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Spur has a strong stomach for turbulent times

Restaurant franchisor Spur Corporation, one the Cape Town’s greatest business success stories, is hastily trying to get things back on the boil after a damaging impasse during the prolonged Covid-19 lockdown.

Even with restaurants open for business under the current lockdown level, the banning of the sale of alcohol as well as capacity constraints – due to social distancing requirements – will continue to play havoc with the business model for the ensuing months.

Aside from its eponymous steak house brand, Spur also owns Panarotti’s pizza and pasta, seafood business John Dory’s, the Hussar Grill and gourmet burger business RocoMamas.

Spur – unlike its rivals like Famous Brands (Steers and Debonairs) as well as Burger King, KFC and McDonalds -is more of a sit down eatery concept than a business that caters for takeaways and convenience meals.

To top at all, Pierre van Tonder, Spur’s long serving CEO, has opted to take retirement after 24 years as the boss and a nearly 40 year career at the group.

CBN suspects the retirement of Van Tonder (in his early sixties) – despite his enduring tenure – caught Spur’s board by surprise. No successor was named for Van Tonder, and Spur has indicated it is looking for suitable candidates for CEO internally and externally.

There is some reassurance, however, that Van Tonder will remain on-board until the end of December.

Spur Corporation chairman Mike Bosman said the business has shown strong growth under Pierre’s leadership over the past 24 years, with the group now a market leading, multi-brand franchisor with over 640 restaurants in South Africa and a global presence in 20 countries.

“Pierre has overseen the expansion of the brand portfolio through the in-house development of brands including Panarottis and the acquisition of smaller brands like RocoMamas, The Hussar Grill and John Dory’s which are today among South Africa’s most recognised restaurant brands.”

Spur, which was in the fortunate position of still holding a heap of cash at the start of lockdown at the end of March, expects that the number of local restaurants trading will have increased to 495 by the end of July. Most will be operating a full sit-down service.

But Spur’s sales update for the year to end June 2020 was dismal. The group reported total franchised restaurant sales declined by 22% to R6 billion as the Covid-19 global pandemic and resultant trading restrictions in all countries of operation hampered trading in the last four months of the financial year.

All local restaurants ceased trading on March 27 when lockdown officially took effect. But Spur reported that there were also significant declines in turnover in the weeks leading up to the lockdown. Restaurants could commence trading on a delivery-only basis from the start of May with a customer collection service permitted from June. Full sit-down service was only resumed on June 29.

A dig down into Spur’s latest trading statement showed Spur Steak ranches sales down 22.5% for the 12 month trading period to end June. But sales were down 91% in May and 87% in June.

Equally hard hit were John Dory’s (down 95.7% in May and 89% in June, the Hussar Grill (99.8% and 97.5%) and the pizza/pasta category (88.9% and 82.8%)

Interestingly RocoMamas fared best with May sales only down 52.9% and 53% in June.

In total, Spur’s local operations saw sales decline 87% in May and 84% in May.

Van Tonder explained that the restrictions on the sale of alcohol and the curfew – together with customer anxiety about contracting the virus and growing personal financial stress – had a detrimental impact on business.

Van Tonder said Spur’s ongoing partnerships with third-party delivery services Mr D Food and Uber Eats had also been key in driving customer support.

“Our primary focus at this time is on supporting our franchisees. We are discounting franchise and marketing fees and granting extended payment terms for certain debts.’

But overall, it’s going to be leans days ahead. Van Tonder noted grimly: “The re-introduction of a total ban on alcohol sales in July together with the curfew will negatively impact trading. The grim economic outlook for the country is also likely to result in a protracted period of recovery for the restaurant industry.”

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