Spur Corporation’s RocoMamas chain, a major growth engine for the restaurant group in recent years, has run out of steam.

Sales from existing RocoMamas outlets fell 6.7% in the six months ended December 2018, versus growth of 22.2% a year before and 45% in the second half of 2016. Including new stores, the chain’s total sales rose 6%.

Spur CEO Pierre van Tonder said the decline in sales from existing RocoMamas restaurants “reflects a period of consolidation following the unprecedented increase in restaurant numbers since acquisition in March 2015”.

Spur said that group-wide franchised restaurant sales rose 6.5% to R3.9bn in the interim period. In SA, sales were up 5.7%, while sales from international restaurants increased 12.7% in rand terms.

The core Spur Steak Ranches chain grew existing restaurant sales 5.1% and total restaurant sales, including store additions, 6.1%.

“The fact that RocoMamas stalled is a little concerning not just for Spur but for the wider fast food segment and for the economy,” said independent analyst Anthony Clark.

“It shows that the middle market is being desperately squeezed, and as such, the growth engines inside Spur, which are basically RocoMamas and a potential recovery in the core Spur business, might mean that the stock will have a very pedestrian six to 12 months,” Clark said.

However, Spur was trading at a far more attractive valuation compared with Famous Brands, he said.

Spur’s shares have fallen from above R40 in May 2015 to R22.99 at Wednesday’s close.

Clark said the overall numbers from Spur were “commendable given the extreme challenges in the consumer environment”.

But he said that if Spur was struggling, floundering competitor Taste Holdings was likely doing far worse.

Van Tonder said Spur’s local franchised restaurant sales growth slowed in the three months to December, to just 1.2%.

“While the second quarter performance was disappointing, it is generally consistent with sales trends in the local retail sector,” van Tonder said.

“The South African consumer is taking significant strain due to the sombre state of the economy, although the performance of The Hussar Grill indicates that higher-income consumers continue to be more resilient to the weakening economy,” he said.

Spur said it opened 25 outlets and closed six in the six-month period, while 14 restaurants were opened internationally.

The group also acquired the Nikos Coalgrill Greek chain during the period, which now comprises eight outlets.

At the end of December, Spur had 616 outlets, from 575 six months before. Of those, 76 were outside SA.

“While restaurant trading conditions have deteriorated in Australia and New Zealand, Africa and Mauritius traded well,” van Tonder said.

“In particular, seven new Panarottis restaurants were opened in Zambia, increasing the number of restaurants in that country to 12. The first Hussar Grill was opened in Saudi Arabia during the period, while the group’s first restaurant, a RocoMamas, was opened in India.”

In December, Spur shareholders shot down the group’s pay policy for the second year in a row. 

Three-quarters of votes cast went against the remuneration policy at the company’s annual general meeting.