Johannesburg - Restaurant group Spur Corporation increased its total sales by 11.5 percent year on year to R2.8 billion in the six months to December, with pleasing growth from its Panarottis Pizza Pasta chain.
The company, which owns chains such as Spur Steak Ranches and John Dory’s, said its South African sales grew by 11 percent, while sales from international operations went up by 16.1 percent.
Panarottis Pizza Pasta led the pack by increasing its restaurant sales by 26.2 percent, with turnover from existing restaurants increasing 14.8 percent.
“Restaurant sales benefited from continued product innovation, upgrades and the success of the brand’s ongoing breakfast promotion,” Spur said.
The group’s chief executive, Pierre van Tonder, said: “The slower retail sales growth in the food and beverage sector in the second half of 2013 is a clear indication that consumers in our target market are feeling the impact of a depressed economy and increasing cost pressures, particularly in the lower end of the market.”
He added that despite these pressures, Spur performed well. In contrast, restaurant sales for Captain DoRegos declined 9.2 percent, as a result of closing redundant outlets and the tight economy in which it operates.
John Dory’s Fish Grill Sushi grew sales by 19.3 percent and Spur Steak Ranches lifted sales by 10 percent.
A net 13 new restaurants were opened in the period, lifting the number to 492, of which 49 are outside South Africa.
Jean Pierre Verster, an analyst at 36One Asset Management, said Spur’s sales update was a good outcome but warned about the poor performance of Captain DoRegos. “Although it’s about 3 percent of the Spur business and one should not worry too much, it is still a concern that the acquisition and integration of that business is taking longer than expected, seeing that Spur has been increasingly acquisitive of late.”
On the positive side, Verster said existing restaurant sales of Spur, Panarottis and John Dory’s were pleasing, especially when compared with food and apparel retailers’ trading updates in the past few weeks.
“It would seem like even though consumers are financially under pressure, they are also increasingly under pressure when it comes to time. The choice of where to cut spending seems to be on apparel first, followed by a cut on groceries and then on eating out,” he said.
This implied that the value proposition of a prepared meal at places like Spur still compared well with the cost of preparing the meal at home, and many people would rather eat a meal at a restaurant.
“This means that this business is resilient but still needs to be very careful about pricing to make sure that it is competitive when compared to self-prepared food,” he added.
Spur shares rose 1.19 percent to R31.46 on Friday. - Business Report