Spur warns of more pain ahead as sales plunge in Covid-19 fallout
Restrictions on the sale of alcohol, the curfew and customer anxiety about contracting Covid-19 have had a bad effect, says CEO Pierre van Tonder
Restaurant group Spur, the owner of RocoMamas, Hussar Grill and John Dory’s, said sales in its year to end-June fell more than a fifth as Covid-19 shuttered restaurants in the final few months of its financial year.
Group sales fell 21.7% to R6bn, with group sales plunging 85.7% year on year in May, and 79% in June.
“After the limited relaxation of the trading restrictions following the hard lockdown in April, trading has proved particularly challenging,” outgoing CEO Pierre van Tonder said.
“The restrictions on the sale of alcohol, and the curfew imposed on all South Africans, together with customer anxiety about contracting the virus and growing personal financial stress, has had a detrimental impact on our business,” Van Tonder said.
The “grim economic outlook” for SA is also likely to result in a protracted period of recovery for the restaurant industry, the group said.
Spur's warned of a 40% decrease in annual headline earnings per share, which came as no surprise to small caps analyst Anthony Clark, who said the April and May Stats SA food and beverage statistics released this week were “pretty horrific”.
The food and beverage statistics revealed a 100% decrease in sales in April compared with 2019 and 98% in May, showing that Spur’s weaker trade was experienced across the restaurant sector.
Headline earnings per share are unlikely to exceed 101c from 173.68c in the previous period.
Clark says the 40% decrease in annual headline earnings per share is likely to be "revised downwards" when full June sales per restaurant are released.
"You can write off much of the year for the fast food sector," he said.
Spur expects that by the end of July 75% or 374 of its local 547 restaurants will open. Franchises have discretion as to whether to open for sit-down trade, delivery or remain closed.
Currently, only 35% or 32 of Panarotti’s pizza and pasta restaurants are open for sit-down customers. None of the 22 Hussar Grills high-end steakhouses opened for sit-down customers, but 78% of RocoMamas are open for sit-down trade.
Spur and rival Famous Brands are listed firms that could potentially raise capital on the JSE but thousands of smaller restaurants without access to capital are not likely to survive weak trade and the alcohol sales ban. The Restaurant Industry Association of SA in a joint letter with the alcohol industry wrote to President Cyril Ramaphosa on Tuesday and warned of a “devastating” loss of income which would result in increased hunger of staff and lower taxes.
At the end of June, the Spur group’s restaurant base comprised 631 outlets, including 84 operating outside SA.
Spur's share price gained 12c to close at R15.
Updated: July 23
This article has been updated with additional information.
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