Tough conditions eat into Spur’s profits
The restaurant franchiser reports higher sales, but lower profits and a smaller dividend, as difficult economic conditions took their toll
Restaurant franchiser Spur reported higher sales for the year to end-June, but lower profits and a smaller dividend, as difficult economic conditions took their toll.
Input costs were higher, due to double-digit food inflation, thanks to a severe drought in SA.
Food inflation has fallen back into single digits in recent months, so some relief can be expected for Spur on that front in the current year.
Restaurant sales from continuing operations were up 4.2% across the group, at R7.2bn.
That figure covers total sales at all franchises, and does not reflect the revenue Spur earned. Revenue growth from continuing operations was 2.4%, to R648m.
Franchise revenue in Spur fell 5.2% but increased in Pizza and Pasta by 9.1%, John Dory’s by 6.3%, The Hussar Grill by 31.2% and RocoMamas by 36.7%. Captain DoRegos revenue declined 38%.
"The social media fallout following a customer incident in a Spur outlet in Johannesburg affected restaurant turnovers in the last quarter of the financial year. However, in the current poor trading environment the extent of the impact cannot be determined," Spur said.
Group comparable profit before tax from continuing operations fell 8.7%
The full-year dividend of 132c per share was down 5.7% from a year ago.
In SA, restaurant sales rose 4.4%. International restaurant sales (excluding the UK and Ireland, where operations were closed in the previous financial year) increased by 2.4% in rand terms and by 6.3% on a constant exchange rate basis.
The company added 11 restaurants in SA, taking its total to 528, and 11 outside SA, taking its international footprint to 63.
Spur said it was committed "to supporting franchisee profitability to ensure the sustainability of the restaurant brands".
By 9.35am, Spur had declined 0.72% to R28.99.