In 1983, when Spur Steak Ranches was only beginning to expand its brand outside of South Africa’s Western Cape, a 23-year-old walked into a Cape Town outlet as a trainee manager. The whirlwind of the following four months in the budding restaurant business was something he would never forget – and he claims it must have cost him 15kgs. But little did he know that it would result in him heading one of Africa’s leading restaurant businesses.
Today, 32 years later, Pierre van Tonder is the CEO of Spur Corporation, a Johannesburg Stock Exchange-listed multi-brand restaurant franchisor. Over the past decade he has spearheaded the company’s portfolio growth from two to six brands, and overseen expansion into various international territories, including a string of African countries. The group also sells a variety of products – such as Spur sauces and spices – through local South African supermarkets.
How we made it in Africa sat down with Van Tonder to learn more about Spur Corporation’s growth over the years and its plans for expansion.
Acquiring new brands
The first Spur Steak Ranch was opened in 1967 in Newlands, Cape Town, by founder Allen Ambor. In 1990, the group introduced its second restaurant brand, Panarottis, with a similar franchise model.
In 2004, Spur Corporation acquired a majority stake in seafood restaurant franchise John Dory’s – with the remaining shareholding purchased in 2012. And over the past three years, the group has bought the Captain DoRegos takeaway chain (2012), The Hussar Grill (2013), and a 51% share in gourmet burger restaurant, RocoMamas, earlier this year.
Growing presence in Africa: Ethiopia to Angola
As of the end of June, the group had 522 restaurants – with 58 operating outside of South Africa, including around 40 in other African markets. Over the next five years, Van Tonder plans to reach 100 outlets on the continent (excluding South Africa).
The Spur Steak Ranches chain has a footprint in 13 African countries. The group is also opening its first Spur in Ethiopia’s capital Addis Ababa, through an agreement with local franchisee Cucina Trading. The outlet is expected to be up and running in the first quarter of 2016, with a Panarottis scheduled a few months after.
“I am stunned in terms of what has happened in Ethiopia – if you look over the last 10 or 15 years,” noted Van Tonder. “Like any other country on a growth curve, there is still plenty for the guys to do but they are definitely on the right path. The growth opportunities and the opportunities for retail businesses made it a very attractive market for us to look at.”
In addition, the group has signed license agreements with partners in Portuguese-speaking African countries – Angola and Mozambique. While the head office’s team is still looking at property options, Van Tonder said he hopes to open within these markets in the next 12 months.
He added one of the reasons the group can navigate markets with language and cultural differences, is due to its local franchisee partners, who have a better understanding of both the market and its consumers. Menus may also differ slightly to those in South Africa. “In certain instances we will have slightly different product mixes and so forth… It depends on the territory and the pallets of the local people, and what their preferences are.”
Currency fluctuations a risk
According to Van Tonder, one of the major risks the group faces on the continent is currency fluctuations, such as in Nigeria, where it is planning to open its third Spur Steak Ranch in the next few months. “The naira actually devalued so much against the dollar because of the oil pricing – those things you can’t foresee. You just can’t predict them.”
In most African markets, he explained, rent is set in US dollars. So when the local currency devalues against the US dollar, revenues are affected while expenses stay the same.
“If you look at Tanzania for instance where the Tanzanian shilling has devalued against the US dollar to the tune of about 25-30%. You can’t just pass that onto the customer.”
Expanding into the UK, Ireland, Australia
Both Spur Steak Ranches and Panarottis have also expanded into western markets. Spur has 13 outlets across the UK, Ireland and Australia, while Panarottis has four in Australia.
“Yes, there is no question that we want to grow our international business because we have been at it for many years – and it has come with its scars and its wounds, like anything else in a new market,” said Van Tonder.
“So we will continue, on a prudent basis, to look at opportunities internationally.”