Spur eyes recovery as online sales surge
● Group expects turnover to return to pre-Covid levels in its 2022 year
Spur, the owner of Panarottis and The Hussar Grill, is ramping up its online presence as it grapples with pandemic-induced changes in consumer behaviour, saying, however, that it has seen encouraging signs for its sit-down restaurants as lockdown restrictions ease.
The group, now under the leadership of former Famous Brands executive Val Nichas, cautiously expects pre-pandemic turnover to return in its 2022 year.
It reported a R1.2bn fall in restaurant sales during its six months to end-December 2020 as the industry grappled with curfews and a prohibition on alcohol sales.
Speaking after the release of the group’s interim results, Nichas said Spur expected trading conditions in the coming months to remain erratic.
Though there was a threat of a third wave of Covid-19 hitting SA, franchisees had recorded a jump in sales after lockdown restrictions eased at the beginning of February.
“The minute things open up we see growth — people want to return to normality and celebrate events in their lives,” Nichas said.
Spur’s profit fell by almost three-quarters to R29.5m to end-December, with revenue dropping 40.2% to R314.2m, and SA franchise sales falling by almost a third.
The group incurred R3.3m in retrenchment costs and R25m through franchise fee concessions, while in SA — which generates 95% of revenue — restaurants were under pressure from an alcohol ban and travel restrictions, which hit dinner sales at franchisees such as The Hussar Grill particularly hard.
At the end of December, Spur had 633 outlets — including 87 outside SA — from 631 in the same period in the previous year.
SA franchise revenue in Spur declined 43.6%, Panarottis and Casa Bella 46.7%, John Dory’s 49.8%, The Hussar Grill 41.5%, RocoMamas 23.8% and Nikos y 48.7%.
Spur has turned to online sales to offset the effects of Covid-19, saying it is looking to adapt to a trend towards inhome consumption, as well as tap into a younger, more internet-savvy market.
Takeaway sales more than doubled year on year, and now account for 27% of total restaurant sales, while the group was encouraged by the response to its “virtual kitchen” brands.
These offer takeaway meals, under new brands but made at existing restaurants, that require little additional investment from franchisees.
Seven of the brands that had been in trials since May would move into the next phase of testing, Nichas said, while Spur was also making a push towards “click and collect”, adding drive-throughs at a number of restaurants.
Nichas declined to go into too much detail, but said the group had two projects — one involving RocoMamas.
The other, “clip-on” offering would be announced in the next few months.
“Alternative trading formats are definitely on our agenda, they may not all be drivethroughs, but they will all be convenience offerings,” she said.
“The channel of delivery, takeaway, is paramount — we will do all we can to grow it through all means.”
The group grew sales with Mr Delivery 72% and Uber Eats 41% for the six months,
Nichas said.
The partial lifting of restrictions effective on February 2 relaxed the curfew, which allowed for trading hours to be extended to 10pm as well as alcohol sales, with encouraging results, the group said.
In February, sales were at about 82% of sales in the previous year, with Spur and RocoMama’s performing best.
SA franchise sales had fallen to 36.5% in July 2020, before recovering to 92.8% in October.
They had then fallen to 74.2% in December, when SA was dealing with a second wave of Covid-19.
In afternoon trade on Tuesday, Spur’s shares were down 0.17% to R17.20, having recovered almost 5% in 2021, but having fallen by just more than a quarter over the past 12 months.