SOUTH AFRICA – south Africa’s quick service restaurant, RocoMamas posted a 6.7% decline in its six months financial results for the period ending 31st December 2018, reports Business Day.
RocoMamas is a major growth engine for Spur Corporation’s restaurant group.
Pierre van Tonder, Spur crorporation Chief Executive Officer said the decline in sales from existing RocoMamas restaurants “reflects a period of consolidation following the unprecedented increase in restaurant numbers since acquisition in March 2015”.
In 2017, RocoMamas recorded a 22.2% growth in sales and 45% in the second half of 2016.
RocoMamas’ declining sales seems to dampen Spur group’s performance – which said that group-wide franchised restaurant sales rose 6.5% to US$290 million in the interim period with its SA’s sales growing by 5.7%, while sales from international restaurants increased 12.7%.
Comparably, Spur Steak Ranches restaurant chain, the core chain in Spur Corporation, increased total restaurant sales by 6.1%.
However, according to Anthony Clark, an independent analyst, Spur was trading at a far more attractive valuation compared to its competitor Famous Brands despite RocoMamas’ notable low performance.
“It shows that the middle market is being desperately squeezed, and as such, the growth engines inside Spur, which are basically RocoMamas and a potential recovery in the core Spur business, might mean that the stock will have a very pedestrian six to 12 months,” Clark said.
Spur’s CEO, Van Tonder said that the firm’s local franchised restaurant sales growth slowed in the three months to December, to just 1.2%.
“While the second quarter performance was disappointing, it is generally consistent with sales trends in the local retail sector.
“The South African consumer is taking significant strain due to the sombre state of the economy, although the performance of The Hussar Grill indicates that higher-income consumers continue to be more resilient to the weakening economy,” he added.
During the six months period under review, Spur Corporation opened 25 outlets and closed 6 in South Africa while opening14 restaurants in other countries in including Zambia, Saudi Arabia and India.
The group also acquired the Nikos Coalgrill Greek chain during the period, which now comprises eight outlets.
At the end of December, Spur had 616 outlets, from 575 six months before with only 76 outside SA running operations under different chains such as Panarottis restaurants and Hussar Grill.