Spur eyes higher-end market with Nikos grill house deal
Spur Corporation will markedly fatten-up its higher-end eatery offering with the acquisition of a 51% stake in the Nikos Coalgrill Greek chain – a brand that the restaurant franchisor believes can be rapidly expanded.
On Thursday, Spur CEO Pierre van Tonder contended that Nikos Coalgrill Greek – which has six outlets — had the potential to expand to about 50 restaurants nationally over the next few years. He also said Spur was seeking out more opportunities in a largely fragmented restaurant market — “as long the brands don’t clash internally”.
Van Tonder said restaurant brands that had the potential to expand into 30 or 40 strong franchise chains typically traded at slightly better margins than Spur’s eponymous steakhouse brand, which still accounts for the bulk of the group’s franchise revenue and profits.
In recent years there has been a concerted push to diver18%. sify the franchise fee and earnings base away from the Spur brand, with forays into pizza and pasta, branded steakhouses, seafood and even an underwhelming dabble in the takeaway market with Captain DoRegos. Market watchers said the Nikos Coalgrill Greek would slot neatly into Spur’s middle- to upper-market restaurant segment, where the group has rapidly expanded recently.
The group acquired brands like gourmet burger brand RocoMamas and (to a lesser extent) steakhouse brand The Hussar Grill. RocoMamas has grown from five outlets when Spur acquired the brand in 2015 to 64 restaurants in SA and six international outlets.
Anthony Clark, an analyst at Vunani Securities, said that Spur had shown it was adept at buying and expanding great franchise businesses.
Aside from expansion possibilities, Clark reckoned there could be cross-synergies with The Hussar Grill.
The deal with Nikos Coalgrill Greek proposes Spur initially buy a 51% shareholding from the founding family members — Peter, Nicolette and Nicholas Triandafillou and Pano Economou — who will retain the balance of the shareholding and continue to manage the business. No transaction price was disclosed, but Spur noted the purchase price would be calculated on a five times earnings multiple after three years. Spur would have an option to acquire an additional 19% shareholding.