Spur Corporation’s international restaurants closely resemble their South African counterparts, with slight adaptations to appeal to local markets. Most of the group’s international restaurants are franchised, except for RocoMamas in Melbourne, Australia, in which the group has a 45% interest.
2019 was a strong year for growth in Africa (including Mauritius) and the Middle East and the division achieved a record for the region with 19 new restaurant openings.
The division increased its footprint in Saudi Arabia with the addition of the first Hussar Grill and second RocoMamas. The first RocoMamas in Botswana was well received. The first RocoMamas in India has started off slowly in a unique trading environment, but there are signs of progress and encouragement as the brand works with highly motivated franchisees who are committed to expanding the brand throughout India.
The Panarottis brand was well received with its launch in Zambia with the opening of eight restaurants, a combination of take away express restaurants and wood-fired sit down restaurants. There are plans to further expand the Panarottis brand in Zambia along with the opening of the first RocoMamas in 2020. The first Panarottis also opened in Kenya, increasing the overall restaurant footprint to seven outlets in Kenya with a further two restaurants planned for the new financial year.
Two additional RocoMamas restaurants were opened in Mauritius, taking the total to three RocoMamas restaurants trading on the island. With the opening of another Panarottis restaurant in Mauritius, the island has a presence of eight Panarottis outlets.
The first RocoMamas was opened in Cyprus and there are plans to further develop this territory.
The first international Spur Grill & Go opened in Namibia and was well received.
The group exited Uganda by mutual agreement with the franchisee and plans to exit Malawi in the new financial year, as growth prospects in these countries are weak and it is not financially sustainable to support these territories.
Franchised restaurant turnover increased by 28.5% in rand terms to R650.6 million (2018: R506.1 million) and by 23.5% on a constant exchange rate basis. Revenue improved by 28.8% to R29.6 million (2018: R23.0 million) and operating profit increased by 22.0% to R12.7 million (2018: R10.4 million). The operating profit margin declined from 45.1% to 42.8% due to additional costs associated with restaurant openings during the year.
Restaurant turnovers in Australia were 15.6% down and in New Zealand, 19.4% below 2018. Restaurants in both countries suffer from intense competition and overtrading, declining economies and increasing operating costs, specifically labour and rental. The group closed three restaurants, as they were no longer profitable.
One new restaurant, Panarottis Wanneroo, was opened with no new restaurants planned for the year ahead.
Revenue declined by 33.7% to R4.3 million (2018: R6.6 million). The decline exceeded the reduction in restaurant turnover as additional franchise fee concessions were granted in an effort to assist struggling franchisees. The operating loss increased to R17.0 million (2018: R11.0 million) due to impairments of franchisee loans and lower revenue.
|Spur||Panarottis||John Dory’s||The Hussar Grill||RocoMamas||Total
|Africa (including Mauritius)||32||19||3||1||7||62|
The region’s strategic intent is to be a highly effective, skilled team, who are experts at creating and maintaining sustainable restaurants in identified territories.
A key focus area is to capitalise on the growth of new restaurants in existing territories, which will further serve to improve operating efficiencies regarding product procurement, menu costings and operating costs such as rentals. These improvements are key to the franchisees’ success and business model.
Africa (including Mauritius) and the Middle East
The development schedule for the 2020 year looks encouraging, with an estimated 10 new restaurant openings scheduled
The group is exploring alternative operating models in the region in an effort to minimise operating costs in line with lower revenue, while continuing to meet our legal and ethical obligations to franchisees. The group will not invest any additional capital in the region, but is expecting to continue to incur small losses for the next few years. The division’s management will continue to engage with franchisees in an effort to improve franchisee profitability.