Restaurant franchise group Spur Corporation continued to gain market share in the year to June 2015 as worldwide restaurant sales increased by 12.1% to R6.2 billion.
Sales in South African restaurants proved resilient in growing by 11.3% while international restaurant sales increased by 18.6%.
Following the opening of 52 new outlets during the year the group increased its restaurant base to 522, with 464 in South Africa and 58 in the international operations across Africa, Australia and the United Kingdom.
Group chief executive, Pierre van Tonder, said the group reported “a competitive performance in an environment of continued slowdown in middle-income spending and consumer confidence sinking to its lowest levels in over a decade.”
Panarottis Pizza Pasta continued its strong growth trend and increased local restaurant sales by 25.4%. Spur Steak Ranches increased restaurant sales by 9.0%, John Dory’s grew by 12.0% and Captain DoRegos declined by 13.2%.
The Spur Family Card loyalty programme has grown to 1.9 million active members who account for 45% of Spur’s restaurant sales.
Van Tonder said trading was impacted by load shedding which reduced local restaurant turnover by an estimated 3%. “Generators have been installed in 283 of our local restaurants at a cost to franchisees of approximately R106 million,” he said.
The group’s profitability for the year was impacted by a share-based payment expense of R33 million relating to the black economic empowerment transaction with Grand Parade Investments in October 2014.
Comparable profit before tax, excluding the impact of the GPI transaction and exceptional and one-off items, increased by 10.8%.
Headline earnings increased by 4.7% to R141.5 million with diluted headline earnings per share 3.2% lower at 152.8 cents per share. Excluding the impact of 2 the GPI transaction and other exceptional and one-off items, headline earnings per share increased by 14.3%.
The total dividend increased by 9.1% to 132 cents per share. This equates to a dividend payment of R143.2 million, an increase of 21.2% on the prior year.
In March 2015 the group bought a 51% stake in RocoMamas, a trendy fast casual dining restaurant chain offering artisanal-style “smash burgers”, ribs and wings. Four new outlets have been opened, bringing the total to nine. “The brand has exciting growth prospects nationally and we plan to double the number of RocoMamas outlets in the year ahead,” said Van Tonder.
The group’s African operation delivered strong growth. The footprint in the region was expanded to 41 with the opening of six new outlets, including the first international John Dory’s which was opened in Lusaka, Zambia. Van Tonder said the performance in the UK and Ireland was disappointing, owing mainly to high levels of competition in the quick-service restaurant market and escalating labour, occupancy and food costs.
“Our strategy in the UK has shifted to focus on a smaller format Spur brand, known as RBW (Ribs Burgers Wings). RBW requires a lower upfront investment than a regular Spur restaurant and is a more sustainable formula in the current climate. Our first Spur RBW opened in Corby near Northampton in June and the initial customer response has been encouraging.”
On the prospects for the group, Van Tonder said: “The economic and trading headwinds facing the food and restaurant sector are not expected to abate in the year ahead. Similarly, consumers are likely to remain under financial pressure.”
The group plans to open 38 restaurants in South Africa. International expansion will focus mainly on Africa where 12 new franchised outlets will be opened, including additional restaurants in Nigeria, Zambia, Kenya and Namibia, and the first outlets in Ethiopia.
The first international outlets for RocoMamas and The Hussar Grill will be opened in Namibia and Zambia respectively.
Two new restaurants will be opened in Perth, Australia, and the group plans to expand the RBW pilot project in the UK to a further three sites.
Ref: Issued by Tier 1 Investor Relations on behalf of Spur Corporation
