Spur Corporation reports a 4.5% sale rise in the half year period despite low economic growth

SOUTH AFRICA – Spur Corporation, South Africa based fast–food chains operator, has reported a 4.5% increase in sales to R4.1billion (US$280m) in the six months to end December.

Sales from franchised restaurants in South Africa accounting for 60.5% of the group’s total turnover increased by 4.7%, with sales from international restaurants increasing by 2.7% in rand terms and by 4.1% on a constant exchange rate.

Chief executive Pierre van Tonder said the performance reflected the economic reality facing the South African consumer which constrained consumer spending, low economic growth and rising unemployment.

“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.

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

Turnover for the international business, which comprised 10.7% of total turnover, grew by 2.7%.

Trading conditions in Australia and New Zealand continue to be challenging, with sales declining by 20.3% following the closure of two restaurants.

Spur Corporation consists of Spur International, Spur Steak Ranches, Panarottis Pizza Pasta, John Dory’s Fish Grill Sushi, The Hussar Grill, RocoMamas, Spur Grill & Go and Casa Bella.

Panarottis and Casa Bella grew restaurant sales by 1.5%. The Panarottis chain continues to be impacted by aggressive discounting in the pizza takeaway market.

 “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,” Van Tonder he said.

John Dory’s, which reported a 6.6% increase in sales, benefited from the re-opening in December 2018 of two large restaurants which were temporarily closed for renovation.

RocoMamas was boosted by the opening of a net five new restaurants during the period. RocoMamas’ sales were up by 6.4%.

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

Despite the difficult operating challenges, Spur managed to open 20 restaurants in South Africa and closed four while Internationally it opened 10 restaurants and closed four as well.

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.

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