Cape Town - South African restaurant group Spur Corporation delivered a resilient six month performance to December as total franchised sales from continuing operations increased by 10.4 percent to R3.8 billion despite a tough trading environment.
Franchised restaurant sales grew by 10.2 percent in South Africa and by 12 percent in rand terms in international restaurants, excluding the impact of the closure of the group's operations in the UK and Ireland in the previous financial year.
The group's headline earnings from continuing operations increased by 20.8 percent to R109.5 million. Diluted HEPS (headline earnings per share) from continuing operations increased by 21 percent to 114.2 cents, or by 4.5 percent on a comparable basis. The interim dividend was increased by 6 percent to 71 cents per share.
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Spur expanded its global restaurant footprint to 590 with the opening of 21 outlets in South Africa and six in international markets. The group opened its first restaurants in New Zealand (Spur), Ethiopia (Spur) and Oman (RocoMamas) during the past six months.
Pierre van Tonder, the group's chief executive, said economic headwinds had impacted trading conditions in South Africa and the rest of Africa.
"Discretionary consumer spending came under increased pressure in the domestic market owing mainly to rising food, utility, education and healthcare costs, and growing levels of unemployment in the country. At the same time our franchisees continued to encounter margin pressure from escalating food inflation, and we have taken a decisive action to support franchisee profitability and ensure the sustainability of the restaurant chains."
Keeping its market
The flagship Spur Steak Ranches brand grew sales by 4 percent. Spur has maintained market share and levels of foot traffic, although customer spend per head had declined over the past six months, reflective of the tough consumer environment.
Van Tonder said, however, value promotions and the loyal customer base of over 1.8 million Spur Family Card members have been key to maintaining sales growth.
He said for the outlook for the remainder of the financial year, trading conditions are not expected to improve in the short-term as middle-income South Africans remain under financial pressure.
"Our focus in the months ahead will be on driving growth through value promotions, innovative marketing, rewarding customer loyalty, expanding the restaurant base and continuing to offer a high quality, affordable family dining experience."