3. These franchise restaurants are doing well in South Africa

Spur Corporation on Thursday (12 September) published its financial results for the year ended June 2019, showing revenue climbed 5.9% to R944.8 million.

The listed company’s portfolio includes Spur Steak Ranches, Panarottis and Casa Bella, Rocomamas, and the recently acquired Nikos Coalgrill Greek chain.

Revenue from the South African operations, which accounted for 95.6% of total group revenue, increased by 5.7% and international revenue by 10.3%, it said.

Total franchised restaurant sales increased by 7.2% to R7.6 billion. Franchised restaurant sales in South Africa grew by 6.2%. After increasing local restaurant sales by 11.3% and 1.3% in the first and second quarters of the financial year respectively, the group reported growth of 7.5% in the third quarter and 6.0% in the fourth quarter.

Headline earnings increased by 10.2% to R165.1 million, with diluted headline earnings per share 10.7% higher at 173.2 cents.

  • Results highlights
  • Comparable profit before income tax Up 15.9%
  • Earnings per share ip 7.3% to 173.69 cents
  • Headline earnings per share up 10.8% to 173.68 cents
  • Dividend per share up 10.6% to 136 cents
  • Net asset value per share up 3.6%

Spur Steak Ranches increased restaurant sales by 5.4%, “supported by the loyal customer base of over 1.2 million active Spur Family Card members”.

“Restaurant sales in pizza and pasta, incorporating Panarottis and Casa Bella, grew by 0.9% as the Panarottis chain continued to be impacted by aggressive discounting by competitors in the takeaway pizza market,” Spur said.

Rocomamas grew restaurant sales by 7.5% as an increased investment in marketing saw the brand return to positive existing business growth in the second half of the year, following a decline in the first half, the JSE-listed firm said.

John Dory’s increased restaurant sales by 4.6%, “benefiting from the reopening of two major outlets which were temporarily closed due to shopping mall redevelopment”.

The Hussar Grill’s higher income customers continue to be resilient and the brand grew restaurant sales by 13.4%, Spur said.

In 2018, Spur acquired a 51% shareholding in the Nikos Coalgrill Greek chain for around R6 million, which comprised six restaurants at the effective date of 1 August 2018. The chain contributed franchised restaurant sales of R65.9 million for the 11 months since acquisition.

New restaurant openings contributed to international restaurant sales increasing by 12.3% on a constant exchange rate basis and by 16.2% in rand terms.

“Trading in Africa, Mauritius and the Middle East remains strong. Restaurant trading conditions in Australia and New Zealand continue to be impacted by high operating costs, escalating rentals and declining disposable income, with sales declining by 15.9% following the closure of three restaurants,” Spur said.

The group opened 59 restaurants across all brands. In South Africa, 39 outlets were opened in addition to the six Nikos restaurants that were acquired, while 15 closed during the year. The group’s restaurant base increased to 620, of which 77 are located outside of South Africa.
A record 20 international outlets were opened as the group continued to focus its international expansion strategy mainly on territories where the business has an established presence, in order to ultimately reach critical mass.

Eight Panarottis restaurants opened in Zambia, increasing the number of outlets in the country to 13.
Other restaurants were opened in Mauritius (Panarottis and RocoMamas), Botswana (RocoMamas), Kenya (Panarottis), Namibia (Spur) and Saudi Arabia (RocoMamas). The group opened its first restaurants in India (Pune) and Cyprus (Nicosia) during the year, both being RocoMamas outlets.

The Hussar Grill opened its first outlet in Saudi Arabia (Khobar).

Looking ahead, Spur Corporation said it expects trading conditions to remain constrained in the short to medium term against the background of low economic growth, the weak labour market, fragile consumer confidence and continued pressure on household budgets.
“In this environment, management will maintain its focus on tight cost management, excellent product quality and the profitability of franchisees.

“In the year ahead the group plans to open at least 11 restaurants in South Africa and 10 internationally.”

Source: BusinessTech – www.businesstech.co.za

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