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JSE-listed franchise restaurant chain Spur Corporation plans to open 17 restaurants in the second half of its 2023 financial year, adding to its existing base of 642 restaurants across 14 countries, as it continues its post-pandemic recovery.
The return to pre-pandemic dining activity seems to have led the group on an aggressive growth path – in the last six months Spur opened 18 new locations in South Africa alone, bringing the group’s restaurant footprint in the county to 556 outlets.
Strong revenue growth – up 35% to R1.5 billion – is supporting its growth ambitions. For the six months ended December 2022, Spur posted a 31.5% increase in franchised restaurant sales to R4.9 billion.
The Spur brand led sales growth in South Africa, reporting a 33.6% increase in restaurant sales this period, followed by Panarottis, which saw an increase of 28.6%.
Group CEO Val Nichas believes the return to tourism behaviour has had a lot to do with the group’s performance this period.
“Increased tourism in the Western Cape contributed to our sales growing by 31% in the province,” she says.
“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. Several restaurants in casinos and resorts also delivered higher than expected results.”
Read: Rising cost pressures mute AVI’s profit expectations
Dividend growth
The group declared an interim dividend of 82 cents per share, 67% higher than that declared in the previous period.
Diluted headline earnings per share (Heps) grew to 136.65 cents, up from 45.77 cents in the previous period.
Spur ended the reporting period in “an ungeared” cash position, with unrestricted cash on hand of R294 million.
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Load shedding
Spur says it is assisting its franchisees to deal with the scourge of load shedding by directing them to viable alternative power-generation solutions to keep operations going.
It is also exploring the possibility of establishing a group-negotiated rate for the supply of diesel for its franchisees.
“Currently 95% of our restaurants have generators or are linked to shopping mall central generators. This ensures that the majority of our restaurants continue to trade during load shedding and provide customers with a consistent dining experience,” says Nichas.
“The increase in power outages has placed pressure on franchisee operating costs, with higher diesel and generator maintenance costs.”
Listen to host Simon Brown and Chantal Marx of FNB Wealth and Investments unpack the trading update issued by Spur Corporation earlier this month:
You can also listen to this podcast on iono.fm here.
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