Spur’s shares surge after strong earnings growth on the back of customer loyalty

A Spur restaurant. Franchised restaurant turnover grew 10.4% to R5.4 billion. Photo: Supplied

A Spur restaurant. Franchised restaurant turnover grew 10.4% to R5.4 billion. Photo: Supplied

Published Mar 1, 2024


Spur Corporation benefited from its strong brands and customer loyalty in the low growth environment and headline earnings increased by 15.4% to R130 million in the six months to end-December.

The strong results in a weak economy saw the share price rise 5.76% to R31.39 on the JSE yesterday afternoon, and the price was also well up by 32% on R23.75 it traded at on the same day a year before.

Restaurant turnovers were boosted by buoyant December trading, reflected in 251 of the 305 Spur restaurants in South Africa exceeding their turnover records in December 2023, CEO Val Nichas said yesterday in a statement.

High numbers of tourists in the Western Cape helped enable double-digit growth for the festive season trading period.

The group also performed well in KwaZulu-Natal in December despite the impact of roadworks, heavy rains and beach closures on tourism in the region, she said.

She said, however, that “the high cost of living continues to impact household spending and lower- and middle-income consumers are diverting a greater share of their wallets to fund the increasing cost of food, housing, energy and transport.”

Franchised restaurant turnover grew 10.4% to R5.4 billion and revenue increased 15.2% to R1.8bn. Sales in the group’s retail company stores increased 47.4%, aided by the Doppio Collection acquisition. Sales from the manufacturing and distribution division rose 12.4%.

Diluted headline earnings a share grew by 14.8% to 157 cents and the interim dividend was raised 15.9% to 95c. The balance sheet remained ungeared, with cash on hand of R288m.

Nichas said after a strong performance in the first quarter, trading slowed in the second quarter.

Spur’s acquisition of a 60% interest in the Doppio Collection, comprising the Doppio Zero, Piza e Vino and Modern Tailors brands, became effective from December 1.

The Doppio Collection includes 27 franchised and 10 company-owned restaurants, as well as a bakery and central supply business. Restaurant sales for December totalled R66.7m.

Nichas said the acquisition would strengthen their position in the daytime speciality dining segment and accelerate entry into the speciality coffee market.

“We have received considerable interest across our franchise network on the Doppio Collection portfolio of speciality brands and this will key to expanding the brands nationally,” she said.

Nichas said the 57-year-old Spur brand had undergone a creative identity transformation.

“The bold new look is part of the refresh of the brand and the dining experience, and has been incorporated in four Spur restaurants to date, which are all reporting double-digit turnover growth,” she said.

Spur accounted for 69% of the group’s South African sales, followed by RocoMamas and Panarottis, which each represented 10%. The international restaurants accounted for 10% of group sales.

Volume growth in South Africa was mainly driven by the iconic Spur brand, which increased restaurant sales by 10%. Panarottis grew sales by 10.1%, RocoMamas by 6% while John Dory’s sales were 0.8% lower.

The speciality brands increased sales 38.7%, and by 12.1% excluding the three Doppio Collection brands, which was mainly due to The Hussar Grill which benefited from the increase in local and international tourism.

Takeaway sales represented 14% of local restaurant sales. Collect orders comprised 55% of takeaways, with the balance through Mr D and Uber Eats.

Internationally, new restaurants were opened in Zambia and Zimbabwe, while the Doppio acquisition added one Doppio Zero outlet in Botswana.

Nichas said trading conditions would likely remain challenging. However, management’s optimism was reflected in plans to open 41 new restaurants in South Africa and 12 internationally for the financial year.