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Food costs bite into Spur's profit margin

By unknown | Sep 12, 2008 | COMMENTS [ 0 ]

Marcia Klein

Marcia Klein

As it warned in a trading update, Spur Corporation published disappointing financial results as high food inflation and a write-down on a failed pilot project in Australia took their toll.

Spur managed to lift revenue by 37percent to R296million in the year to June, benefiting from strong growth in its international operations, whose contribution to turnover increased dramatically to 30percent of turnover, from 11percent last year.

It has recently concluded a deal in the UK which will enable it to accelerate the expansion of its restaurant base in the region.

But group managing director Pierre van Tonder said the write-off of the Australian restaurant, and the effect of food inflation on its profit margin (it absorbed some of the costs so that its franchisees would not suffer) resulted in a 27percent drop in earnings a share. The Australian fish and grill opened in January.

It looked promising, but just did not deliver the kind of revenue that was expected.

Earnings were also affected by a tax credit in the previous year which was not repeated this year.


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