Press release

Spur Corporation lifts restaurant sales 13.5%

September 11, 2014

Cape Town – Leading sit-down restaurant group Spur Corporation lifted revenue by 9.1% to R733 million in the year to June 2014 as total restaurant sales across the group increased by 13.5% to R5.5 billion.

Restaurant sales in South Africa grew by 12.8%, driven by robust performances from the Spur and Panarottis brands.

The group’s profitability for the period was, however, impacted by exceptional and one-off items. Headline earnings remained flat at R135.2 million with diluted headline earnings per share increasing 0.5% to 157.9 cents.

The total dividend for the year was increased by 9% to 121 cents per share.

Comparable profit before income tax, excluding exceptional and one-off items, increased by 9.9%. These items include an unfavourable swing of R20.9 million in the accounting treatment of the group’s long-term share incentive scheme, R6 million restaurant impairment and related losses, and R1.3 million closure costs of the Captain DoRegos distribution centre.

Group chief executive Pierre van Tonder said trading conditions became increasingly challenging in the second half of the year. “Spending among lower and middle income families remains constrained, with marked spikes in mid-month and month-end pay day spending patterns becoming the norm.”

Spur Steak Ranches showed an encouraging 11.3% growth in local restaurant sales. Van Tonder said the Spur Family Card loyalty programme has been a key differentiating factor for the brand in the current environment. “We now have over 1.7 million Spur Family Card members who account for 44% of total restaurant sales, up from 38% last year.”

Spur was again ranked number one in the Sunday Times Top Brands 2014 survey in the Sit-Down Restaurant category. Readers of the Sunday Times also voted Spur as the Coolest Eat Out Place in the Generation Next awards for the 11th consecutive year.

Panarottis Pizza Pasta delivered excellent results, increasing restaurant sales by 28.2% in South Africa. John Dory’s grew local restaurant sales by 21.0%, driven by the opening of five new restaurants. Local restaurant sales in Captain DoRegos
declined by 13.8% due, in part, to the closure of 15 redundant outlets and the financial pressures on its lower LSM target market.

The Hussar Grill, the Western Cape based steakhouse chain bought by the group in January 2014, has shown encouraging growth and attracted high levels of interest from potential franchisees. Management plans to expand the chain nationally and double the restaurant base to 12 in the new financial year.

International restaurant sales increased by 20.2% in Rand terms, benefiting from the depreciation in the currency during the year. Africa grew by 22.3% mainly due to the opening of seven new franchised outlets in Swaziland, Tanzania, Namibia, Nigeria and Zambia.

The group’s global restaurant footprint was increased to 490 following the opening of 18 Spur, eight Panarottis, five John Dory’s and four Captain DoRegos outlets.

Discussing the prospects for the new financial year, Van Tonder said economic pressures are likely to continue to dampen consumer demand in the restaurant sector in the short to medium term.

“We are confident of continuing to deliver on our growth strategy by targeting organic growth within existing brands and markets, and pursuing opportunities to expand vertical integration in relation to our core products,” he said.

The group plans to open eight restaurants internationally in the 2015 financial year, including additional franchised outlets in Namibia, Tanzania, Nigeria, Zambia and Australia. Expansion plans in South Africa include the opening of ten Spur, ten Panarottis, seven John Dory’s, eight Captain DoRegos and six outlets for The Hussar Grill.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact

Pierre van Tonder, Spur Corporation 021 555 5100
Graeme Lillie, Tier 1 Investor Relations 021 702 3102 / 082 468 1507

 

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