Fat­ten­ing op­er­a­tions off­shore

Sep­a­rate list­ing must be on its long-term menu

Finweek English Edition - - Companies & Markets - MARC HASEN­FUSS

SPUR COR­PO­RA­TION, the restau­rant fran­chis­ing com­pany, has been ul­tra-con­ser­va­tive in ex­pand­ing its off­shore op­er­a­tions over the past five years. How­ever, it fi­nally seems its in­ter­na­tional em­pire is tak­ing shape with off­shore busi­ness – ac­cord­ing to its lat­est an­nual re­port – ac­count­ing for a chunky 30% of turnover in the year to end-June 2008.

Lit­tle more than two years ago the con­tri­bu­tion from Spur’s in­ter­na­tional op­er­a­tions to group turnover was less than 5%. In the year to end-June Spur gen­er­ated R81m from in­ter­na­tional op­er­a­tions, mainly in Bri­tain and Aus­tralia.

Writ­ing in the lat­est Spur an­nual re­port, MD Pierre van Ton­der notes that while fran­chis­ing re­mains its core busi­ness model, there had been an in­vest­ment in wholly owned restau­rants to ac­cel­er­ate growth in both Bri­tain and Aus­tralia. “We plan to in­vest in the forth­com­ing years – fo­cus­ing on sub­stan­tial fran­chisee part­ners who in­vest in and op­er­ate the fran­chised out­lets per­son­ally – while con­tin­u­ing to de­velop our fran­chise base.”

Ad­mit­tedly, Spur’s off­shore out­lets are small com­pared to some of the world’s fast food/restau­rant brands. But there cer­tainly is enough meat on the bone for Spur to con­sider a sep­a­rate list­ing – per­haps on Lon­don’s AIM – for th­ese op­er­a­tions over the longer term.

Spur, a gen­er­ous div­i­dend payer, may well want to bring on board strate­gic eq­uity part­ners to help in its fund­ing bur­den for its fledg­ling off­shore op­er­a­tions. Ob­vi­ously, cur­rent con­di­tions aren’t con­ducive to list­ing a busi­ness. But if Spur can add a few more out­lets to the mix in Bri­tain and Aus­tralia and build a de­cent trad­ing mar­gin, an IPO and sep­a­rate list­ing of its in­ter­na­tional busi­ness could well be a re­ward­ing ex­er­cise in a few years’ time.

In terms of hard cur­rency earn­ings, Spur’s ad­vances in Bri­tain (and Ire­land) will be crit­i­cal. Van Ton­der says sev­eral new op­por­tu­ni­ties are be­ing in­ves­ti­gated in Bri­tain and Ire­land – where the group, af­ter a deal with for­mer mas­ter fran­chisee Trin­ity Leisure, now holds the fran­chise rights for all fu­ture de­vel­op­ments.

Aus­tralia also looks in­ter­est­ing. Ear­lier this year Spur man­aged to buy out the out­side share­hold­ers of two Aus­tralian Spurs (Camp­bell­town and Erina Fair). Pre­sum­ably, Spur will look to buy out part­ners in the other three restau­rants where it only holds a mi­nor­ity in­ter­est. It seems fur­ther ex­pan­sion is on the cards in Aus­tralia, with Van Ton­der re­port­ing that a re­gional HQ was re­cently set up there “to es­tab­lish a greater cor­po­rate pres­ence in that re­gion”.

For the mo­ment it would seem African ex­pan­sion will con­tinue apace, with Spur plan­ning open­ings in Lusaka (Zam­bia) and looking at new op­por­tu­ni­ties in Ghana, Kenya and Nige­ria, plus ad­di­tional out­lets in Tan­za­nia and Zam­bia.

Clearly, Spur hasn’t been spooked by its ex­pe­ri­ence in China (where it beat a hasty re­treat) and is still will­ing to ex­plore new mar­kets. In that re­gard Van Ton­der says a site for a fran­chised Spur restau­rant has been se­cured in Dubai – which will hope­fully be a beach­head for what could be a lu­cra­tive foray into Mid­dle East mar­kets.


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