New stores on the cards for company’s star performer in places like India and Saudi Arabia as restaurant sales increase 31.5%
Spur Corporation seeks further expansion of its RocoMamas brand in the new financial year, with new outlets in the pipeline for international markets such as India and Saudi Arabia.
Spur, owner of the Spur Steak Ranches, Panarottis Pizza Pasta and RocoMamas brands, said it intends to open at least 14 restaurants internationally and 29 in SA in the new financial year. In addition to the planned new outlets in India and Saudi Arabia, the franchise restaurant chain is also assessing potential sites in Cyprus for RocoMamas and Pakistan for the Spur Steak Ranches brand.
RocoMamas, which is in the gourmet burger market, has been growing at a rapid clip. Spur opened 15 stores in SA in 2017. At 72 stores, RocoMamas is Spur’s third-largest brand after Spur Steak Ranches (321) and Panarottis Pizza Pasta (96).
The expansion of the brand is consistent with Spur’s strategy to boost revenue by growing the footprint of existing brands by expanding into new territories and acquiring new businesses.
As in the previous financial year, RocoMamas’ performance stood out in the year to June 30, with restaurant sales up 31.5%, in contrast to flagship Spur Steak Ranches’ 2.8% drop in sales.
Investment analyst Chris Gilmour on Thursday said the novelty factor had contributed to RocoMamas’ strong performance. “It is a new brand. Spur [Steak Ranches] is relatively tired,” Gilmour said.
He said RocoMamas’ appeal to different demographics also works in its favour. “They are also located in high foot-traffic sites,” he said.
Speaking after the release of the group’s financial results, Spur CEO Pierre van Tonder said Spur Steak Ranches has “90% recovered” from a consumer boycott following an angry exchange between two customers at one of its restaurants in Johannesburg in 2017.
Improved performance from the Spur Steak Ranches business, which accounts for one-third of the group’s restaurant sales, could herald a turnaround for the company.
The Spur Steak Ranches business suffered a decline in foot traffic after that incident. That hurt Spur’s overall performance because in the year to June, 51.1% of the group’s revenue came from franchise fees, which is a percentage of the franchisee’s turnover.
Spur is banking on the continuation of Spur Steak Ranches’ improved sales in the new financial year. Spur Steak Ranches increased sales by 3.2% and 14.8%, respectively, in the third and fourth quarter of the year to June.
Headline earnings
This signalled a reversal of the 9.1% sales decrease in the first half. The sales were down 2.8% for the year.
The group’s headline earnings increased 14.8% to R153.7m. Revenue from continuing operations was up 3% to R667.2m.
The company declared a final dividend of 60c per share, bringing the total dividend to R1.23, down 6.8% from 2017.
Van Tonder said political concerns and policy uncertainty have resulted in weak economic growth in SA, a volatile exchange rate, rising unemployment, increased pressure on consumers’ disposable income and low levels of consumer confidence.
Source: BusinessDay – www.businesslive.co.za
