Spur Corp, the owner of RocoMamas, the Hussar Grill and John Dory’s, said interim profit almost tripled on greater sales, boosted in particular by tourism in the Western Cape.
The food and restaurant group, valued at R2.14bn on the JSE, reported that profit soared 182.9% year on year to R117.1m in the six months to end-December as revenue increased 35% to R1.5bn.
“Increased tourism in the Western Cape contributed to our sales growing by 31% in the province. We also experienced strong growth in restaurants in high-traffic national locations such as OR Tambo International Airport and major shopping malls, including Canal Walk, V&A Waterfront and the Mall of Africa,” said group CEO Val Nichas.
Despite high inflation and interest rate hikes weighing on consumer spending, the popular restaurant group benefited from people wanting to dine out after the Covid-19 pandemic and lockdowns had hampered their quality of life for almost two years.
The customer count, including repeat visitors, increased 21%.
The improved earnings prompted the group to increase its interim dividend by more than two-thirds year on year to 82c, making for a total payout of R74.62m.
Yet Spur remains cautious as record levels of power outages and plant breakdowns at state-owned power utility Eskom continue despite 95% of its restaurants having generators or being linked to the generators of shopping malls.
“This ensures that the majority of our restaurants continue to trade during load-shedding and provide customers with a consistent dining experience,” it said.
Many companies have pointed to the effect of higher costs, including spending on diesel to run generators to keep their doors open and the lights on. For Spur, the effect of power cuts was most acute in its supply chain, including food manufacturing and farming production.
“With advance planning and the support of reliable suppliers and distribution partners, the group traded successfully during the peak holiday season when volumes were at their highest,” Spur said in a statement accompanying the earnings. “In addition, as the brands offer a wider range of protein and other menu choices, the national chicken shortage over the past four months had only a marginal impact on the group.”
Individual franchise owners pay the costs of operating their restaurants, including the cost of diesel and generators, and Spur does not offset any costs related to load-shedding to its franchisees.
“We try to work in a partnership, but all running costs of the restaurant are for the franchisees, so the franchisee pays for power and water ... and for any running costs to operate the restaurant,” Nichas said.
Still, the group tries to ensure menus are correctly priced to take into account food inflation and customer budgets.
“We try to consider what’s happening to the business model and look at things like menu engineering,” Nichas said. Spur will also look at food inflation to ensure the menu pricing is correct.
“Remember, even though the franchisee has incurred operating costs on diesel, the turnover has gone up substantially. Turnover is particularly high.”
In other financials, net cash flow from operating activities jumped 79.6% to R40.67m. The group also repurchased 1.5-million shares at an average of R21.33 apiece, at a total cost of R32m, during the reporting period, in addition to the 1.48-million bought in the 2022 financial year.
Nine restaurants were closed in the period while 18 were opened in SA and nine abroad, including its first RocoMamas outlet in the Democratic Republic of the Congo (DRC). The group plans to open 17 more restaurants in the second half of the year.
Nichas said Spur is partnering in the DRC with a local fast-food operator. “We do believe this opportunity is a growing market. RocoMamas is very appropriate for that region.”
The group has eight restaurants in Nigeria.
In SA, Spur expects the next half-year to be “fairly challenging as the consumer is under pressure”, Nichas said.
With Katharine Child
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