Spur stakes UK di­vi­sion on new-for­mat res­tau­rant

Finweek English Edition - - IN THE NEWS - BY JACO VISSER

Spur Cor­po­ra­tion’s steak-ranch ven­ture into the UK hit the com­pany’s sales and profit this year, prompt­ing it to re­think its model in the UK and the roll-out of smaller-sized on-the-go fran­chises in South Africa.

The Cape Town-based com­pany, which owns brands in­clud­ing Spur Steak Ranches, Pa­narot­tis Pizza Pasta, John Dory’s and Cap­tain DoRe­gos, saw rev­enue grow by 3.7% to R760m, while af­ter-tax profit slumped by 1.2% to R135.6m in the year to end June. Rev­enue at the UK di­vi­sion con­tracted by 6.3% to R147m and its loss be­fore tax widened to R4.7m from R2.2m.

“In t he UK, our cur­rent model has passed it s sel l- by date,” says Pierre van Ton­der, CEO of Spur Corp. “Hence we l aunched t he new model of t he smaller Spur.” The com­pany will con­tinue to sell its cur­rent leases in the UK, with Aberdeen CEO of Spur Corp. sold for £425 000 (R8.9m) and Lakeside for £450 000 (R9.4m), he said. If the new model, called Ribs, Burgers and Wings, is suc­cess­ful, the com­pany’s board has given the go-ahead to ex­pand it in­ter­na­tion­ally, Van Ton­der said. If un­suc­cess­ful, he would “come home”. The new model will also f ind its way to SA, ac­cord­ing to Van Ton­der. Plans to roll out the smaller-sized on-the-go for­mat lo­cally are pro­gress­ing well, with two out­lets planned for Worces­ter and one for Piket­berg, both in the Western Cape, he adds.

“We call it ‘Grill and Go’ in SA,” he says. “[It] is specif­i­cally de­signed for what I call tran­sient sites. [This] model of 150m² to 200m² is be­ing rolled out with [cer­tain] petroleum com­pa­nies.”

These out­lets won’t be opened in tra­di­tional Spur ter­ri­to­ries, ex­plains Van Ton­der. They would rather be fo­cused on highways and sim­i­lar sites, he says, with a fo­cus on smaller towns.

“You can’t spend R6m on a site in Kriel and ex­pect to make a re­turn,” he says. “When you build a smaller Spur with a smaller menu and spend R2.5m, a fran­chisee can make a re­turn.”

SA’s eco­nomic woes, with the ef­fects of power out­ages, a slump in me­tal prices and lay­offs in the min­ing sec­tor, have hit one of Spur’s brands. Rev­enue from Cap­tain DoRe­gos has slumped by al­most 26% to R6m in the year ended 30 June from R8.1m in the pre­vi­ous f inan­cial year. It turned a pre-tax profit of R2.1m in 2014 into a pre-tax loss of R11.8m, which in­cludes an im­pair­ment charge of R13.9m to the brand name.

“Cap­tain DoRe­gos trades in the worst seg­ment of the mar­ket where peo­ple are re­ally poor,” Van Ton­der says. “It’s a very tight mar­ket. Those are the peo­ple who got the hard­est hit [eco­nom­i­cally].”

The top end of SA con­sumers was not as hard hit as the mid­dle seg­ment, Van Ton­der adds. The com­pany was suc­cess­ful in its pro­mo­tion cam­paigns, in­clud­ing Spur’s Fam­ily Card loy­alty pro­gramme tar­get­ing t his mar­ket, ac­cord­ing to him.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.