Spur to push for growth through new fast-food chain

Group aims to further expand chain into SA and rest of Africa

SPUR Corporation’s recipe, for so long dominated by its eponymous restaurant brand, could get a fresh growth infusion as the company looks to aggressively expand its recently acquired Captain Doregos fast-food chain. In the year to end-June Captain Doregos generated restaurant sales of R191m and franchise fees of R9m. This compares favourably with Spur’s secondary brands such as Pannaroti’s and John Dory’s.

MARC HASENFUSS CAPE TOWN — Spur Corporation’s recipe, for so long dominated by its eponymous restaurant brand, could get a fresh growth infusion as the company looks to aggressively expand its recently acquired Captain DoRegos fast-food chain.

In May last year Spur paid R30m for Captain DoRegos, which specialises in “value orientated” takeaway fare such as chicken, seafood and burgers.

Spur CEO Pierre van Tonder said yesterday plans were under way to markedly broaden Captain DoRegos’ presence to the rest of SA from the Free State, Gauteng and the Eastern Cape.

“We think we can increase the chain from the current base of 75 stores to between 120 and 130 by expanding into the Western Cape, KwaZulu-Natal and Mpumalanga markets in the next five years.”

Mr van Tonder said Captain DoRegos had also made its first forays into the rest of Africa with store openings in Namibia and Mauritius. “We are also looking at Maputo, Gaborone and other African opportunities.”

In the year to end-June, Captain DoRegos generated restaurant sales of R191m and franchise fees of R9m. This compares favourably with secondary brands such as Pannarotti’s and John Dory’s, which racked up franchise fees of R17m and R12m respectively. Spur restaurants continue to dominate the franchise line, earning almost R180m.

While Captain DoRegos looks set to add a dash of diversity to Spur’s franchise flows, its growth is key to the company’s all-important distribution centre sales.

Captain DoRegos’s influence is already tangible in the year to endJune with Spur’s manufacturing and distribution revenue increasing nearly 50% to R214m.

Mr van Tonder said the Captain DoRegos distribution centre chipped in R73m to Spur’s manufacturing and distribution income. This contribution should grow in the year ahead with 11 new Captain DoRegos outlets opened during the financial year and another seven scheduled for opening in the first half of the new financial year.

Overall, Spur will remain on the expansion track. Mr van Tonder indicated the 26 new restaurants would be opened across the company’s four brands in the 2014 financial year. He said global expansion would include a focus on increasing Spur’s African footprint with restaurant openings set for Swaziland, Nigeria, Tanzania, Namibia and the Seychelles.

Faced with the question of whether the family sit-down restaurant segment was at risk of becoming overtraded in SA, Mr van Tonder said there was still a healthy fight between major quick service restaurants and fast-food providers for a “share of the stomach”. “The quick service restaurants and fast-food industry is still a growing segment. As long as our franchisees are profitable we will keep growing,” he said.

He said the flagship Spur restaurant brand — which now has 1.4-million loyalty card members — managed to push up sales 15.2% in SA despite management containing the menu price increase to just 3.6%.

Mr van Tonder warned that sustained pressure on disposable income in Spur’s target markets was likely to remain for the foreseeable future.