Spur predicts big drop in earn

Spur promotion in Knysna. Photo credit: Spur Facebook page

Spur predicts big drop in earnings when full-year results released

Restaurant giant says headline earnings will decline by at least 40% due to the impact of the pandemic on its business operations.

Spur predicts big drop in earn

Spur promotion in Knysna. Photo credit: Spur Facebook page

Restaurant group Spur expects its earnings per share and headline earnings per share to decline by at least 40% relative to the prior year when it releases its results for the year ended 30 June 2020.

The warning was given by the group – which includes Spur Steak Ranches, Panarottis, seafood restaurant John Dory’s, RocoMamas and steak restaurant Hussar Grill in its portfolio – when it announced its latest sales update to the Johannesburg Stock Exchange this week.

The group said it was currently finalising its full financial results and planned to issue a trading statement once it had more certainty on the financial performance for the year.

“COVID-19 has had a significant impact on the group’s revenue and earnings for the year,” it warned.

Trading has proved ‘particularly challenging’, says CE

Chief Executive, Pierre van Tonder, commented: “After the limited relaxation of the trading restrictions following the hard lockdown in April, trading has proved particularly challenging.

“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 noted that customers have become extremely price sensitive and the company was responding by providing them with a “compelling value proposition across all our brands”. Partnerships with third-party delivery services Mr D Food and Uber Eats had been key in driving customer support, he said.

Support is being given to the many struggling franchisees

According to Van Tonder, the primary focus at this time is on supporting struggling franchisees.

“We are discounting franchise and marketing fees and granting extended payment terms for certain debts,” he explained.

“We expect to continue discounting fees until our franchisees experience meaningful increases in restaurant turnovers.”

Total sales declined 21.7% to 30 June 2020

In its sales update, Spur Corporation said its total franchised restaurant sales declined by 21.7% to R6-billion for the year to 30 June 2020, as the pandemic and resultant trading restrictions in all countries of operation hampered trading in the last four months of the financial year.

Sales from franchised restaurants in South Africa decreased by 22.3%, with sales from international restaurants decreasing by 16.7% in rand terms.

As local restaurant sales comprise 88.5% of the group’s total restaurant sales, the trading restrictions in South Africa had the biggest impact on the group’s trading performance.

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