File photo: Ross Jansen/INLSA
File photo: Ross Jansen/INLSA

Spur Corporation sales rise by 4.5%, despite low economic growth

By Sandile Mchunu Time of article published Jan 29, 2020

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JOHANNESBURG - Spur Corporation felt the impact of constrained consumer spending, low economic growth and rising unemployment as it reported a 4.5percent increase in sales to R4.1billion in the six months to end December.

Sales from franchised restaurants in South Africa increased by 4.7percent, with sales from international restaurants increasing by 2.7percent in rand terms and by 4.1percent on a constant exchange rates. Chief executive Pierre van Tonder said the performance reflected the economic reality facing the South African consumer.

“Stagnant economic growth, rising unemployment, increases in energy, utility and living costs, regular bad news concerning state-owned enterprises and the recent widespread load shedding have hit the consumer hard. Consumer confidence remains negative and trading in these circumstances is certainly proving challenging,” Van Tonder said.

Despite the difficult operating challenges, Spur managed to open 20 restaurants in South Africa and closed four while 10 restaurants were opened and four closed internationally.

The group’s restaurant base increased to 642 at the end of December, up from 620 outlets at the end of June, and this includes 83 outlets operating outside South Africa.

Van Tonder said Spur South Africa, which accounts for 60.5 percent of the group’s total turnover, performed well in the face of these economic headwinds. “The pizza market in South Africa is extremely competitive, with local quick service restaurant brands discounting products significantly to maintain sales volumes.

“Panarottis’ move away from significant discounting to maintain franchisee profitability and ensure the sustainability of the brand, combined with competitor activity, has impacted the brand’s turnover growth,” he said.

John Dory’s, which reported a 6.6percent increase in sales, benefited from the re-opening in December 2018 of two large restaurants which were temporarily closed for renovation, and RocoMamas was boosted by the opening of a net five new restaurants during the period. RocoMamas’ sales were up by 6.4percent.

The Hussar Grill sales increased by 9.2percent and Van Tonder said its higher income customer base remained relatively resilient to the current economic pressures.

However, he added that turnover for the international business, which comprised 10.7percent of total turnover, grew by 2.7 percent.

“Turnover for restaurants trading in Australia and New Zealand declined by 20.3percent, impacted by the closure of a net two restaurants and challenging trading conditions in the region,” he said.

Restaurant turnover for the group’s African and Middle East operations, which represents 82.3percent of the total international restaurant turnover, grew by 9.6percent, driven mainly by the opening of a net six new restaurants.

Spur said it would release its interim results on February 27.

Sour shares closed 1.10percent lower at R26 on the JSE yesterday.

BUSINESS REPORT 

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