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Family restaurant franchise Spur Group would seek to source a higher proportion of stock internationally in a move to counter higher local food prices, it said yesterday.

September 7, 2007

By Tom Robbins

Cape Town – Family restaurant franchise Spur Group would seek to source a higher proportion of stock internationally in a move to counter higher local food prices, it said yesterday.

Spur is the second food company to announce the move.

Last week Shoprite chief executive Whitey Basson said the supermarket group had already increased imports from countries such as Turkey and Uruguay in a bid to keep local food suppliers on their toes.

Spur Group managing director Pierre van Tonder said that in the year to June it had been able to prevent higher food input prices being passed on to customers at its Spur Steak Ranch and Panarottis Pizza Pasta brands.

“Despite high food price inflation, prudent menu engineering and aggressive promotions ensured that the price impact on customers was minimal,” Spur Group said in a statement.

Van Tonder said that with higher interest rates, consumers simply did not have the cash in their wallets to absorb significantly higher meal selling prices.

He attributed the slow pace of full-year operating profit growth, compared with sales growth, to a number of once-off expenses, rather than a margin squeeze.

These expenses included store opening costs of R2.6 million in the UK, which limited operating profit.

Before the introduction of the international financial reporting standards, this expense would not have had to be accounted for in a single year on the income statement.

Operating profit for the year to June was up 15.7 percent to R90 million, while revenue climbed 17.9 percent to R215 million.

Net profit grew by as much as 41.1 percent to R82 million, boosted by the recognition of a R17 million tax credit, following previous tax losses at restaurants located outside South Africa.

After June the restaurant group bucked a trend and opened a franchised store in Zimbabwe. Although it said the franchises were great businesses, the South African-based company was receiving no income from Zimbabwe.

Even before the Zimbabwean government set limits on retail selling prices, retailers had been battling to repatriate profits from investments there.

Spur Group shares gained 1 percent yesterday to close at R10.10.

The leisure and hotel sector advanced by 0.04 percent.