South Africa’s big restaurant franchises take a beating – pin hopes on drive-thrus and ‘virtual kitchens’

Spur Corporation, the owner of family franchise restaurant brands including RocoMamas and Nikos, on Tuesday (2 March) reported a 40.2% slump in revenue for the six months ended December 202, to R314.2 million.

Revenue from the South African operations accounts for 95.3% of total group revenue. International revenue declined by 28.9%, it said.

The global Covid-19 pandemic and the resultant national lockdown and trading restrictions in all countries of operation had a material impact on Spur Corporation’s business operations and financial performance, the group said.

Spur Corporation total franchised restaurant sales across its local and international operations decreased by 29.5% to R2.9 billion, with South African franchised restaurant sales declining by 31.0% for the period.

International franchised restaurant sales, for the same period, decreased by 17.3%, it said.

After the initial hard lockdown last year, restaurants were allowed to resume a full sit-down service from 29 June 2020, subject to strict social distancing protocols,  restrictions on the number of customers and a ban on the sale of alcohol.

The impact of the curfew in South Africa on evening restaurant trading hours is reflected in dinner sales for the group declining by 39%, and by 48% for the restaurant brands of The Hussar Grill, Casa Bella and Nikos in the period.

Group alcohol sales were also 39% lower for the period as a result of the ban on sale of all alcoholic drinks for part of the period.

Improved trading conditions were experienced from September 2020 through to November 2020 as the relaxation of the national curfew extended trading hours and alcohol sales were permitted, Spur said.

Sales for the months of September and November 2020 declined by 26.2% and 21.0% respectively in South Africa relative to the prior year, with October 2020 being a particularly strong trading month in South Africa, trading behind the prior year by only 7.2%.

The second wave of Covid-19 infections in South Africa resulted in government’s reintroduction of a national curfew and restrictions on social activity in December 2020.

The imposition of the adjusted level 3 lockdown regulations in late December impacted restaurant sales, with the national curfew again limiting trading hours.

“Trading showed a marked improvement in February 2021, however, following the partial lifting of restrictions which extended our trading hours to 22h00 and allowed for the sale of alcohol in our restaurants,” Spur said.

Sales for February 2021 were at 82% of the prior year, with Spur and RocoMamas performing best.

In South Africa, 17 restaurants were opened and 18 closed, while seven restaurants were opened and four closed internationally during the period.

Looking ahead, Spur said that president Ramaphosa’s announcement on Sunday, 28 February, of the relaxation of lockdown restrictions in South Africa to alert level 1 with effect from 1 March 2021, is a welcome development for the group, its franchisees and customers.

The resumption of normal trading hours, without being limited by a curfew, and the increase in permitted restaurant seating capacity are expected to have a positive impact on trading in South Africa for all brands.

The group’s management aims to adopt a strategic direction which will steer the business towards a common purpose. The main drivers to expand the current brand experiences are transformation and innovation.

Evidence of this innovation is the planned extensions to trading formats, with the introduction of a RocoMamas drive-thru, Spur drive-thru-clip-on, a Bento’s drive-thru click & collect and a specialty restaurant extension.

Seven of the virtual kitchen (VK) brands, launched during lockdown and which have been trialled since May 2020, will move into the next phase of testing.

In addition to revamps and renovations planned for the 2021 calendar year, new restaurant development will include an estimated eight to 10 outlets locally, it said.


Read: Here’s how Spur, RocoMamas and other restaurants have fared at various stages of lockdown

 

 

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South Africa’s big restaurant franchises take a beating – pin hopes on drive-thrus and ‘virtual kitchens’