SPUR CORP. LIMITED INTEGRATED REPORT 2014

group profile

Business model

Spur Corporation operates predominantly as a franchisor, leveraging its intellectual property, experience, skills and support infrastructure to manage franchised restaurant operations. This includes franchised restaurants in the rest of Africa and Mauritius, certain of the restaurants in Australia and three The Hussar Grill restaurants in South Africa.

Value creation and the capitals

The group creates value through its relationships with stakeholders within the context of the external environment, which includes economic conditions, social concerns and the broader natural environment.

The group draws on the six capitals (mentioned below) and converts these, through the group’s business activities, into outputs and outcomes. While we discuss the capitals in six separate categories, in practice these capitals overlap, interconnect and have an impact across the group’s business activities.

Financial capital

The group depends on financial capital in the form of earnings, equity (equity raised and retained earnings) and access to debt financing to fund its operations (salaries, maintenance capital expenditure, operating costs, training costs, taxes, interest and capital distributions) and future growth (organic growth, acquisitions, expansion and capital expenditure).

Manufactured capital

Manufactured capital includes the land and buildings from which the group operates, furniture and fittings, computer equipment, vehicles and equipment in the sauce factory and décor manufacturing plant. It also includes the finished stock of goods manufactured in these facilities.

Intellectual capital

Intellectual capital at Spur Corporation takes the form of the know-how, experience and operational knowledge the group has developed over the last 47 years in the family restaurant business. This intellectual capital is used to support franchisees in running successful businesses and to identify new opportunities for growth.

Human capital

The group is dependent on its employees to implement strategy, support our franchisee network and engage with our stakeholders in an ethical and respectful way. Our franchisee employees are also important to ensuring that the high standards of the group’s brands are upheld and excellent customer relationships are maintained. Consequently, the group dedicates significant amounts of financial capital to the training of group employees and franchisee employees.

Social and relationship capital

Social and relationship capital at Spur Corporation takes several forms, such as the relationships we develop and maintain with our customers through our brand building initiatives, excellent food and service, loyalty programmes, and customer care centre. It also includes the group’s integration with franchisees and suppliers, and the community work we carry out through the activities of the Spur Foundation.

Natural capital

The group depends on natural capital in the form of clean air, water and other environmental resources. We manage our impact on the natural capital around us through various programmes to increase energy efficiency, reduce water use and minimise waste.

FRANCHISE MANAGEMENT (south africa)

Franchised restaurants are run by independent, entrepreneurial fran-chisees that pay the group a franchise fee based on the turnover of each restaurant.

The group is not involved in the day-to-day operations of franchised outlets, but we maintain a high level of supervision. Ongoing support is provided to franchisees by experienced brand-specific operations teams. This support includes:

  • business management;
  • marketing support through the proactive identification of marketing opportunities and assistance in developing and implementing be-spoke marketing plans for each restaurant;
  • upholding the brand and product standards; and
  • ensuring that franchisees build and maintain successful businesses.

The operations management teams visit each restaurant at least once a month. During these visits, inspections are performed to assess the operations of each restaurant against predetermined standards, ranging from food safety, and product and service standards, to regulatory compliance.

A dedicated development team manages the new franchisee process. This includes franchisee and site selection, store opening, store relocations and refurbishments.

NUMBER OF CORPORATE EMPLOYEES



INTERNATIONAL OPERATIONS

International franchise operations in the UK and Australia are managed by dedicated regional franchise executives.

The UK and Ireland operate exclusively on a retail model following the takeover of the two remaining franchised restaurants last year. The group plays a more active role in the day-to-day management of its retail outlets. Australia includes retail and franchised outlets, while the remaining territories operate exclusively on a franchise basis.

Franchise management functions for international territories (other than the UK, Ireland and Australia) are performed by the international head office based in the Netherlands.

Other group services

The group’s training department implements training programmes for head office employees, franchisees and franchisee employees. It is also responsible for the Spur College of Excellence.

Group marketing is a customer-focused service department that collaborates with multiple business partners. Their goal is to create communication that broadens the group’s customer base and builds profitable iconic brands. Group marketing managed funds of R185.8 million during the financial year (2013 restated: R164.5 million) on franchisees’ behalf.

Certain of the iconic décor items that are unique to the various brands’ identities are manufactured by the décor business. These décor items are sold to franchisees for use in new restaurants and refurbishments.

Manufacturing and distribution

The manufacturing and distribution division comprises the procurement function for the group and its franchisees, and the sauce factory. The procurement function is responsible for managing the relationship between the outsourced logistics service provider, suppliers and franchisees as well as the food safety and quality of centrally procured items. The group earns a fee based on the value of goods transported to cover the costs of providing these services. The sauce factory manufactures in excess of 400 000 litres of sauce per month, supplying many of the brands’ unique sauces for group restaurants.

The Captain DoRegos distribution centre, which was acquired as part of the Captain DoRegos transaction in 2012, was closed down in November 2013 and its operations absorbed into the group’s outsourced logistics network.

In addition to the group’s own operations, the group invested R36.650 million in a 30% interest in Braviz Fine Foods in March. Braviz is a start-up operation establishing a new rib processing facility in Johannesburg. The 6 000 m2 plant will have the capacity to process 700 metric tons of ribs a month. It is scheduled to start production in December 2014.

Support Services

The customer care centre comprises 14 people and receives in excess of 6 000 calls per month on average, providing support to customers and franchisees. The customer care centre has been structured for growth in light of the launch of the Panarottis Rewards and digital John’s Club loyalty programmes.

The group also manages a host of other support functions that are integral to the franchise business model including information technology, human resources, finance, export, and facilities management.