The Spur Corporation overcame mounting pressure on consumer spending in the year to June 2023, with its franchised restaurant turnover growing 23% to R9.5 billion and revenue increasing by 27.4%.
Headline earnings increased by a meaty 75.9% to R213 million. Sales in retail company stores increased by 37.7%, while manufacturing and distribution division sales were 23.5% higher. The final dividend was raised by 41% to 110 cents per share.
Investors must have been heartened, as the share price rose 10.8% to R29.92 on the JSE yesterday afternoon, a price also well up on R22 exactly a year before.
On the prospects for the 2024 financial year, CEO Val Nichas said while trading conditions would remain challenging due to pressure on consumer spending in the weak macroeconomic climate, the group remained positive on the outlook.
This was reflected in plans to open 41 new restaurants in South Africa and 12 internationally in the next year. This included aggressive expansion of the Panarottis brand, where 15 new stores were planned.
Nichas said their primary focus would be to increase the loyalty base across all brands, target the next tier of young families in South Africa, and introduce smaller format outlets for Spur, Panarottis and RocoMamas.
“This strategy will enable these brands to expand into smaller towns and shopping nodes, which can generate an improved return on investment with a smaller restaurant footprint,” she said.
The group remained ungeared at year end, with unrestricted cash of R375m.
Chairman Mike Bosman attributed the strong growth to their clearly defined strategy and focused business model adopted in 2021, which was now delivering profitable results.
After increasing restaurant sales by 31.5% in the first half, growing macroeconomic headwinds meant sales grew by 15.1% in the second half. Food inflation peaked at 14.4% in March before easing to 7.8% at year end.
Volume growth in South Africa was mainly driven by the Spur brand, which increased restaurant sales by 24.9%. Panarottis grew sales 18.6%, RocoMamas by 9.6% and John Dory’s by 8.7%.
The speciality brands, The Hussar Grill, Casa Bella and Nikos increased sales by 42.2%, benefiting from an increase in local and international tourism. The group’s customer count grew by 13% year-on-year.
Nichas said the R1bn mark in breakfast sales was topped for the first time this year.
Spur accounted for 69% of the group’s South African sales, followed by RocoMamas and Panarottis which each represented 10%. The international restaurants account for 10% of group sales.
Load shedding also drove customer demand for convenience, she said. Takeaway sales now represent 15% of total local restaurant sales. Collect orders comprise 52% of takeaways, with the balance through Mr D and Uber Eats.
Burgers and pizzas were the most popular eat-at-home choices, with takeaways making up 47% of sales in RocoMamas and 35% in Panarottis.
International franchised restaurant sales increased by 27.6% following improved trading conditions in the rest of Africa. Africa represents 71% of international sales and Mauritius 21%.
At year end ,the group operated 639 restaurants across South Africa and 13 countries in the rest of Africa, Mauritius and the Middle East.
In South Africa, 22 restaurants were opened including nine Spur, five RocoMamas and three Panarottis restaurants. In the speciality portfolio, four new Hussar Grill restaurants were opened, supporting a strategy of increasing market share in Gauteng.
Franchisees collectively invested R98m to revamp and relocate 72 restaurants.
Ten new restaurants opened internationally, including two RocoMamas in Ghana and one in India, Saudi Arabia, Botswana, Democratic Republic of Congo and Zimbabwe. Two Panarottis opened in Zambia and one in Nigeria.
Last month the group announced the acquisition of a 60% stake in the Doppio Group with 37 restaurants across the Doppio Zero, Piza e Vino and Modern Tailors brands as well as Doppio’s bakery and central supply business.
BUSINESS REPORT