Spur Corporation has 63 restaurants operating outside South Africa – 49 in Africa and Mauritius, two in the Middle East and 12 in Australasia. While most of these are Spur and Panarottis brands, there is growing representation across the portfolio. The international stores closely resemble their South African counterparts, with slight adaptations to appeal to the local market. The eight group-owned restaurants in the UK and Ireland were closed in the prior year following the decision to cease operations in that region and reposition the international business focus primarily on Africa, the Middle East and Australasia. All the group’s international restaurants are now franchised.
International restaurant sales from continuing operations increased to R727.3 million, a 2.4% increase on 2016 (R710.1 million), and sales at existing restaurants decreased by 5.5%. At constant exchange rates, international restaurant sales increased by 6.3%.
|Spur||Panarottis||John Dory’s||Captain DoRegos||The Hussar Grill||RocoMamas||Total stores|
|Africa and Mauritius||34||7||2||3||1||2||49|
Trading in Australia was variable, with buoyant trading in New South Wales being offset by the poor economy and higher unemployment in Western Australia. The need to support franchisees through contributions to marketing efforts, franchise fee concessions and product subsidies had a significant negative impact on profitability.
While the opening of our first Spur Steak Ranch in Auckland, New Zealand was delayed, the restaurant opened in October 2016 and has been well received, exceeding turnover expectations to date. We are investigating a second site in the country.
We are maintaining aggressive marketing campaigns in all areas, including special offers on popular products such as ribs, Kids Eat Free days and lunch specials. The campaigns are run on local radio, cinemas, letterbox drops and social media campaigns. Loyalty programmes and the Go Review customer satisfaction tool have been launched throughout the region.
Our main challenge in both Australia and New Zealand remains the high cost of labour. We are exploring the possibility of launching a smaller format concept to balance the need to ensure high-quality service while keeping labour levels low.
UK and Ireland
By 30 June 2016, all operations in the UK and Ireland had ceased trading. The closures led to a current period cash outflow of R5.040 million relating to the disposal of liquidated UK subsidiaries, which is discussed in more detail in note 4 to the consolidated financial statements on page 102.
Africa, Mauritius and the Middle East
Economic and political developments affected trading in certain territories and weaker African currencies against the dollar negatively affected our rand results. Total restaurant sales for franchised restaurants in Africa and Mauritius grew 1.1% (5.5% on a comparable exchange rate basis) and the medium-term growth outlook remains compelling. The group opened a Captain DoRegos and a John Dory’s in Namibia, Spurs in Ethiopia and Kenya, a Spur Grill & Go in Mauritius, a Captain DoRegos in Zimbabwe and a RocoMamas in Oman, Mauritius and Saudi Arabia.
The Spur Loyalty programme is currently running in five countries with launches planned in another five in the 2018 financial year. The Go Review customer satisfaction tool is currently being rolled out in all countries and for all brands.
We have continued to see a slowdown in new retail development across the African continent with many landlords battling to fill developments. This brings opportunity for more realistic rentals and potentially better long-term leases. A significant amount of work has been done on the design of a smaller-footprint Spur model. These smaller and more personalised outlets have been well received and have proven to be advantageous from an operating cost and operating margin point of view. This has also aligned well with the cost of occupancy and dollarised rentals on the continent, not to mention the reduced set-up cost. Similar adjustments have been made to the other brands within our portfolio for the African market.
Twenty-three international stores sent 39 managers to South Africa for training in the last financial year and online training has been implemented in various parts of the region. Management modular training has also been a focus point which has been well received throughout the region. Continued progress is being made with our supply and logistics throughout the continent.