SPUR CORP. LIMITED INTEGRATED REPORT 2014

Operational reports

Panarottis Pizza Pasta

Big on Family. Big on Pizza

Panarottis is an Italian themed restaurant well known for generous portions, handmade pizzas, fresh ingredients and a warm, family-friendly atmosphere.

Panarottis continued with its impressive revenue growth following a bumper year in 2013. Overall restaurant turnover increased by 28.2% to R450.5 million (2013: R351.5 million) while sales at existing outlets grew 15.2%. Franchise revenue was up 25.4% to R20.9 million (2013: R16.7 million) and the division contributed R13.1 million to group profit before income tax, an increase of 32.8% on 2013. This strong performance was driven by the ongoing revamps of outlets and upgrading of kids’ facilities together with a focus on improving operational standards and franchisee profitability.

Revenue grew on the back of the following initiatives:

  • Customers welcomed our use of superior Italian ingredients, especially imported pizza flour and key new ingredients for our pasta sauces, and this reflected in higher restaurant sales.
  • We continued with our training programme focused on sustaining quality, which includes modular training.
  • We refined and expanded our weekday promotions to meet our customers’ requirements.

Last year’s menu re-engineering process continues providing us with a wealth of information to rationalise menus, identify products for promotion and support strategic menu item placements. This benefited franchisee profitability by improving sales, lowering labour costs, reducing inventory levels and maximising gross margins. We also rolled out energy-saving initiatives that further helped to reduce pressure on franchisee cash flow margins.

Brand communication has been streamlined with a clear and consistent message following through from store level to above the line marketing. We extended our marketing campaign to television with a focus on promoting Panarottis as a breakfast destination with competitive breakfast specials.

Strong relationships with key landlords have enabled us to open seven new sit-down restaurants and one Panarottis Pizza Express outlet. We also relocated and revamped 11 restaurants.

The Panarottis Reward Programme will be launched early in the new financial year. This will enable customers to transact digitally to earn, buy or redeem digital vouchers at all Panarottis outlets in South Africa.

Goals for 2014 Achieved in 2014 Goals for 2015
Opening two new restaurants and three new Panarottis Pizza Express outlets Opened seven new restaurants and one Panarottis Pizza Express Open ten new restaurants
Relocating/revamping 12 outlets Relocated four restaurants and revamped seven restaurants Relocating/revamping eight outlets
Promoting our weekday specials and breakfast offering Promoted breakfast and weekday specials strongly on TV Continue promoting our weekday specials and breakfast offering
Launching our new menu using imported high-quality Italian ingredients Achieved N/A
Expanding our delivery business Added eight new outlets to the delivery model Continued expansion of delivery business
Expanding the slice bar and takeaway offerings Added a further nine takeaway counters Continued expansion of slice bar and takeaway offerings
Refining the business model, running product workshops and training Achieved N/A
Focused approach to “Big on family. Big on pizza” Upgraded 12 kids’ facilities and introduced ’Panoland’ signage Continued rollout of kids’ facilities
Greater community involvement Franchisees continue to get involved in various community initiatives Greater community involvement
Implementing a loyalty programme Implementation delayed Loyalty programme is scheduled to be launched in the first half of the 2015 financial year

Full details of our historic performance and goals are available in the key performance indicator table.