Business

Spur’s full-year headline earnings surge almost a third

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JSE-listed multi-brand restaurant franchisor Spur Corporation says headline earnings for the full year ended June 2022 surged by 31% to R121 million, seeing the group posting a strong post-Covid-19 recovery.

Increased foot traffic to Spur locations has seen the group achieving a 32.5% rise in revenue to R2.4 billion, an improvement it says was supported by company-owned restaurants and the manufacturing and distribution division posting higher sales figures as well as overall improved restaurant turnovers.

Diluted headline earnings per share for the period surged 30.9% to 143.68 cents, while group profit before income tax increased by 41.9% to R209.7 million.

Spur has declared a final dividend of 78 cents per share, bringing the total dividend for the period to 127 cents. The dividend has been declared from income reserves.

“Although economic conditions remain challenging in the face of higher inflation and severe pressure on consumer disposable income, the group’s business model continues to demonstrate its resilience,” Spur says in a statement.

“The group embarked on robust and aggressive marketing campaigns to increase brand awareness, everyday value and consumer convenience, including takeaways, click and collect services and third-party deliveries,” it notes.

Segmental review

According to Spur Corporation, franchised restaurant sales grew by 28.2% during the period, a recovery that it says now exceeds pre-pandemic sales levels.

The group further adds that within its South African operations, well-known brand Spur carried most of the growth, posting a 30.1% rise in restaurant sales.

“Panarottis, John Dory’s and RocoMamas all performed well while the speciality brands lifted sales by 52% with a strong recovery in restaurant sales in The Hussar Grill.”

Post the Covid-19 led rise in demand for convenience and takeaway offerings, the group has reported a 30% rise in takeaways. This growth it says was led by RocoMamas which saw a 57% surge and Panarottis Pizza which reported growth of 39%.

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As it stands, Spur Corporation has expanded its presence to 631 stores, with 547 outlets within South Africa, while the remaining 84 stores are scattered across the rest of Africa, Mauritius and the Middle East.

During the period, the group opened 23 new restaurants in South Africa, but closed 15. A further eight restaurants were opened in international locations.

Looking ahead, Spur plans to open a further 32 new restaurants in South Africa and nine more in the international space during the 2023 financial year.

Tightening spending environment

Noting the plight of consumers in the current period– in the face of elevated fuel, food and electricity prices as well as rising interest rates – the group acknowledges the potential impact diminishing disposable income may have on its business.

However, CEO Val Nichas remains optimistic that the economic environment, although challenging, will still provide Spur with opportunities for growth.

“The widespread changes in the trading environment and shifting consumer trends creates opportunities for innovation, including new meal solutions, expansion of restaurant formats and alternative trading channels,” he says.

“We are taking advantage of the global trend towards convenience with the growth in e-commerce and on-demand delivery as well as expanding our ranges of plant-based and vegan menu options for health conscious and environmentally aware consumers,” Nichas adds.

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