Spur, whose brands include Panarottis and HussarGrill, released a bumper set of results in the year to end-June and will continue to expand its brands in SA and abroad. Business Day sat down with CEO Val Nichas to discuss the group’s improvement since the tough days of Covid-19.
The economy is weak, yet the Spur brand increased sales by 25%. How did you grow turnover when cash-strapped consumers are cutting back on spending?
I think it’s a combination of things. The number one reason is the strength of the Spur brand in SA. It’s in many towns, people know it, and it’s reliable. If you’re going to spend your money, you know you’re going to get a return because your kids can play safely and you receive generous portions. I also think our marketing team has done an amazing job this year.
Pizza and pasta chain Panarottis appears to be doing much better after a few sluggish years and a redesign. You are opening 15 new stores in the next year. Why are you optimistic about this brand?
I think it’s a wonderful category that appeals to the mainstream consumer because pizza is a shareable item and it’s affordable. The brand isn’t intimidating. It resonates with consumers and offers a fresh new shopping experience [because of the redesign]. The menu is very focused and is of high quality. We have invested in a new marketing strategy to attract people to the brand.
Many SA businesses have struggled in Africa. Spur, Panarottis and RocoMamas appear to be doing well in Mauritius, Tanzania, Zambia, the Democratic Republic of Congo, Zimbabwe and Botswana. You will be opening 12 new restaurants in the Middle East and Africa in the next year. Is this the new frontier for Spur?
International restaurants make up only 10% of our business. We do not have a massive growth plan. But I think there is still an appeal and need for our brands in Africa. So in markets where we’ve got good, secure and credible franchise partners, we will continue to offer an opportunity for them to expand. But I think it will always remain a smaller portion of our business.
You have R375m cash on hand before spending R70m for a 60% stake in Doppio Zero. With the balance, would you consider share buybacks to lift the share price further?
We want to just get through the next few months and then we will be looking at proper cash allocation again and will be exploring various options.
What have been the challenges at John Dory’s fish grill and seafood restaurant? It appears to underperform compared with your other brands.
We have had difficulties finding strategic sites to open new stores. A lot of people still think about the old John Dory [with the tagline] “Everybody loves John Dory”. It had an old and corny sort of position. We’ve tried to reposition it as a quality seafood restaurant where the family can have a sit-down meal.
Even though sales growth wasn’t where we wanted it to be, we are still optimistic. We have reduced the expenses and improved the operational structure of the business and it has delivered improved profit.
Can you grow it?
South Africans love seafood. Fish is difficult for us to cook at home. It has a shorter shelf life. Everyone smells it. Yet consumers still want to eat seafood. John Dory’s sells a beautiful product. It’s good quality. The sushi is one of the best on the market among mainstream restaurants. So I think we have an opportunity there. We need to try to get a few more strategic sites.
What was the effect of the taxi strike on your Cape Town stores?
We experienced delays in the supply chain and distribution, and production at the group sauce manufacturing plant was halted for four days. Ninety-seven of the 117 franchise restaurants in the Western Cape were affected with a loss of turnover of approximately R4.5m. Many employees were unable to work. Restaurants either had too few staff or were forced to close. Many franchises tried to accommodate staff close to the restaurants to ensure their safety. I acknowledge our franchisees and management for the commitment to keeping our customers and staff safe.
Having said the “reinvention is imminent”, you are looking at updating the Spur look slightly. Tell us more.
We need to evolve with a look that remains fresh and relevant for a future market. We will continue to get consumer feedback on what they love about the brand. We are piloting a new-generation Spur restaurant concept in the Vaal. It will open towards the end of August. This event will mark a key milestone for the 55-year-old brand. A clear strategy has been formulated to ensure that we retain the key attributes that consumers love about Spur while setting the scene for the future generation.
The foundation of the brand is simply to elevate joy.
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