Spur Corporation, which owns the RocoMamas, Doppio Zero and Panarottis brands, believes the expected reduction in interest rates and the implementation of the two-pot retirement system next month will boost consumer spending.
The group said that while SA’s economic growth is projected to accelerate in the year ahead, that’s unlikely to translate into improved trading conditions in the short term.
“However, the outlook for improved consumer confidence and spending is positive following the national elections in May and the transition to the country’s first coalition government in the democratic era,” the group said in its results for the year ended June 30, released on Wednesday.
The consistent electricity supply in the country over the past five months, along with moderating inflation, the rollout of the two-pot retirement system, and the anticipated reduction in interest rates later in 2024, are all expected to alleviate consumers’ debt burdens and boost consumer spending, it added.
The group, with has 701 outlets in S A and 14 other African countries, reported a 14% increase in revenue to R3.5bn, while diluted headline earnings per share rose 9.4% to 284c. Return on equity was 29.6%, and the company held unrestricted cash of R366m.
Group CEO Val Nichas said volatile trading patterns were a feature of the past year.
“After strong trading in the first quarter, the second quarter was marked by slower trading until our restaurant sales were boosted by robust trading in December 2023. Slower trading volumes continued in the second six months, though we experienced a positive upturn in June 2024 during the midyear school holidays,” she said.
“Cash-strapped customers responded well to the value-added campaigns. In a year when the Springboks again won the Rugby World Cup, the Spur’s Springbok rugby sponsorship ensured very high levels of brand awareness. Panarottis increased restaurant sales by 10.8% and RocoMamas by 7.8%. Panarottis has been a star performer with strong leadership, excellent franchisee relationships and a value proposition that is appealing and sustainable.”
Both brands showed robust growth in the latter half of the year, with RocoMamas achieving like-for-like growth of 8.2%. On the other hand, sales at John Dory’s were down 1%, and the advantages of securing strategic locations and opening six new restaurants early in the financial year have yet to be fully realised, the group said.
In 2023, the group’s acquisition of a 60% stake in the Doppio Collection led to restaurant sales of R394m. The deal covers 27 franchises and 10 company-owned restaurants from the Doppio Zero, Piza e Vino, and Modern Tailors brands, along with a bakery and a central supply business.
On the legal front, two companies in the group were served with summonses from GPS Food Group for RSA (Pty) Ltd, with claims ranging from R95.8m to R167m. The dispute was referred to arbitration, which started on October 23, 2023.
The quantum claim is scheduled for a hearing on August 27, with closing arguments to follow in September 2024. No liability has been acknowledged yet in relation to the matter. The group plans to open 47 new restaurants in S A and 13 internationally in the 2025 financial year.
“Our brands have definitely not reached saturation levels in S A and the newly acquired Doppio Collection presents attractive expansion opportunities,” Nichas said.
“We will continue to focus our growth on the continent of Africa. We are well positioned to gain market share across categories, regions and countries, supported by our portfolio of 10 diverse and distinctive restaurant brands.”
The group is benefiting from consumer demand for convenience, with local takeaway sales now accounting for 14% of total restaurant sales. Of these, 55% are collected orders (via phone, online, or in-person), while the remainder are delivered by Mr D Food and Uber Eats, with Uber Eats experiencing higher growth compared to its main competitor.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.