Spur Corporation has seen early signs of a slow recovery in the second half of its year to June 2021. Photo: Supplied
Spur Corporation has seen early signs of a slow recovery in the second half of its year to June 2021. Photo: Supplied

Spur Corporation enjoys rapid recovery in sales in the first six months of this year

By Edward West Time of article published Sep 27, 2021

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SPUR CORPORATION has seen early signs of a slow recovery in the second half of its year to June 2021.

Franchised restaurant sales increased by 1 percent, to R6 billion, over a period of erratic Covid-19-related trading restrictions. After declining 31 percent in the first half, franchised restaurant sales in South Africa grew 75 percent in the second half, ending the year 2 percent higher.

Spur restaurants grew sales 81 percent in the second half and by 3 percent for the year.

The first Spur Drive Thru opened in Pretoria in June this year and plans were afoot to expand this channel.

Group revenue fell 10.5 percent to R681 million. This was due to concessions granted on franchise and marketing fees to franchisees for the first eight months of the year, as well as lower sales in company-owned restaurants.

Revenue from South African operations accounted for 96 percent of group revenue. Pre-tax profit increased 16 percent to R148m, benefiting from one-off and unusual items, as well as a year-on-year positive movement of R43m in the marketing funds. Comparable profit before income tax decreased by 19 percent.

No dividend was declared for the 2021 financial year. The interim dividend for the 2020 year, which was later deferred following the outbreak of Covid-19, would be paid to shareholders on October 25.

The group remained in an ungeared position at year end and cash on hand increased by R96m to R261m.

Chief executive Val Nichas said there continued to be uncertainty in the restaurant industry due to the macro-economic impact of Covid-19.

“These difficult trading conditions have continued, but our casual dining restaurants are better poised to manage deliveries and takeaways, while loyal customers are more responsive to convenience channels such as click and collect,” she said.

RocoMamas lifted 13 percent for the year, mainly due to its high proportion of takeaway and delivery sales.

Takeaways accounted for 18 percent of the group’s South African turnover, with the highest percentage in RocoMamas (48 percent), Panarottis (37 percent) and Spur (11 percent).

In South Africa, 19 restaurants were opened and 27 were closed. Profitability in several of these was already marginal and reduced trading due to Covid-19 restrictions forced final closure.

International franchised restaurant sales fell 3 percent. Sales in Australasia declined by 9 percent while the rest of the international restaurants were 2 percent lower. This was largely due to extended lockdowns, especially in the key market of Mauritius where the group has 17 restaurants.

The international growth strategy was repositioned to focus on countries in Africa where the brands resonate with consumers, such as Zambia, Namibia, Kenya and Mauritius.

Eight restaurants were opened internationally, with three in Zambia, two in Eswatini and one each in Zimbabwe, Ghana and Oman, while seven restaurants were closed.

The virtual kitchen brands launched during the first lockdown in 2020 continued to gain traction, generating turnover for the year equivalent to the group’s smaller brands.

The online, delivery-only brands aimed to capitalise on the growing global trend to home consumption, which has been accelerated by Covid19.

At the end of June, 302 of the group’s restaurants were participating in the virtual kitchen offering.

Nichas said August proved a buoyant trading month, stimulated by increased marketing activity across most brands, and the positive trend continued into September.

The civil unrest in KwaZulu-Natal in July resulted in nine franchised restaurants being looted and vandalised, with damages totalling close to R30m.

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