Business Maverick

Business Maverick

Spur delivers sizzling results in a weak trading environment

Spur delivers sizzling results in a weak trading environment
Spur Corporation head office in Cape Town. (Photo: Leila Dougan)

Shareholders of Spur have a good reason to pop the cork on their favourite bubbles (the local industry would suggest a fine Méthode Cap Classique), with the restaurant group confirming on Tuesday a healthy dividend is in store for them next month. 

Investors can look forward to a share of the R100.1-million cash dividend, set to be split between over 90.99 million shares, which will be paid out on 18 September. This corresponds to a total dividend for FY2023 of 192c – 51.2% higher than the 127c declared in the 2022 financial year. 

Group revenue increased by 27.4% to R3-billion (2022: R2.4-billion), supported by higher sales in the retail company stores, better sales from the manufacturing and distribution division, and improved turnover in the group’s global franchised restaurants.

Franchised restaurant turnovers were up 23% to R9.52-billion, with profit before income tax up 51.9% to R318.4 million.

Earnings per share were up 80.2% to 260c and headline earnings per share up 81.1% to 261.18 cents.
The group said its franchised restaurant sales grew by 31.5% in the first half of the 2023 financial year, over the comparable period of the prior financial year. 

While the economy remained “challenging” in the face of higher inflation and severe pressure on consumer disposable income, Spur’s restaurant sales grew by 15.1%, aided in part by loyalty programmes that have gained traction among customers. Loyalty voucher redemptions increased from 36% at June 2022 to 70% by June 2023. 

The group now has 1.9 million active Family Club loyalty members.

With 97% of the group’s local restaurant network in possession of alternative power solutions, the group has been well-positioned during rolling blackouts, which has helped drive restaurant sales by 24.9%, as grills were fired up and customers headed out to avoid eating in the dark. A bonus is the fact that Spurs, in particular, have enticing play areas for children.

Marketing has helped too, with a Springbok rugby sponsorship and  outdoor advertising exposure.

Panarottis restaurant sales increased by 18.6% with RocoMamas and John Dory’s increasing by 9.6% and 8.7% respectively. Speciality brands sales were up strongly, by 42.2%, driven by The Hussar Grill and Casa Bella, due to what the group said was an increase in both local and international tourism. 

In the first half of the 2023 financial year, franchised restaurant sales grew by 31.5% over the comparable period of the previous financial year. Rolling blackouts, it said, fuelled customer demand for convenience and the group’s local takeaway sales now represent 15% of total restaurant sales, with 52% as collect orders (call, click or walk in) – with the balance being delivered by Mr D and Uber Eats. The largest contributors to takeaway sales remain RocoMamas at 47% and Panarottis at 35%.

Internationally, franchised restaurant sales increased by 27.6%. 

In a trading update earlier this month, Spur reminded shareholders that its profit for the previous financial year was dented a one-off income tax charge of R22.034-million related to its dispute with the South African Revenue Service.

The Spur brand represents 42% of the group’s international restaurant sales, followed by Panarottis at 33% and RocoMamas at 23%.

Seventy-one percent of Spur’s international portfolio is in Africa, with solid performances in Zambia, Namibia, Kenya and Nigeria. 

At year end, the group has 639 restaurants in 14 countries. 

The Spur group plans to open 41 new restaurants in South Africa and 12 internationally in the new financial year.

On 27 July 2023, the group announced that agreed to acquire a 60% interest in the restaurant brands Doppio Zero, Piza e Vino and Modern Tailors, with a portfolio of 37 franchised and company-owned restaurants, as well as Doppio’s bakery and central supply business (collectively, the Doppio Group). 

The Doppio Group has much potential for expansion: In its financial year ended February 2023,  it generated total restaurant sales (franchised and company-owned) in excess of R600-million. It’s expected that the group will expand the Doppio brand nationally. DM

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