'Food inflation a challenge'

Commenting in the outlook that accompanied the group's solid results for the year to end-June, group MD Pierre van Tonder said: "Strategies have been developed to enhance customer loyalty, drive foot traffic and increase customer spend, while the group will source value added products locally and internationally in an attempt to limit the impact of food inflation."

Spur (SUR) on Thursday reported a 35.4% increase in diluted headline earnings per share to 88.17 cents for the year 65.1 cents a year ago.

A distribution per share of 29 cents per share was declared in lieu of dividends.

The group increased revenue by 18% to R215m and headline earnings for the period was boosted by a tax credit of R16.6m and increased by 39.2% to R80.7m.

The tax credit resulted from the recognition of a deferred tax asset relating to the company's international operations.

Restaurant turnover for the financial year increased by 19.6%, with turnover of existing restaurants, which excludes new outlets opened during the reporting period, growing by 13.5%.

Franchise fee income in Spur Steak Ranches rose by 17.9% to R101.1m, Panarottis Pizza Pasta by 19.9% to R11.3m and John Dory's Fish and Grill by 32.2% to R4.1m.

Increased restaurant base to 333

The group's international operations contributed 10.8% of revenue - up from 3.7% in 2006. The strong growth in restaurant revenue contributed to a 15.7% increase in operating profit to R89.6m.

Spur has increased its restaurant base to 333 locally and internationally following the opening of 30 new outlets during the year. These comprised 22 Spur Steak Ranches, four Panarottis and 4 John Dory's outlets.

A further 35 restaurants were upgraded and seven outlets relocated to improved trading areas, which has increased revenue by an average of 10% to 15%.

Spur continues to broaden its restaurant base in the growing South African economy and recently began trading successfully in Jabulani Mall, Soweto, Carlton Centre, Johannesburg and Trade Route Mall, Lenasia. A Spur will be opened in the Maponya Mall, Soweto, and further potential sites have been identified in Mamelodi, Gugulethu and KwaMashu.

The group plans to open 20 restaurants in South Africa, with a further three in Africa and two to three in Australia. Opportunities are also currently being considered in the Middle East, said van Tonder.

Executive chairperson Allen Ambor said a number of new restaurant developments have been earmarked for funding for black franchisees from the R30m facility secured from the Industrial Development Corporation. These include Spur restaurants in Soweto and Hout Bay and John Dory's and Panarottis in Parow.

I-Net Bridge