Spur Corporation, which employs more than 31 500 people in its restaurant franchise network, said yesterday that while there would likely be increased consumer confidence and spending this year, longer term economic growth is only possible through increased job creation.
Group CEO Val Nichas said at the release of their results for the year to June 30 that the group’s trading outlook was likely to remain subdued in the short term, even though South Africa’s economic growth was forecast to expand.
“The outlook for improved consumer confidence and spending is positive following the national elections in May, and the transition to the new government. The stable electricity supply, lower inflation, the new two-pot retirement system and expected interest rate relief are all likely to support increased consumer spending,” she said.
However, Nichas cautioned that economic growth and prosperity would only be possible through sustained job creation.
“Spur Corporation is committed to supporting the Government of National Unity (GNU) by creating employment opportunities… Our restaurant industry offers access to the workplace for young individuals through entry-level roles, franchisees offer good employment prospects, while the franchise model creates opportunities for aspirant business owners,” she said.
The group’s workforce comprises 77% black staff, with 53% female. Spur management’s optimism was reflected in the planned acceleration of their restaurant expansion programme, with 47 new outlets planned for South Africa, and 13 internationally in the new financial year. The group’s restaurant footprint passed the 700 mark in the year to June 30.
“Our brands have definitely not reached saturation levels in South Africa and the newly acquired Doppio Collection presents attractive expansion opportunities. We will continue to focus our strategic growth on the continent of Africa,” Nichas said.
She said they were well positioned to gain market share across categories, regions and countries, supported by their 10 distinctive restaurant brands.
Spur’s share price traded 0.63% higher at R35.12 yesterday morning on the JSE, after steadily rising through the past year by a healthy 27.7%.
In the year to June, headline earnings were up 10.8% to R236 million, a strong performance given the pressures on consumers’ disposable income.
Franchised restaurant turnover grew 11.5% to R10.6 billion, and by 7.4% excluding the Doppio acquisition. Revenue rose 14.1% to R3.5bn supported by stronger franchised restaurant turnover, increased manufacturing and distribution division sales, and from higher retail company store sales.
Diluted headline earnings a share was up by 9.4% to 284 cents, and the total dividend rose 10.9% to 213 cents per share. Cash on hand came to R366m.
“After strong trading in the first quarter, the second quarter was marked by slower trading until our sales were boosted by robust trading in December. Slower trading volumes continued in the second six months, although we experienced a positive upturn in June, 2024,” said Nichas.
The Spur Steak Ranches brand increased restaurant sales by 7%, accounting for 66% of total SA sales. Panarottis increased restaurant sales 10.8%, and RocoMamas by 7.8%.
International franchised restaurant sales increased 10.5%, comprising 10% of total group restaurant sales.
The group’s acquisition of the 60% interest in the Doppio Collection, from December 1, 2023 contributed restaurant sales of R394m.
The acquisition included 27 franchised and 10 company-owned restaurants across the Doppio Zero, Piza ē Vino and Modern Tailors brands, as well as a bakery and central supply business.
Nichas said Spur Steak Ranches brand transformed through the year, with a new brand icon designed to reflect “the vibrance and diversity” of its customers.
The refreshed brand has so far been incorporated in 19 Spur restaurants, which were all reporting “very pleasing turnover growth”, she said.
The repositioning of Panarottis had been a success and 38% of the local restaurants were trading in the new-look restaurant and brand image.
The five virtual kitchen brands were operating from 322 restaurants, with Pizza Pug and Just Wingz the top-performing brands.
Takeaway sales represented 14% of total local restaurant sales. Collect orders comprised 55% of takeaways, with the balance delivered by Uber Eats and Mr D.
In South Africa, 27 restaurants were opened and nine closed. The international store network increased to 98 across 14 countries following the opening of 12 restaurants in Africa.