The Spur exodus

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Spur

SPUR Corporation – the owner of the iconic and perennially profitable Spur steak ranch franchise – is flipping executives faster than hamburger patties.

At the time of writing Cape Town- headquartered Spur had seen two key and long serving executives unexpectedly stand down – followed by the resignation of two non-executive directors.

The timing is really unfortunate as Spur battles to regain its traditional business levels across its various brands – which also include Rocomamas, Panarotti’s, John Dorys, The Hussar Grill and Casa Bella – after the disruptive and damaging Covid-19 lockdown.

The initial shock came when long serving CEO Pierre Van Tonder opted to retire. While Van Tonder has been instrumental in reinforcing the core Spur brand as well as building out (and acquiring) other eatery formats, the consensus was that Spur had plenty of experienced senior management to step into a leadership role.

But then chief operating officer Mark Farrelly – a logical successor to Van Tonder – also opted to step down – a development which did raise questions about possible vulnerabilities in the leadership structure.

To add further fat to the fire, last month also saw two non-executive directors – Mntungwa Morojele and Dineo Molefe – resigning with immediate effect.

The non-executive resignations might be just an unfortunate coincidence. Spur Corporation chairman Mike Bosman said Molefe’s resignation followed her recent appointment as chief financial officer of MTN South Africa.

Bosman said Morojele resigned due to increased professional responsibilities – which included starting a new business in the field of renewable energy and his appointment as a non-executive director of another listed company.

Sour shareholders – and probably many restaurateurs in Cape Town – will be anxiously awaiting Spur’s financial results for the year to end June.

Spur would normally have already reported these numbers, but Covid-19 complications have meant that the group has delayed publication of the accounts until the end of October.

The payment of the interim dividend of R71 million for the half year to end December 2019 will remain a ‘deferred’ issue until more clarity emerges around Spur’s financial status.

Spur has indicated that it experienced a significant decline in income for the duration of the national lockdown period in South Africa and in most foreign jurisdictions.

Following the total prohibition of restaurant trading in April, the group’s franchised restaurant sales declined by 85.7% for May 2020 and by 79.0% for June 2020 with business restricted to deliveries for May 2020 and to deliveries and takeaways for June 2020. Sit-down dining services only resumed at the end of June.

Spur has reported that trading has steadily improved since the beginning of May 2020 – although levels are still significantly down on pre-lockdown levels.

In terms of the dividend – and one must remember Spur’s illustrious and unbroken dividend record that spans three decades – the group directors believe that if the current Covid-19 restrictions be extended over the long term the projected recovery would be delayed.

Still, the board of directors remained confident that the group’s current cash reserves would be sufficient for the foreseeable future.