With the lockdown forcing restaurants to shut their doors, Spur Corporation said it’s seen its revenues fall dramatically since the previous year and it is in talks to secure loans in case the lockdown is extended.
The group owns Italian food franchise Panarottis, seafood restaurant John Dory’s, burger joint RocoMamas and Spur Steak Ranches.
Spur is in talks with financial institutions to secure credit if the lockdown extends beyond the current year or if the economic impact of Covid-19 is more severe than currently expected, it said in a trading update issued on Wednesday.
Staff received full salaries for April and May, but the group will implement a 20% salary reduction from 1 June, in line with a reduced work week. Fees for non-executive directors will also be reduced by 20% from 1 June.
According to its trading update for 1 March to 30 April, the group’s restaurant sales declined by 46.7%, compared to the same period last year. For the period from 16 to 31 March, sales were down by more than three quarters, compared to the same period last year.
All its restaurants had to be closed from 27 March to 1 May. According to lockdown regulations under Level 5, restaurants were not regarded as essential services. But since moving to Level 4, restaurants are able to provide delivery-only food.
By Sunday, just over a quarter of the group’s restaurants have been operating delivery-only services, through partnership with UberEats and Mr D. Some franchises are relying on small local delivery services or managing their own deliveries. Spur Steak Ranches is leading the charge, with 82 restaurants operating, followed by RocoMamas with 47. Only 19 Panarottis are operating and seven John Dory’s are open for business.
“The outbreak of the Covid-19 pandemic in South Africa and the resultant national lockdown and trading restrictions is having a material impact on Spur Corporation’s business operations and financial performance,” it said. “The group did not earn any material income for this period.”
“While the initial response from customers to the delivery food offering from the beginning of May 2020 has been favourable, it is too early to determine whether the current momentum will be sustained.
“Competition is also expected to intensify as more national food chains reopen for delivery services,” Spur said.
Spur’s share price was trading 3.33% weaker on Wednesday afternoon at R14.50. The share price has declined by 30% to what it was the same time last year.