Spur setting table to enhance profitability for its franchisees

SPUR Corporation said yesterday that low economic growth in the country, increasing demands on disposable income and weakening sentiment among the group’s middle-income customer base had had a negative impact on its performance in the six months to end December. During the period, the group reported, its total franchised restaurant sales across the local and international operations had increased by only 4.8 percent to R3.9 billion. Comparable profit before tax, excluding exceptional and one-off items, increased by 12.4 percent, while the results were negatively impacted by impairment losses of R7.8 million. Chief executive Pierre van Tonder said trading conditions in the current low growth environment remained particularly challenging. He said management’s main focus during the period had been on enhancing the profitability of franchisees to ensure the sustainability of the group’s business model. “Initiatives aimed at improving margins across the brands include expanding the range of homemade products manufactured in Spur restaurants, rationalising menu offerings, renegotiating rentals and reducing the size of restaurants where necessary,” Van Tonder said. Despite these efforts, the group’s headline earnings declined by 11.2 percent to R83.9m while diluted headline earnings per share (Dheps) declined by 10.9 percent to 87.8 cents a share. The group maintained the dividend of 63c a share. However, in South Africa franchised restaurant sales increased by 5.7 percent, supported by the continued recovery in the flagship Spur Steak Ranches brand and a strong performance from The Hussar Grill. Spur Steak Ranches increased restaurant sales by 6.1 percent, while the Hussar Grill grew restaurant sales by 13.8 percent as the brand’s higher-income customers prove more resilient in the weakening economy. “Restaurant sales in RocoMamas grew by 6 percent and the brand has grown sales by an annual compound rate of 45.9 percent since being acquired by the group in 2015. Panarottis and Casa Bella restaurant sales declined by 1.5 percent and John Dory’s by 0.8 percent,” the group said. The group is planning to open more than 20 new restaurants in the second half of the financial year.