SOCIAL MATERIAL MATTERS
Spur Corporation’s activities and operations are regulated by a range of legislation. Ensuring regulatory compliance is a fundamental aspect of the group’s commitment to good governance. Failure to ensure regulatory compliance in the group creates the risk of monetary fines, reputational damage and the loss of its legal and social license to operate.
While Spur Corporation is not directly responsible for the regulatory compliance of franchisees, compliance failures at franchisee level can have a direct reputational impact on the group and its brands.
The group chief financial officer, assisted by the legal and compliance officer, is responsible for monitoring compliance within Spur Corporation. Proactive and systematic management of compliance is the responsibility of the group’s in-house legal and compliance officer. This includes assessing potential consequences or risks associated with new legislation, and reporting to the social, ethics and environmental sustainability committee. Significant non-compliance with mandatory laws and rules will be reported to this committee and escalated to the board as necessary.
Departments in the group affected by pending legislation monitor progress and likely impacts and report back to the board committees and the board. Franchisees are kept informed regarding regulatory developments, and operations teams provide guidance on implementing the required response.
There are a number of proposed laws, guidelines and codes of conduct currently under discussion, several of which have the potential to affect the group’s business and franchisees. We continue to monitor their development and engage proactively with the relevant authorities to ensure the practical implications for the industry are understood.
The primary regulatory concerns for the group currently include:
Consistent quality of food is a critical issue in the restaurant industry. In June 2018, government amended parts of the hazards analysis and critical control points (“HACCP”) legislation to ensure the submission of rapid information from the industry or food testing laboratories in the event of a food-borne illness outbreak. This was precipitated by an outbreak of listeriosis, which started in 2017 and prompted heightened consumer awareness around food safety.
Food safety is of critical importance to Spur Corporation and we take all issues regarding the production and preparation of our food extremely seriously. The group’s centralised procurement function monitors suppliers’ and the outsourced distributor’s compliance with:
- HACCP: A systematic preventive approach to food safety from biological, chemical and physical hazards in the production process, which can cause the finished product to be unsafe.
- ISO 22000: The food safety management system which maps out what an organisation needs to do to demonstrate its ability to control food safety hazards in order to ensure that food
The group also engages independent parties to conduct specialised food safety audits of suppliers and franchisees. Franchisee employees receive training in food preparation, food safety and other relevant areas. Operations managers monitor food quality during store inspections.
B-BBEE rating of franchisees
Spur Corporation urges franchisees to improve their broad-based black economic empowerment (“B-BBEE”) status as part of our commitment to transformation.
Where franchisees are unable to produce verified B-BBEE certificates of an acceptable level, there is a risk they may not be granted business licences, liquor licences or leases in strategic locations, or that they may be penalised by landlords. The group established a structured solution to assist franchisees to improve their B-BBEE ownership level, which we presented to franchisees around the country this year.
The B-BBEE status of suppliers can have a significant impact on those of franchisees and, wherever possible, Spur Corporation’s procurement function uses its influence to effect transformation among suppliers of the outsourced distributor.
Guideline 14 of the Foodstuffs, Cosmetics and Disinfectants Act (Act No. 54 of 1972)
Guideline 14 was released in 2015 by the Department of Health (“DoH”). This guideline impacts on the group in that it prohibits the marketing of food items deemed to be unhealthy. Spur Corporation is engaging with the DoH through an industry body to explore ways in which the industry can self-regulate to address issues raised within the guidelines.
Milestones and timelines have been set to satisfy the requirements for self-regulation, which include displaying the kilojoule content of meals and ceasing the use of toy-and-meal combos. The Consumer Goods Council of South Africa (“CGCSA”) recently convened a meeting between the industry and the DoH and are satisfied with the levels of compliance with the “Better for You” undertaking – a DoH initiative to provide healthier swap-out recommendations for consumers.
Spur Corporation remains committed to the undertakings made by the industry to the DoH, and our “Better for You” meals now feature on the kids’ and adult menus of Spur Steak Ranches, Panarottis and John Dory’s. The Spur adult menus include Choose Healthy Options Wisely (“CHOW”) accreditation, which links into the CHOW app to offer customers independent verification to influence behavioural change and promote healthier eating.
Proposed changes to liquor licensing laws
Spur Corporation continues to engage with the Department of Trade and Industry (“dti”) regarding the proposed Liquor Amendment Bill.
The bill includes proposals that will have a substantial impact on establishments serving alcohol, and on the people who work in them. These include limitations on liquor licence holders that operate within 500 metres of schools, places of worship, recreation facilities, rehabilitation or retreat centres, residential areas and public institutions. The extended liability clause could hold manufacturers, distributors and retailers responsible for all alcohol-related harm and damage caused when alcohol is consumed.
There has been no significant progress on the draft legislation since 30 September 2016, and the group continues to monitor developments in this regard.
The Franchise Association of South Africa (“FASA”) Code
FASA is a non-profit organisation that represents the interests of franchisors, service providers and franchisees in South Africa with the objective to promote ethical franchising. The draft FASA Code of Ethics and Business Practices provides for the establishment of a franchise industry ombud. The appointment of the ombud was gazetted in 2016; it is yet to happen, but could have a significant impact on franchisors once finalised.
Spur Corporation engages with other industry players in the casual dining and quick-service restaurant (“QSR”) franchising industries on an ongoing basis to monitor developments to proposed legislation and regulations. The first quarter of 2018 saw the launch of the FASA Franchisor Food Forum, chaired by Spur Corporation and with the support of several notable restaurants.
Protection of Personal Information (“POPI”) Act (Act No. 4 of 2013)
POPI affects the management of confidential consumer information held by companies and prescribes the manner in which personal information is to be collected, captured, stored, used and deleted.
The POPI Act has been promulgated, but without an effective date and without any of the regulations to which the Act refers. A period of one year will be allowed from the effective date, once announced, after which companies will have to comply.
Spur Corporation has conducted extensive analysis of the impact POPI will have on the group. This includes assessing information flow and security at the group’s head office, corporate offices, and retail and ancillary operations, which include marketing, the call centre and the group’s customer loyalty programmes.
Tax compliance is a standard board agenda item, reflecting the rising complexity of local and international tax frameworks and the increased assertiveness of revenue authorities.
Health and safety
The health and safety of our employees and customers is a critical concern for the group. This matter is most relevant to the group’s manufacturing operations at the sauce and décor facilities.
While franchisees are responsible for health and safety at their operations, compliance at restaurants is a key concern for the group as this could pose a reputational risk for the group, particularly where kids’ facilities are concerned.
The group’s occupational health and safety structures are monitored by the health and safety committee.
Spur Corporation’s corporate offices and manufacturing facilities have health and safety systems in place that are audited by an external party. Manufacturing sites are audited monthly and non-production sites quarterly. Monthly health and safety reports are submitted to head office, and progress on health and safety compliance is reported to the chief executive officer on a quarterly basis.
No major injuries were reported during the year under review.
The group supports health and safety at franchise restaurants through occupational health and safety and first aid training. Franchisees’ health and safety procedures and policies are reviewed by the operations management teams to ensure these comply with the relevant legislation.
Customer satisfaction and the growth and retention of a loyal customer base are important value drivers for Spur Corporation. Service excellence is a critical component of the brand promise at each restaurant.
Spur Corporation has a range of initiatives in place to improve customer service. These operate at different levels in the group and include:
- Franchisee training, which emphasises the importance of providing excellent customer service.
- Training of franchisee management through the modular Management Prestige Training Programme, which includes training on managing and resolving complaints quickly and efficiently. Franchisee employees also receive training in conflict management.
- Spur Corporation’s in-house customer service centre is an important customer touchpoint and base for monitoring consumer relations. The service centre supports franchisees and provides customer feedback to franchisees to ensure any required operational improvements are addressed. Customer interactions increased by 16% to 115 481 in 2018. Of these interactions, 76% were queries, 18% were compliments and only 6% complaints.
- Spur Corporation’s social media team monitors and responds to queries, compliments and complaints posted to sites such as TripAdvisor, GoReview, Facebook and Twitter. Negative comments are forwarded to the customer service centre for logging and resolution. In 2018, the group invested in social media tracking software and our social media team has grown to four dedicated social media ambassadors.
The group’s customer loyalty programmes include the Spur Family Card, John’s Club Card (for John Dory’s) and the Panarottis Rewards Programme. These programmes have been designed to grow sales and reward customer loyalty. There are also local customer loyalty programmes at Spur Corporation restaurants in several countries across Africa.
Spur Corporation invests heavily in building its information technology (“IT”) capability as a key enabler of achieving excellent customer service. This investment supports the group’s ability to influence purchase behaviour across all target markets through platforms such as digital loyalty, e-gifting, business-to-business e-commerce/loyalty, GPS locations, generator notifications and social network management.
The group consolidated the loyalty and gifting programmes into a single platform during the year to improve innovation, customer-reward capabilities and fraud detection. This platform provides our brands’ customers with an in-restaurant experience that can quickly evolve and adapt according to their needs. The new platform enables brands to implement:
- progressive loyalty programmes;
- consumer-to-consumer and business-to-business gifting capabilities;
- scan to pay (customers pay through Spur Corporation brand apps in-restaurant and at home);
- online ordering; and
- table ordering.
The John’s Club app was launched in June and the Spur Family app in July 2018. These provide a seamless customer experience to earn and redeem vouchers and will be further developed to include mobile payments, online and table ordering. The Panarottis Rewards app will launch toward the end of the 2018 calendar year.
A team of loyalty card fraud agents monitors suspicious activities and trends, and these are reported to franchisees for follow-up.
Loyalty programme performance:
- The main focus during 2018 was the establishment of the new platform rather than member acquisition; subsequently, active members of the Spur Family Card declined to 1 456 000, below our target of 1 848 000.
- Spur Family Card loyalty spend reached R1.7 billion for the year and the redemption rate of the Spur Family Card vouchers remains healthy at 64%.
- The eGift Card delivered good results, with sales of over
R10.1 million for the year and a redemption rate of 92%.
- Secret Tribe birthday vouchers received renewed focus and their redemption rate increased by 14.7%.
- We introduced a monthly SMS application, which sent just over 3 000 000 text messages during the financial year.
- Panarottis Rewards has continued to perform well, with over 147 000 members.
- John Dory’s loyalty portfolio called “John’s Club” reached R161 million in loyalty spend for the year, with a redemption rate of 60%.
|Loyalty membership (’000)||Loyalty spend (R’000)|
|2018 target||Achieved||2019 target||2018 target||Achieved||2019 target|
|Spur Family Card||1 848||1 456||1 572||2 100||1 712||1 848|
|John’s Club Card||230||157||169||178||161||174|
Spur Corporation’s vision commits the group to make a positive and lasting difference in the lives of those we interact with, including communities. This commitment aligns with the spirit of generosity, which is one of the group’s core values.
Spur Corporation is active in communities through various corporate social investment (“CSI”) initiatives. Managed by the Spur Foundation, our CSI initiatives reflect its motto “Nourish, Nurture, Now!” through feeding and education programmes for children and the provision of basic necessities and amenities.
Many of our franchisees are active in their local communities through a range of initiatives, that give back and support the people and environments in which they trade.
In 2014, Spur Corporation committed to funding the Spur Foundation through a donation of 100 000 treasury shares per year for five years. To date, four tranches of shares have been transferred. The dividends from these shares will provide ongoing annuity income to help support the Spur Foundation’s CSI initiatives. Funding is further supplemented through restaurants campaigns and event contributions. Spur Corporation has a voluntary employee salary deduction donation scheme and employees are encouraged to make a difference in their communities. Total CSI spend for 2018 was R2.6 million (2017: R2.9 million), including voluntary employee salary deductions.
The Spur Foundation supported a number of initiatives in 2018 including:
The Full Tummy Fund
The Full Tummy Fund, a Spur Foundation initiative, primarily focuses on Early Childhood Development (“ECD”) and nutrition for children from disadvantaged communities up to the age of six.
Early childhood is a critical stage of development that forms the foundation for children’s future well-being and learning. In South Africa, no reliable data exists on the number of sites providing early childhood development services, but estimates suggest that as few as 10% of preschoolers are catered for properly. Statistics indicate that approximately 4.5 million children under the age of four have no access to quality early childhood care and education facilities.
Integrated programmes that target children in their early years are, therefore, critical for their mental and psychosocial development. Over the past six years the Spur Foundation has supported a number of beneficiaries focused on children, predominantly on teacher training (education) and feeding programmes.
John Dory’s has been supporting the Full Tummy Fund since 2016 by adding an automatic donation of R2 to selected kids’ meals on their menu. In 2017, Panarottis opted to also add a R2 donation to their kids’ grilled chicken strips meal. Spur Steak Ranches joined the campaign in April 2018, selecting to donate R2 from every kids’ beef burger meal and R1 from every canyon cup sold nationally.
For more information on these and other beneficiaries, please visit www.fulltummyfund.co.za and Spur Foundation www.spurcorporation.com/governance-sustainability/spur-foundation/.
The Full Tummy Fund supported a school in Knysna:
Spur Corporation urged customers to make a donation in aid of those affected by the Knysna Fires in 2017. A total of R81 000 was raised and matched by the Full Tummy Fund. All funds were used to assist Tinkerland Nursery School in Concordia, an informal settlement in Knysna. The school, which was damaged by the storm that fanned the fires, received a new ceiling, renovations to existing walls, and access to plumbing and electricity. This included a solar geyser, shelving, a new fridge and other kitchen equipment, a new coat of paint and a sand pit with a shade cloth.
The ASHA Trust
The Spur Foundation has enjoyed a successful partnership with The ASHA Trust since 2014 when 10 informal preschools in Alexandra were selected to benefit from basic ECD training, business and financial management, as well as child development and inclusion training programmes provided by ASHA and funded by the Foundation.
Over the past five years, donations from the Spur Foundation totalling more than R1 million have enabled the ASHA Trust to make a very real difference in the lives of vulnerable children and the teachers who look after them. Our initial investment gave 10 principals and 10 teachers the opportunity to participate in the training. In 2016 we increased the number of preschools receiving training to 20, bringing the total number of educators receiving training to 40.
In the preschools where principals and teachers have received training and support, there have been remarkable improvements. Assistance from the Foundation has enabled many of these schools to add classrooms, do renovations and upgrade facilities such as bathrooms, toilets and sick bays. The majority of these preschools have registered with the Department of Social Development and are receiving grants that enable them to increase employee salaries as well as the number of employees.
Children are more school ready and perform better in grades R and one as a result, while their parents or guardians are able to work or seek employment in the knowledge their children are receiving quality education in a safe and secure environment, and nutritious daily meals.
The Spur Foundation Employee Initiatives Fund and Franchisee Fund
The Foundation’s Employee Initiatives programme provides limited funding to employees who are actively involved with charitable work in their communities. This initiative has been well received by employees and has benefitted numerous charities across the country.
In 2018 the Foundation created a Franchisee Fund which enables franchisees to apply for additional funding in aid of the charitable organisations they currently support.
Grass roots development programmes throughout South Africa
The Spur Soccer Masidlale programme
Over 33 000 boys and girls aged between 10 and 12 have been through the Spur Soccer Masidlale programme since its inception in 2005. The programme runs in the Western Cape, Eastern Cape, KwaZulu-Natal, the Free State, Tshwane and Gauteng. R1.3 million was spent on this seven-a-side soccer and life skills initiative in 2018. This investment goes a long way as the Spur Soccer Masidlale programme which is our flagship CSI initiative fills a void and provides children within previously disadvantaged areas with an opportunity to take part in competitive sport.
The seven-week programme incorporates physical activity as well as life skills, since boys and girls at this age need to be empowered to make sensible decisions in life. Each participant is provided with a full Spur branded soccer kit to keep and use during the weekly league phase. Spur also provides food at every match.
Ithembelihle High School first team rugby sponsorship
Ithembelihle High School, based in New Brighton informal settlement in Port Elizabeth, has a deep-rooted history in rugby. Spur Corporation provides the Ithembelihle first rugby team with kit, accommodation, meals and transport to various tournaments across the country. This has been Spur’s investment towards Ithembelihle Comprehensive high school’s 1st rugby teams since 2010 and a sure indication of our dedication towards the development of rugby within previously disadvantaged communities.
In addition to these initiatives, Spur Corporation also funds a range of community-focused events that encourage families and children to improve their health while having fun and experiencing the Spur “taste for life”. More than 64 events were supported during the year to uplift communities through sport.
Human capital and skills development
Spur Corporation’s business model is anchored in the talent, skills and expertise of our employees. Significant emphasis and value are placed on ensuring we have a skilled and diverse workforce. The group’s investment in skills development is crucial to ensure we support and harness the best from our human capital. Training and development initiatives provided to franchisee employees further ensure that quality and service are maintained at the highest standard.
In the last financial year we invested extensively in research and benchmarking of our reward and remuneration practices, and in our leadership development, organisational culture and employee engagement programmes.
As at 30 June 2018, 581 people were employed at Spur Corporation’s South African operations (2017: 528).
Spur Corporation’s human resource (“HR”) function incentivises, motivates and provides opportunities for advancement through our Employee Value Proposition, which ensures an agile and fit-for-purpose workforce.
The group values the diversity in its workforce and seeks to create equal opportunities for all employees. We do not tolerate discrimination of any kind and have formalised disciplinary and grievance policies and procedures that are communicated to all employees. We facilitated “Unconscious Bias” training in the financial year to enhance diversity and inclusion across the group.
HR roadshows are held twice a year to increase employee engagement and to enable the group to access real-time feedback and concerns.
An active Employee Assistance Programme funds counselling for employees, provides emergency employee loans of small amounts at affordable interest rates, and offers wellness-at-work initiatives. These include free sight assessments, flu inoculations and talks on basic personal financial management.
The group’s succession plan aligns with our transformation goals, differentiating between actual and earmarked successors and identifying the need for external appointments. Corporate employee rotation – a measure of employee turnover – has remained at 12%. This is largely as a result of the higher employee turnover in corporate-owned retail outlets, which
is typical of the retail restaurant industry.
The learning and development of Spur Corporation employees ensures they are equipped with the skills needed to meet the group’s business objectives. Transformation is a critical consideration in training initiatives for group employees, and upskilling and promotion of appropriate equity candidates
Regular career discussions are held with employees to align individuals with their core skills and capabilities. Through soft skills and technical training we ensure our employees receive cutting-edge learning opportunities.
The group invested R1.8 million in employee development across a number of initiatives including:
- Adult Education and Training (“AET”) numeracy and literacy programmes, which are being expanded to facilitate completion of an online Matric qualification.
- A bursary scheme for the children of employees, which allocated R597 603 in bursaries in 2018.
- Financial support for business-related studies.
- A Management Development Programme hosted at the University of Stellenbosch Business School.
- An outsourced Leadership Development Programme, which starts with tests to identify individual areas of strength and weaknesses, along with a structured programme to support and address these areas.
- Group funding of tertiary studies for employees.
|2018 target||Achieved||2019 target|
|Corporate employee rotation||10%||12%||10%|
|Employee training costs (R’000)*||2 057||1 811||2 933|
|* Includes dependents’ bursaries.|
Franchisee employee training
To support franchisees in running successful businesses, the group provides training to franchisee employees. Improving restaurant employees’ skills ensures the highest standard of food quality and service at restaurants, thus building consumer loyalty and strengthening the group’s brands.
Given the group’s commitment to investing in skills development, our well-trained franchisee management are attractive to competitors and the high level of turnover at this level is a concern.
Franchisee employee training initiatives include:
- Training centres in Johannesburg, Durban and Cape Town offer Spur Training Academy workshops in food preparation and food safety, operational efficiencies, financial management, sales techniques, management skills, environmental awareness and customer safety. In total, 8 048 franchisee employees were trained at internal workshops and regional training in major centres.
- Practical training is offered at training restaurants around the country to ensure franchisees and restaurant management are capable of managing all aspects of a franchise business. A total of 265 people received practical training in 2018.
- Practical product workshops for all restaurant brands are run through the Management Prestige Training Programme. The programme features modules of two weeks each and focuses on improving the manufacturing skills of the various franchisee management teams and production employees.
- Online testing and assessment enables franchisees to test waitron product knowledge in restaurants and to complete Management Prestige Training Programme assessments. New modules are loaded every six months and, to date, more than 16 105 registered users have accessed this. Video training material is being developed to enhance this programme.
- The training centre delivered several special interventions during 2018, a compulsory hygiene training session (830 attendees) were conducted with a further 4 778 franchisee employees being trained by their management in the restaurants.
|2018 target||Achieved||2019 target|
|Employees trained (franchise)||13 750||8 048||9 000|
Spur Corporation believes that the long-term success of South Africa is critically dependent on transformation and the group is committed to the principles of B-BBEE. Our transformation initiatives support the development of historically disadvantaged individuals at franchises and Spur Corporation corporate offices. The group takes transformation further by providing in-house development opportunities and mentoring programmes.
An analysis of the group’s top suppliers was concluded during the financial year and continuous discussions are in place to improve black ownership and black-female ownership of suppliers.
Transformation is monitored by the transformation committee and progress is measured against the dti Codes of Good Practice. Spur Corporation falls under the Tourism Charter of the BEE codes.
|dti Codes of Good Practice category||Score 2018|
|Enterprise and supplier development||4.15|
|Codes of Good Practice Level||non-compliant|
Employment equity (“EE”) is an important aspect of transformation and an area of significant focus for Spur Corporation. The group’s EE Plan aligns the recruitment policy with the EE requirements of the Codes of Good Practice. Improvements in EE will be supported over time by the group’s skills development initiatives and recruitment policy, which support greater transformation in Spur Corporation’s management and workforce.
The employee composition in Spur Corporation’s South African operations at 30 June 2018 was as follows:
|Professionally qualified and experienced specialists and mid-management||28||21||49||18||31||27||22||49||13||36|
|Skilled technical and academically qualified workers, junior management, supervisors,
foremen and superintendents
|Semi-skilled and discretionary decision-making||137||132||269||206||63||116||124||240||179||61|
|Unskilled and defined decision-making||24||44||68||68||–||18||35||53||53||–|