Spur’s trading hurt by Eskom outages

SPUR’S trading over the festive season was hurt by Eskom’s power cuts, prompting the restaurant group to start installing generators at most of its outlets countrywide.

“Continued load shedding is likely to impact local restaurant turnover into the future and we are working with our franchisees to install generators to limit trading disruption,” the group’s chief executive, Pierre Van Tonder, said yesterday.

Spur owns Spur Steak Ranches, Panarottis Pizza Pasta, John Dory’s Fish Grill and Hussar Grill, among other brands.

Out of its 447 restaurants in the country, the group has 198 outlets with generators and plans to roll out another 60 to 70 generators in the next five to six months.

“They are not the most inexpensive investment that one makes,” Van Tonder said.

He said the number of stores with generators in December was 82 and their sales growth was recorded at 5.8 percent compared with stores with no generators, which recorded a decline of 3.4 percent in sales.

Van Tonder said to help its franchisees with the financing of generators, Spur had an agreement with one of the financial institutions to provide funding for its franchisees.

He added that based on certain criteria the financial application was approved within 24 hours, which made the installation process much faster.

Van Tonder said Spur would have to weather the “load shedding” storm.

“At the end of the day, customers will come to your restaurant if they know that you have power and a generator.”

When asked if load shedding was getting people to eat out more, Van Tonder said: “Not really, as people were more concerned about the security of their home. So they would rather stay at home if they know that their security or alarm system is not working.”

His outlook for the next six months was not upbeat as he cited the slow economic growth as a barrier, as well as the recent tax increases coupled with the rise in petrol price.

“When I say we are not bullish, I mean we are looking at achieving the same results in June… Having said that, I think we have done very well in very trying circumstances.”

Van Tonder, however, said it was not all “doom and gloom” as people still wanted to visit restaurants and spend time with their families.

In the six months to December, Spur achieved restaurant sales growth of 14.1 percent to R3.2 billion. Headline earnings declined 25.2 percent to R54.5 million with diluted headline earnings a share 28.2 percent lower at 61.2 cents.

The decline in headline earnings was due to a share-based payment expense of R32.96m relating to the black economic empowerment transaction with Grand Parade Investments.

Spur’s shares on the JSE fell as much as 2.74 percent to R35.50. The stock pared losses to close 1.37 percent lower at R36.

Sales in local restaurants grew by 12.6 percent, while international restaurants, including those elsewhere in Africa and in the UK, as well as Australia, grew 19.1 percent on a constant exchange rate basis.

Van Tonder said it was clear that spend per head, which was always a good indicator of availability of cash in the consumers’ pockets, was on the decline.

To overcome this, Spur has had to increase market share through aggressive advertising and promotions.