The Spur Corporation Limited has published a sales update for the six months ending on 31 December 2017.
Franchised restaurant sales for the group declined by 2.6% to R3.7 billion in the six months to December 2017, as economic conditions deteriorated in most of the markets in which Spur trades.
In South Africa, franchised restaurant sales declined by 3.0%, while sales from international restaurants increased by 1.3% in rand terms and by 3.2% on a constant exchange rate basis.
“The first half was a tale of two distinct quarters: while local franchised restaurant sales declined by 6.2% in the three- months to September 2017, the second three months of the financial year to December 2017 showed a marked improvement with sales declining by only 0.2%,” said chief executive, Pierre van Tonder.
He attributes the group’s performance for the period to the residual effects of what he described as the “perfect storm” of March 2017: the political uncertainty caused by the cabinet reshuffle, the impact of the social media fallout following a customer incident in a Spur outlet in Johannesburg, and a struggling economy.
He added that, as previously communicated to shareholders, the group also implemented a strategic decision to move its promotional strategies away from discounting in the second half of the previous financial year, to protect franchisee margins.
This has had the expected negative impact on turnovers in the short term, but is critical to the sustainability of the franchise model, particularly in the case of Spur Steak Ranches, and has been successful in restoring acceptable profitability for franchisees.
“The performance of The Hussar Grill and RocoMamas has been particularly pleasing,” said van Tonder.
“We believe we are on the right track to restoring Spur Steak Ranches to the growth trajectory it was on prior to March 2017. Economic growth is critical to local business and the resolution of the political turmoil in the country will no doubt have a profound impact on our future.
“While we cannot predict the impact of the water crisis in the Western Cape, we are implementing remedial strategies to limit the damage, should ‘day zero’ become reality,” he said.