Sales update for the year ended 30 June 2018
Spur Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE 000022653
(“Spur Corporation” or “the group”)
SALES UPDATE FOR THE YEAR ENDED 30 JUNE 2018
Spur Corporation increased total franchised restaurant sales by 1.3% to R7.1
billion in the year to 30 June 2018.
Franchised restaurant sales in South Africa grew by 1.5%, with sales from
international restaurants declining by 0.7% in Rand terms. International
restaurant sales increased by 2.7% on a constant exchange rate basis.
These results exclude the Captain DoRegos chain which was sold with effect
from 1 March 2018. At the date of disposal, the brand comprised 43 South
African restaurants (June 2017: 41) and 3 international restaurants (June 2017:
3). Turnover from local franchised restaurants for the eight month period to the
date of disposal amounted to R71.8 million (year to June 2017: R114.0 million),
and R4.5 million (year to June 2017: R10.9 million) for international restaurants.
Franchised restaurant sales for the year ended 30 June 2018
Total restaurant Existing
sales restaurant sales
(% change) (% change)
Spur Steak Ranches (2.8) (4.9)
Pizza and Pasta (Panarottis & Casa 4.2 (0.6)
John Dory’s Fish Grill Sushi 0.6 (7.3)
The Hussar Grill 24.4 6.6
RocoMamas 31.5 14.5
Total South African operations* 1.5 (2.8)
Total international operations* (0.7) (6.3)
Total group* 1.3 (3.2)
*excluding Captain DoRegos
In South Africa, 44 new restaurants were opened and 18 closed during the year,
while 11 restaurants were opened and 9 closed internationally. At 30 June 2018,
the group’s restaurant base comprised 575 (June 2017: 547) outlets, including 62
(June 2017: 60) operating outside of South Africa.
Group chief executive, Pierre van Tonder, said the Spur brand, which accounts
for approximately two thirds of group restaurant sales in South Africa, has
continued its recovery in the second half of the financial year.
“Following a decline of 6.0% and 0.1% in local restaurant sales across the group
in the first and second quarters of the financial year (relative to the prior year), we
reported growth of 1.4% for the third quarter and 12.2% for the fourth quarter.
We previously advised shareholders of our strategic shift in promotional strategy
for the Spur brand to reduce reliance on discounting in the second half of the
2017 financial year. Subsequently, a combination of judicious promotion coupled
with product improvement has improved franchisee margins and ensured that our
franchise financial model remains sustainable. As a result of the demonstrable
benefits to our Spur franchisees, we have implemented a similar strategy in
Panarottis during the second half of the 2018 financial year. This has (as was
the case for the Spur brand) had the predicted impact of tempering restaurant
turnover growth in the short term.
The Hussar Grill and RocoMamas brands continued to perform well, benefitting
from new outlets and growth in existing businesses. Panarottis has been
impacted by fierce competition in the pizza market and a shift in promotional
strategy, while John Dory’s has been negatively impacted by the temporary
closure of certain key sites due to revamps.
The positive consumer sentiment following the inauguration of President
Ramaphosa in February 2018 has been tempered by the realisation that there is
no short-term solution to the challenges facing South Africa. The local trading
environment is likely to remain subdued until the economy is able to grow
sustainably. Increasing healthcare, education, transport, utility, property rates
and food costs, in addition to the increase in the VAT rate and the absence of
inflation-linked tax relief for taxpayers, continue to place financial pressure on our
middle income customer base. In this environment, we will reinforce our focus on
product quality, value, customer experience and innovation, in order to retain and
grow our customer base.”
The financial information in this sales update has not been reviewed or reported
on by the group’s independent auditor. Spur Corporation’s annual results for the
year ended 30 June 2018 will be released on SENS on 6 September 2018.
30 July 2018
A division of Sasfin Bank Limited
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