Cape Town – Restaurant franchisor Spur Corporation experienced difficult trading conditions in South Africa and most of its major international markets in the six months to December 2017, reporting a 2.6% decline in total franchised restaurant sales from continuing operations to R3.7 billion.
Franchised restaurant sales in South Africa were 3.0% lower while international sales increased by 3.2% on a constant exchange rate basis. Group revenue declined by 0.9% to R344.6 million.
The group’s headline earnings from continuing operations declined by 11.8% to R96.6 million and by 19.7% on a comparable basis. Diluted HEPS from continuing operations was 11.7% lower at 100.9 cents. The interim dividend was reduced by 11.3% to 63 cents per share.
Despite the tough economic conditions, Spur Corporation expanded its global restaurant footprint to 613 with the opening of a net 22 new outlets in South Africa. Five new international outlets were opened and five closed. The new outlets are in Nigeria (Spur and Panarottis), Mauritius (Spur Grill & Go), Kenya (RocoMamas) and Namibia (John Dory’s).
Chief executive Pierre van Tonder said the ongoing political instability in the country during the reporting period, together with higher living costs, negatively impacted consumer sentiment and discretionary spending, resulting in a sharp decline in restaurant and shopping centre foot traffic.
“Our local restaurant sales declined by 6.2% in the first quarter of the financial year and showed a marked turnaround in the second quarter with sales only declining by 0.2%. This trend was particularly evident in the Spur chain which reported a 5.3% decline in second quarter sales compared to 14.0% in the first quarter when the chain encountered major headwinds,” he said.
RocoMamas continued its strong growth trajectory and increased sales by 37.5% as eight new restaurants were opened in South Africa.
Pizza and Pasta, comprising Panarottis and Casa Bella, grew sales by 6.6% in the highly competitive pizza market where aggressive discounting campaigns have been commonplace. John Dory’s increased sales by 1.8% and The Hussar Grill by 24.1%, with sales in Captain DoRegos declining by 12.2%.
In the international business, sales in Mauritius (11 outlets) increased by 15.7%, Africa (39 outlets) declined by 0.9% while sales in Australasia (11 outlets) were 12.0% lower.
Van Tonder said while the stabilising political environment in South Africa is expected to boost consumer confidence in the short-term, any marked improvement in spending is only likely to follow an economic recovery in the medium to longer term.
“Our focus in the months ahead will be on food quality, value, competitive pricing and driving customer loyalty across all brands. The improving performance in the second quarter augurs well for stronger results in the second half, particularly for the Spur chain.”
He said a net 21 new restaurants will be opened across all brands in South Africa in the second half of the financial year and “we continue to seek opportunities to acquire brands with good growth prospects”.
International expansion will focus mainly on Africa where six new restaurants are planned, with a further two restaurants opening in Saudi Arabia, one in Mauritius and the first RocoMamas in Australia.
Issued by Tier 1 Investor Relations on behalf of Spur Corporation
Reference: Spur Corporation Press Release
