Spur profit up 21% as restaurant turnover passes R3 billion
September 16, 2010
Cape Town – Spur Corporation continued to show its resilience in overcoming
challenging trading conditions as restaurant turnover exceeded R3 billion for the
first time and headline earnings increased by 14.2% to R85.1 million (2009:
R74.5 million) in the year to 30 June 2010.
Diluted headline earnings per share rose 13.8% to 94.6 cents (2009: 83.1 cents)
and a total dividend of 60.0 cents per share was declared for the year, an
increase of 9.1%.
Restaurant turnover increased by 9.1% to R3.2 billion, driven by the performance
of Spur Steak Ranch outlets in South Africa which lifted restaurant turnover by
9.5%. Panarottis Pizza Pasta grew restaurant turnover by 7.8% and John Dory’s
Fish & Grill delivered strong growth of 23.4%.
The group also received a welcome boost from South Africa’s hosting of the FIFA
2010 World Cup, with revenue for the four-week period increasing by 24.8% over
the corresponding period in 2009.
Group managing director, Pierre van Tonder, said the past year was marked by
continued suppressed trading conditions in the local restaurant environment and
in the international markets in which the group operates.
“In this environment we have launched innovative marketing campaigns to
capitalise on the strength of our brands and our high levels of customer loyalty to
increase foot traffic into restaurants,” he said.
While food prices remained relatively constant during the period, despite
concerns that the World Cup would prove to be an inflationary force, Van Tonder
said increases in electricity tariffs, rentals and rates had placed cost pressures on
Group revenue grew by 6.5% to R348.0 million. Franchise income in Spur grew
by 9.9% to R124.4 million, Panarottis by 6.1% to R10.8 million and John Dory’s
by 30.3% to R8.8 million. International revenue, which includes franchise fee
income and turnover from the group-owned restaurants, was impacted by tough
international trading conditions and the strengthening of the Rand against foreign
currencies and declined by 4.4%.
Operating profit before finance income for the period increased by 21.4% to
The continuing recessionary trading environment in the United Kingdom resulted
in an impairment charge of R8 million against the Spur outlet in Derby in the East
Midlands, a region that was particularly hard hit. Excluding one-off or abnormal
items such as foreign exchange fluctuations, foreign restaurant impairments and
the share-based payment expense in the current and prior years, comparable
operating profit before finance income grew by 15.5%.
Continued expansion locally and internationally saw the group’s restaurant base
grow to 359 at year end. This included the opening of nine Spur, three Panarottis
and five John Dory’s restaurants in South Africa.
Van Tonder said one of the highlights of the year had been the launch of a
smaller-format Spur restaurant model which will enable the brand to increase its
penetration into rural areas.
“This model makes it feasible to operate in smaller towns which have growth
potential and where we have not traded until now. The start-up costs are
substantially lower than the standard format Spur outlet owing to the smaller
trading area and simplified menu offering. Two such outlets were opened in
Nylstroom and Groblersdal and have delivered rewarding returns,” he said.
The international restaurant base increased to 38 following the opening of Spur
restaurants in Aberdeen (Scotland), Mandurah (Western Australia), Dubai
(United Arab Emirates), Maseru (Lesotho) and the first Spur Express outlet in
Gaborone (Botswana). Subsequent to year-end, a Spur restaurant was opened
in Gateshead (United Kingdom).
Discussing the outlook for 2011, Van Tonder said while the economy should
continue its slow recovery, consumer spending is expected to remain muted in
the year ahead.
“In this environment we need to ensure our brands continue to offer an attractive
and affordable proposition, that franchisee profitability is well managed and that
we remain competitive by tailoring our menus to meet customer demand.”
The group plans to open 21 restaurants across the three brands in South Africa
in the new financial year, with the small format Spur model forming a key part of
the expansion programme. In Africa, Spur restaurants are scheduled to open in
Lusaka (Zambia) and Lilongwe (Malawi) while further opportunities are being
evaluated on the continent.
Issued by Tier 1 Investor Relations on behalf of Spur Corporation
For further information contact
Pierre van Tonder
Tel (021) 555 5100
Tier 1 Investor Relations
Tel (021) 702 3102 / 082 468 1507