Strategy, risks and key performance indicators (“KPIs”)

Sustainable supply of raw materials

Our restaurant brands use significant quantities of raw materials. The chicken the group buys in a year weighs as much as 19 Boeing 747s. If all the potato chips we bought in a year were laid end to end, they would stretch nine times the length of the Great Wall of China. The group uses enough cooking oil in a year to fill an Olympic sized swimming pool and buys enough juice and water to fill 30 family-sized swimming pools.

Therefore, it is critically important that the supply of our raw materials is consistent, predictable and of the highest quality. High volume foods we use include beef, chicken, pork, seafood, potatoes and cheese. We have established relationships with multiple reputable suppliers to ensure that the group is not exposed to a single supplier across our core products. These include local and foreign suppliers where necessary and we try to ensure that alternative suppliers are separated geographically to limit the impact of a regional event.

The group acquired an interest in Braviz Fine Foods, a start-up rib processing factory, to better manage the supply of this key product. This facility is due to commence production in December 2014.

The supply of raw materials may be disrupted by a number of factors over the long term. Social and labour unrest could interrupt supply. There were several strikes at our suppliers during the year. While contingency plans were in place and production facilities ran on skeleton staff, inventory levels were pressured. Spur Corporation’s strong long-term relationships with key suppliers help us to flag possible supply interruptions early and allow contingencies to be implemented timeously.

Climate change is likely to lead to shifting weather patterns that may negatively affect food production. Over time, stress on food producers to meet the rising demands of the growing world population will increase. In the short term, shifts in the availability of raw materials affect food prices, which in turn put pressure on franchisee margins. As a responsible corporate citizen, Spur Corporation needs to work closely with its suppliers to ensure that they use sustainable practices so the group will have access to the food it needs at a reasonable price.

Our procurement department specifies sustainable practices in the criteria it applies when selecting preferred suppliers. These include seafood suppliers’ adherence to Southern African Sustainable Seafood Initiative (SASSI) guidelines. All seafood products supplied by the group locally are on the SASSI green list. We review our key suppliers’ sustainability plans and processes annually to ensure that they apply sustainable practices that align with group values.

Goals for 2014 Achieved in 2014 Goals for 2015
83% of suppliers managed by the group have adequate and appropriate sustainability plans in place 97% of suppliers managed by the group have adequate and appropriate sustainability plans in place 100% of suppliers managed by the group have adequate and appropriate sustainability plans in place
95% of seafood suppliers managed by the group comply with SASSI guidelines All seafood products procured centrally are on the SASSI green list. Maintain 100% of seafood products managed by the group to comply with SASSI guidelines