Spur Corp hit by a decline in sales
R3.7bn down on last report
JSE-LISTED Spur Corporation said yesterday that its franchised restaurant sales declined 2.6 percent to R3.7 billion for the six months to December as a result of deteriorating economic conditions in most of the markets in which Spur trades.
In South Africa, franchised restaurant sales declined 3 percent, while sales from international restaurants increased 1.3 percent in rand terms and 3.2 percent on a constant exchange rate basis.
In yesterday’s trading update, chief executive Pierre van Tonder said the first half was a tale of two distinct quarters.
“Local franchised restaurant sales declined by 6.2 percent in the three months to end September. The second three months to December showed a marked improvement, with sales declining by only 0.2 percent,” Van Tonder said.
The biggest declines were recorded by Captain DoRegos and Spur Steak Ranches, which were down 12.2 percent and 9.3 percent respectively, during the period.
Van Tonder said Spur suffered a perfect storm of disasters in March with political uncertainty gripping the country when President Jacob Zuma reshuffled his cabinet, the impact of the social media fallout following a customer incident at a Spur outlet in Johannesburg, and a struggling economy.
He said the group implemented a strategic decision to move its promotional strategies away from discounting in the second half of the previous financial year, to protect franchisee margins.
“This has had the expected negative impact on turnovers in the short term, but is critical to the sustainability of the franchise model, particularly in the case of Spur Steak Ranches, and has been successful in restoring acceptable profitability for franchisees,” Van Tonder said.
The Hussar Grill and RocoMamas reported strong sales growth during the period, with RocoMamas recording 37.5 percent growth and The Hussar Grill up by 24.1 percent.
“The performance of The Hussar Grill and RocoMamas has been particularly pleasing. We believe we are on the right track to restoring Spur Steak Ranches to the growth trajectory it was on prior to March 2017.”
He added that economic growth was critical to local business and the resolution of the political turmoil in the country would no doubt have a profound impact on its future.
“While we cannot predict the impact of the water crisis in the Western Cape, we are implementing remedial strategies to limit the damage should ‘Day Zero’ become reality,” he said.
The group grew its restaurants to 613 at the end of December, up from 591 at the end of June.
During the period the group opened 35 new outlets locally and 13 closed, while five outlets were opened and five closed internationally. There are 63 outlets operating outside of South Africa. The group will release its half-year results on February 22.
Spur shares gained 1.43 percent to close at R28.40 on the JSE yesterday.