Spur sizzling, but not yet well done
Lockdown has been eased, but sit-down trade is still not easy
● Spur Corporation, which owns brands such as Roco-Mamas and Panarottis Pizza Pasta, is taking comfort from better-thanexpected turnover at its restaurants since lockdown restrictions were eased, but it doesn’t mean it’s going to be business as usual in the coming months.
Speaking after the release of a trading update that showed the group’s South African restaurants traded at 73.8% of the previous year’s turnover in September, Spur CEO Pierre van Tonder said the lockdown’s full impact will be felt in the coming months.
“I’m not an economist, I sell hamburgers for a living, but I think in the next few months you are going to see what the impact has really been on the South African consumer and what kind of blows will be coming with that,” said Van Tonder, who retires at the end of December after 36 years with the group, 24 of them as CEO.
It is a “very fluid situation” with a lot of unknowns. “In the old days you would say a strategy works six months to 12 months ahead. In the Covid environment, every day is a celebration if you’re ahead. It’s not business as usual. There is business out there and whatever business is there, you have to be sure to catch the business early, like the early bird in the morning catches the worm,” he said.
Of the group’s 631 restaurants, 600 are operating again. Van Tonder said three or four franchise operators have indicated they will not be able to reopen at all. Other franchise operators are expected to continue reopening as conditions in the areas in which they operate improve and justify it.
“Yes, there will be casualties, and of course we want to limit the damage,” said Van Tonder. “As an organisation we do our best to assist the franchisees as far as franchise fees are concerned. We also give them guidance, whether it be about their landlord negotiations or their negotiations with financial institutions, just to ensure that people don’t find themselves in bigger holes.”
Nevertheless, Spur’s update on Thursday was welcome news, showing that September turnover as a percentage of the previous year’s turnover had improved significantly from the 36.5% recorded for July and 56.7% for August.
The group’s strongest-performing brands in September were The Hussar Grill, trading at 93.7% of the previous year’s turnover, and RocoMamas at 86.5%, followed by Spur Steak Ranches. But the pizza and pasta division lagged.
Van Tonder is heartened by the recovery, and said that comparing the group’s figures with “where we were last year and coming out of Covid lockdown ... we were projecting [turnover] probably in the vicinity of 35% to 40%. To get the 50% to 60% to 70% bracket for us was a really great achievement.”
Van Tonder said a supporting factor was that people have had “cabin fever and are wanting to get out there and have a bit of family time”.
But he said that “in our view, looking at the economic factors, South African consumers are not flush”.
“They are very cautious with their spending ... People are looking for value. The South African consumer is under strain.”
Market commentators agree that not too
In the next few months you are going to see what the impact has been
much can be read into Spur’s figures.
Sasfin Securities deputy chair David Shapiro said while Spur’s September figures “look really good” it is still a matter of what the long-term damage of the lockdown will be, “especially for the franchised operations”.
Casparus Treurnicht, a portfolio manager for the Gryphon All Share Tracker Fund, said: “Is it just a lot of people rushing back because they are wanting to get out after lockdown restrictions? It is too early to read anything into this.”
He said Spur’s update was not “reflective of the economy” and even if by December sales were higher than 80% of the previous year’s turnover, he would still be cautious.
Anthony Clark, an independent analyst at Small Talk Daily, said until all rules were lifted regarding social distancing in restaurants, takeaway businesses would do “better than sit-downs”.
“Because of strict social distancing measures, with every other table being empty, they are still trading significantly below utilisation. If you are a business with a very high sit-down capacity, like Spur, you are being hurt more compared [with] somebody like Famous Brands, who has a much higher takeout and delivery operation. Consumers perhaps don’t want to eat out at restaurants because of safety issues, but will happily order in and eat at home,” Clark said.