Press release

RESILIENT PERFORMANCE AS SPUR RESTAURANT SALES UP 10.4%

February 23, 2017

Cape Town – Spur Corporation delivered a resilient performance in the six months to December 2016 as total franchised restaurant sales from continuing operations increased by 10.4% to R3.8 billion.

Franchised restaurant sales grew by 10.2% in South Africa and by 12.0% in Rand terms in international restaurants, excluding the impact of the closure of the group’s operations in the UK and Ireland in the previous financial year.

The group’s headline earnings from continuing operations increased by 20.8% to R109.5 million. Diluted HEPS from continuing operations increased by 21.0% to 114.2 cents, or by 4.5% on a comparable basis. The interim dividend was increased by 6.0% to 71 cents per share.  
    
Spur Corporation expanded its global restaurant footprint to 590 with the opening of 21 outlets in South Africa and six in international markets. The group opened its first restaurants in New Zealand (Spur), Ethiopia (Spur) and Oman (RocoMamas) during the past six months.

Chief executive Pierre van Tonder said economic headwinds had impacted trading conditions in South Africa and in the rest of Africa. “Discretionary consumer spending came under increased pressure in the domestic market owing mainly to rising food, utility, education and healthcare costs, and growing levels of unemployment in the country.”

“At the same time our franchisees continued to encounter margin pressure from escalating food inflation, and we have taken decisive action to support franchisee profitability and ensure the sustainability of the restaurant chains,” he said.

While trading in several African countries was impacted by the marked deterioration in the value of local currencies relative to the US dollar, the group’s 11 restaurants in Mauritius reported strong growth. Australia experienced mixed trading, with restaurants in New South Wales benefiting from buoyant economic conditions while Western Australia has been adversely affected by the slowdown in the mining sector in the region.

The flagship Spur Steak Ranches brand grew sales by 4.0%. Spur has maintained market share and levels of foot traffic, although customer spend per head has declined over the past six months, reflective of the tough consumer environment. However, value promotions and the loyal customer base of over 1.8 million Spur Family Card members have been key to maintaining sales growth, said Van Tonder.

The RocoMamas success story continues with the chain opening its 50th outlet in December. Local sales increased by 113% as the Smashburger offering and edgy brand image attracted increasing volumes of millennial customers.

Panarottis Pizza Pasta grew sales by 10.6% in an increasingly competitive market, John Dory’s by 17.8% and The Hussar Grill by 58.0%. Sales in Captain DoRegos declined by 15.8%, highlighting the financial stress of consumers in the brand’s lower income market.
 
Discussing the outlook for the remainder of the financial year, Van Tonder said trading conditions are not expected to improve in the short term as middle-income South Africans remain under financial pressure.

“Spur Corporation has a strong portfolio of eight brands trading in the local and selected international markets. Our focus in the months ahead will be on driving growth through value promotions, innovative marketing, rewarding customer loyalty, expanding the restaurant base and continuing to offer a high quality, affordable family dining experience.”

Twelve new outlets will be opened across all brands in South Africa while nine new franchised restaurants will be opened internationally. These include the group’s first outlet in Saudi Arabia (RocoMamas), the first Panarottis in Nigeria, the first John Dory’s in Namibia, and the first RocoMamas in Zimbabwe. Additional outlets are planned for Botswana, Kenya, Nigeria and Zimbabwe.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact
Pierre van Tonder, Spur Corporation    021 555 5100    
Graeme Lillie, Tier 1 Investor Relations     082 468 1507

 

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