Who is rocking RocoMamas’ boat? Page 9

Iknow which restaurant in our neighbourhood sells the cheapest and tastiest margherita pizza — my eldest son’s favourite. I know where I can get the best-priced cheeseburger — my favourite. As for slap chips — the youngest’s favourite — they are among the cheapest items on a menu.

None of the places we frequent (occasionally, so don’t get all judgy) are big fast-food brands, and that is why, with a combination of price and convenience, companies that make their bread and butter selling fast food face a battle in attracting and keeping customers. There is just so much competition, from the local sports club to the hot-lunch counter at the grocery store and the many independently owned restaurants.

Take Spur Corporation’s RocoMamas. The group was onto a good thing when it bought a 51% stake in 2015 and, in 2017, upped it to 70%. The trendy maker of smashburgers boomed and helped drive the group’s growth, while its flagship brand Spur was not only looking a bit tired but grappled clumsily with The Incident — the fight between two customers that led to a banning and then a boycott, and then a capitulation by the company.

With Spur’s backing, RocoMamas expanded at quite a pace — there are about 65 outlets, from five in 2015. This includes those in other countries, and there are plans for further international expansion.

But Spur Corporation’s recent sales update makes it clear RocoMamas has become a drag. This must have come as a nasty shock for the group — in its 2018 annual report, Spur Corporation forecast growth in RocoMamas’ sales way ahead of inflation. This now seems far-fetched.

But its expectations were perhaps not unrealistic given that sales growth at RocoMamas had been exceptional.

Anthony Clark, an independent analyst, says of the poor performance of RocoMamas: “It’s quite simply the economy.” In the last six months of 2018, fuel costs, interest rates and electricity prices rose, and RocoMamas’ customers — mostly twenty- and thirtysomethings — had to pull back on spending. But he adds that RocoMamas has plenty of life left in it, especially when the consumer recovery happens, and there is significant offshore expansion potential.

Of course, Spur Corporation is not alone. Most consumer-facing companies are taking strain. And then there are the issues at competitors Taste and Famous Brands, whose eyes were way too big for their stomachs: the former struggling to fund the expansion of Starbucks and Domino’s Pizza in SA, and the latter ruing the day it bought Gourmet Burger Kitchen in the UK.

Unlike Spur, which offers parents a play area and a chance to relax (and there is always a new crop of parents desperate for respite), RocoMamas had the fortune and now possibly the misfortune of targeting a notoriously fickle market. Parents are not that discerning.

It had the fortune and now possibly the misfortune of targeting a notoriously fickle market