Spur Corporation revenue up 18% – strong growth continues
September 6, 2007
Cape Town – Spur Corporation, the listed family sit-down restaurant group, has continued its strong growth trend and increased revenue by 18% to R215 million in the financial year to 30 June 2007.
Headline earnings for the period was boosted by a tax credit of R16.6 million and increased by 39.2% to R80.7 million (2006: R58.0 million). Diluted headline earnings per share rose 35.4% to 88.17 cents (2006: 65.10 cents). The tax credit resulted from the recognition of a deferred tax asset relating to the company’s international operations.
Restaurant turnover for the financial year increased by 19.6%, with turnover of existing restaurants, which excludes new outlets opened during the reporting period, growing by 13.5%.
Franchise fee income in Spur Steak Ranches rose by 17.9% to R101.1 million, Panarottis Pizza Pasta by 19.9% to R11.3 million and John Dory’s Fish and Grill by 32.2% to R4.1 million. The group’s international operations contributed 10.8% of revenue (2006: 3.7%).
The strong growth in restaurant revenue contributed to a 15.7% increase in operating profit to R89.6 million (2006: R77.4 million).
Group managing director, Pierre van Tonder, said the strategic decision taken two years ago to outsource the national distribution of restaurant supplies from the group’s manufacturing facilities has further enhanced franchisee operating standards and improved efficiencies for both franchisee and franchisor.
He said the impact of rising food prices on customers had been minimised during the year through prudent menu engineering, aggressive promotions and an efficient procurement process.
Spur Corporation has increased its restaurant base to 333 locally and internationally following the opening of 30 new outlets during the year. These comprised 22 Spur Steak Ranches, four Panarottis and four John Dory’s outlets.
A further 35 restaurants were upgraded and seven outlets relocated to improved trading areas, which has increased revenue by an average of 10% to 15%.
Spur continues to broaden its restaurant base in the growing South African economy and recently began trading successfully in Jabulani Mall, Soweto, Carlton Centre, Johannesburg, and Trade Route Mall, Lenasia. A Spur will be opened in the Maponya Mall, Soweto, and further potential sites have been identified in Mamelodi, Guguletu and KwaMashu.
Internationally the group has continued its measured expansion in Africa, Australia and the United Kingdom. The African footprint was enhanced with the opening of new Spur restaurants in Gaborone, Windhoek and Swakopmund, and a Panarottis outlet in Harare.
In Australia, Spur opened a restaurant in Erina Fair on the central coast of New South Wales and a Panarottis in Blacktown.
Two company-owned restaurants were opened in London in The O2 Dome, Greenwich, and Lakeside Shopping Centre in West Thurrock in June. After the year end, a new Spur was opened in Newry, Northern Ireland.
Executive chairman Allen Ambor said following the finalisation of the Codes of Good Practice on black economic empowerment earlier this year, “the group commissioned an independent consultant to review our business in relation to the Codes and develop a holistic empowerment strategy.”
“The findings highlighted various areas where we can make progress in a relatively short period. This may not necessarily involve an equity transaction as a first step. The board will now consider the recommendations before refining and implementing the strategy,” he said.
Ambor said a number of new restaurant developments have been earmarked for funding for black franchisees from the R30 million facility secured from the Industrial Development Corporation. These include Spur restaurants in Soweto and Hout Bay and John Dory’s and Panarottis in Parow.
On the outlook for the group, Van Tonder said continued food price inflation will be a challenge in the year ahead.
“Strategies have been developed to enhance customer loyalty, drive foot traffic and increase customer spend, while the group will source value added products locally and internationally in an attempt to limit the impact of food inflation.”
The group plans to open 20 restaurants in South Africa, with a further three in Africa and two to three in Australia. Opportunities are also currently being considered in the Middle East, said Van Tonder.
“Rising interest rates have inevitably resulted in a slowdown in consumer spending and our value-for-money offering is therefore critical to our success. We remain confident that the group will continue to deliver increased revenue and profitability in the year ahead,” added Van Tonder.
Issued on behalf of Spur Corporation by Tier 1 Investor Relations
For further information kindly contact
Pierre van Tonder
Tel (021) 555-5100
Tier 1 Investor Relations
Tel (021) 702-3102 / 082 468 1507