Food franchise group Spur Corporation’s (SUR) results for the year to June suggest the pressures facing consumers are being felt most acutely in the lower end of the market.
The upmarket Hussar Grill was the standout performer‚ with sales up 51.5% after four new stores were opened‚ while Captain DoRegos sales fell 3.3% and 13 outlets were closed‚ which Spur said reflected “tough trading conditions in the lower-income market”. The group booked a R19m impairment on Captain DoRegos.
Pizza chain Panarotti’s grew sales by 18% in the face of competition from the entry of international brands such as Pizza Hut and Domino’s into the local market.
Sales at the group’s namesake brand rose only 6.2%‚ and group sales were up 12%.
Headline earnings per share from continuing operations rose 3.5%‚ and a full-year dividend of 140c per share was declared‚ up 6.1% from a year ago.
Headline earnings were up 15.9% to R164.0m.
Spur completed its exit of the UK market during the review period‚ and opened eight new restaurants in Africa and Mauritius (excluding SA)‚ and two in Australia‚ in keeping with its strategy to focus international activities in those two regions.
Nine new franchised outlets are planned for the international operation in the current year‚ including additional restaurants in Nigeria and Zimbabwe; the first Spur outlets in New Zealand and Ethiopia; and RocoMamas outlets in Saudi Arabia‚ Oman‚ Kenya and Mauritius.
In SA‚ 74 new restaurants were opened‚ and at least another 28 are planned for the current year.
“Management has focused on sustaining franchisee profitability in the face of margin pressure from high food inflation‚ mainly driven by the widespread drought and the deterioration of the rand against major currencies‚ and aggressive discounting by restaurants and quick service dining chains to attract cash-strapped consumers‚” Spur said in Thursday’s results statement.