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Spur Corporation has released a commercial update detailing how the coronavirus blockade is affecting its business operations.
The group said that restaurant sales decreased dramatically in March 2020 and decreased by 46.7% during the corresponding period in 2019.
Sales for the period from March 16 to 31, 2020, after the declaration of the state of disaster in the country, were 75.7% lower than in the previous period, and trade ceased on March 26, 2020 .
He added that he had no material income between March 27 and May 1, as all restaurants in South Africa were closed since the start of the national closure.
The group said protocols required by the Department of Health and the National Institute of Communicable Diseases are being implemented across the group, with deep cleaning of all restaurants before the exchange begins and that staff receive protective gear. staff needed.
“Restaurants are also being reconfigured to allow access for third-party delivery drivers and meet social distancing requirements,” he said.
“The number of restaurant staff has also been limited.”
Deliveries
The country’s transition to the Tier 4 blockade status effective May 1, 2020 has allowed restaurants to offer food only to customers for delivery.
The Spur Corporation said that as of May 10, 155 of the group’s 559 restaurants in South Africa (27%) had reopened to offer these delivery services only.
The breakdown of these restaurants is as follows:
| # # | Brand | Restaurant trade | Total South African restaurants |
|---|---|---|---|
| one | Spur Steak Ranches | 82 | 303 |
| 2 | Panarottis Pizza Pasta | 19 | 87 |
| 3 | RocoMamas | 47 | 77 |
| 4 4 | John dory | 7 7 | 53 |
In this environment, the administration’s primary operational focus is on online ordering and empowering multiple-choice delivery partners, Spur said.
“Deliveries are primarily done by third-party vendors Mr D and UberEats, with certain franchisees using small local delivery services or managing their own deliveries.”
The group said additional restaurants are expected to reopen as trade restrictions are relaxed to allow for take-out and sit-down dining services subject to social distancing protocols.
The reopening of more restaurants also depends on franchisee rental negotiations with owners, he said.
“While the initial response from customers to the food delivery offering since early May 2020 has been favorable, it is too early to determine whether the current momentum will continue. Competition is also expected to intensify as more national food chains are reopened for delivery services. ”
The group said its administration has granted franchisees a 40% discount on franchise fees for May.
Marketing fees have also been discounted by 75% for the Spur, Panarottis and John Dory brands, and by 50% for the remaining brands, he said.
“Factors influencing the discount level are low revenue expectations for the month, commissions payable to third-party delivery partners, costs incurred by franchisees related to restaurant reopening and the need for franchisees to pay suppliers to ensure future supply.
“Franchise and marketing rates will be reviewed monthly. Franchisee rental negotiations with owners are ongoing, and most franchisees have not paid rent for April. “
Financing
The group said its financial priorities are “preserving cash” and “managing adjusted costs.”
“Based on the group’s cash resources, the directors do not anticipate the need to access external funds for at least the next six months.
“The balance of the group is not modified and there is the ability to introduce formalized loans.
“As a precautionary measure, management is engaging with financial institutions to secure lines of credit in the event that the blockade extends beyond the current year or the economic impact of Covid-19 is more severe than anticipated. currently waiting. “
As previously informed to the shareholders, the payment of the interim dividend for the period until December 31, 2019 has been deferred for six months until October 5, 2020, subject to compliance with the South African Companies Law and the Requirements. of JSE Listings at that time, to provide the group with the greatest balance flexibility during this period of uncertainty.
“While all staff received full salaries for April and May, the group will implement a reduced work week and a 20% proportional salary reduction for all employees beginning June 1 in order to conserve cash.
“Rates for non-executive directors have also been reduced by 20% since June 1.”
Read: New reduction data shows the start of the bloodbath in South Africa.
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