023 to 1,124,768,690 SAR in FY 2024, and further down to 1,082,561,626 SAR in FY 2025. This top-line contraction is mirrored by a negative sustainable growth rate of -1.97%, driven by a five-year average ROIC of just 1.90% and a deeply negative five-year average reinvestment rate of -103.41%. The contraction is also visible in its physical footprint, with leased restaurant locations decreasing from 342 in 2024 to 331 in 2025, while owned locations slightly ticked up from 40 to 41. Geographically, the contraction was most pronounced in its core Central Region, where revenues fell from 642,335,732 SAR in 2024 to 574,025,258 SAR in 2025, highlighting a systemic decline in demand or market share that limits its long-term growth capacity without a major strategic pivot.
Profitability Dynamics
The company's profitability profile reflects a leaky pot struggling to retain heat, characterized by persistent value destruction and negative margins. Herfy's five-year average ROIC of 1.90% stands well below its WACC of 7.22%, resulting in a value-destroying negative gap of -5.32%. In the TTM period, NOPAT was negative at -50,768,413 SAR, leading to a negative operating margin of -4.54% and a net profit margin of -7.16%. This represents a continuation of severe bottom-line distress, with net losses of -77,478,271 SAR in FY 2025, though this is an improvement from the net loss of -116,524,061 SAR in FY 2024. Profitability was further weighed down by significant asset impairments, including a massive 35.7 million SAR write-down of the Sudair factory leasehold improvements and right-of-use assets after Modon rejected the company's compliance plan, and a 3.3 million SAR impairment on idle bakery machinery, which were only partially offset by a 4.5 million SAR impairment reversal on certain restaurants.
Risk & Capital Structure
Risk Factors
Herfy's risk profile is dominated by a heavy anchor of lease obligations and operational vulnerabilities. The company carries a substantial debt load, with latest total debt standing at 914,173,642 SAR against a meager cash balance of 13,296,219 SAR, exposing it to significant liquidity risk. This debt is primarily comprised of lease liabilities, which stood at 457,086,821 SAR in FY 2025. The company's relevered beta of 1.44 reflects high systematic risk and market volatility. Business-specific risks are highlighted by the Modon lease dispute, where the rejection of Herfy's plan for the Sudair factory led to a complete impairment of the asset while the associated lease liabilities remain on the balance sheet. Additionally, credit risk is rising, with trade receivables over 180 days past due surging from 35,844,968 SAR in 2024 to 62,192,033 SAR in 2025, forcing the company to maintain an expected credit loss provision of 32,294,341 SAR.
Governance Disclosures
We track 9 key governance and oversight matters for this company in our database.
Related-Party Transactions with Entities Owned by Major Shareholder
The company conducted transactions with entities owned by a major shareholder and close family members. In 2025, these transactions included sales of SR 204,855 to Taza Restaurant Company Limited, rent of SR 350,000 charged to El Mazaq El Amsal Company, rent of SR 285,000 charged by Bazbazah International Trading Company, rent of SR 240,000 charged to Bazbazah, and rent of SR 1,750,000 charged by Qitaf Company.
Related-Party Transactions with Ultimate Parent and its Subsidiaries
The company engaged in significant commercial transactions with its ultimate parent, Savola Group (which owns 49% of the company's share capital), and its subsidiaries. In 2025, these transactions included sales of SR 20,388,728 to Panda Retail Company, purchases of SR 17,521,782 from Afia International Company, purchases of SR 2,457,989 from United Sugar Factory, and purchases of SR 6,177,214 from International Food Industries Company.
Research Report
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