JOHANNESBURG - Spur Corporation reported a stronger second half performance in challenging economic conditions in its major trading markets, with total franchised restaurant sales across the local and international operations increasing by 1.3 percent to R7.1 billion in the year to June.
The group’s diluted headline earnings per share from continuing operations increased by 14 percent to 160.5 cents and it announced a total dividend of 123 cents per share, down 6.8 percent from last year.
Political concerns and policy uncertainty had resulted in weak economic growth in South Africa, a volatile exchange rate, rising unemployment, increased pressure on consumer disposable income and low levels of consumer confidence, group CEO Pierre van Tonder said.
Franchised restaurant sales in South Africa grew by 1.5 percent after recovering in the second half. After declining by six percent and 0.1 percent in the first and second quarters of the financial year, local restaurant sales increased by 1.4 percent in the third quarter and 12.2 percent in the fourth.
“The stronger restaurant sales in the second half were due to our increased focus on product quality, service and innovation, rather than any improvement in consumer spending," van Tonder said.
“Discretionary spend is under growing pressure which is resulting in a continuing decline in restaurant and shopping centre foot traffic. However, the improving sales in the last six months is positive for the sales outlook as we move into the new financial year."
The flagship Spur Steak Ranches brand, which accounts for almost two thirds of group restaurant sales, continued its recovery following a damaging social media incident in March 2017, the company said.
Restaurant sales declined by 9.1 percent in the first half and 3.2 percent in the third quarter, but increased by 14.8 percent in the fourth quarter, resulting in a 2.8 percent decrease for the full year.
RocoMamas continued to be one of the fastest growing restaurant brands in the local fast casual dining sector, with restaurant sales increasing by 31.5 percent as 15 restaurants were opened in South Africa, expanding the brand’s national presence to 65.
International restaurant sales increased by 2.7 percent on a constant exchange rate basis.
As part of its measured expansion programme, the group opened 44 new outlets across all brands in South Africa, despite challenging trading conditions.
Spur said over 40 new restaurants were planned for the 2019 financial year, including at least 29 outlets in South Africa and at least 14 international restaurants.
"Our focus in this environment will be on retaining and growing our customer base through our product quality, value, customer experience and innovation," van Tonder.