Spur sales dip 21.7% due to pandemic
DURBAN - Spur Corporation yesterday reported a 21.7percent decline in total restaurant sales to R6billion for the year to end June, hurt by trading restrictions in all countries due to Covid-19 in the last four months of the financial year.
Its South African sales decreased by 22.3percent, while sales from international restaurants fell by 16.7percent in rand terms. Trading restrictions in South Africa had the biggest impact on its trading performance as local restaurant sales consist of 88.5percent of the group’s total sales.
Spur’s sales decline comes after all South African restaurants stopped trading at the beginning of the nationwide lockdown on March 27. However, restaurants were allowed to trade again on a delivery-only basis from May 1, with collection service permitted from June 1.
The group said the full sit-down service resumed on June 29 and the group allowed franchisees to reopen at their discretion under the various levels of trading restrictions, ensuring that franchisees made decisions that were in their best financial interests.
Chief executive Pierre van Tonder said after the limited relaxation of the trading restrictions following the hard lockdown in April had proved challenging.
“The restrictions on the sale of alcohol and the curfew imposed on all South Africans, together with customer anxiety about contracting the virus and growing personal financial stress, has had a detrimental impact on our business,” Van Tonder said.
Despite the trading restrictions, Spur opened 21 restaurants in South Africa, most of which were opened before the lockdown and closed 17. Internationally it opened 18 and closed 11. At the end of last month, the group’s restaurant base consisted of 631 restaurants, up from 620 compared to last year. The figure includes 84 outlets operating outside of South Africa.
Spur anticipated that the number of local restaurants trading would increase from 374 at the end of last month to 495 by the end of July, with most operating a full sit-down service.
Its international restaurants were also impacted by differing levels of trading restrictions and as at the end of last month 78 of the 84 restaurants outside South Africa were trading to some extent again, but Covid-19 had a significant impact on the group’s revenue and earnings for the year.
Van Tonder said their primary focus at this time was to support their franchisees. “We are discounting franchise and marketing fees and granting extended payment terms for certain debts. We expect to continue discounting fees until our franchisees experience meaningful increases in restaurant turnovers,” he said.
Looking ahead, he said the reintroduction of a total ban on alcohol sales this month, together with the curfew, would negatively impact trading.
“The grim economic outlook for the country is also likely to result in a protracted period of recovery for the restaurant industry. In this environment, we will continue to capitalise on the strength of our brands and remain committed to delivering quality, excellent service and value to our customers,” Van Tonder said.
Spur shares closed 0.18percent higher at R15 on the JSE yesterday.