Spur licks its lips at prospects for its new Greek acquisition
Part of a push to diversify from the Spur brand with forays into pizza and pasta, steakhouses and seafood
Spur Corporation will markedly fatten up its higher end eatery offering with the acquisition of a 51% stake in the Nikos Coalgrill Greek chain – a brand that the restaurant franchisor believes can be rapidly expanded.
On Thursday Spur CEO Pierre van Tonder said Nikos Coalgrill Greek, comprising six outlets, had the potential to expand to 50 restaurants nationally over the next few years.
He also said Spur was seeking out more such opportunities in a largely fragmented restaurant market “as long the brands don’t clash internally”.Van Tonder said restaurant brands that had the potential to expand into 30 or 40 strong franchise chains typically traded at slightly better margins than Spur’s eponymous steakhouse brand, which still accounts for the bulk of the group’s franchise revenue and profits.
In recent years there has been a concerted push to diversify the franchise fee and earnings base away from the Spur brand with forays into pizza and pasta, branded steakhouses, seafood, and even an underwhelming dabble into the takeaway market with Captain DoRegos.Market watchers said the Nikos Coalgrill Greek would slot neatly into Spur’s middle to upper market restaurant segment where the group has rapidly expanded with recently acquired gourmet burger brand RocoMamas and (and to a lesser extent) steakhouse brand The Hussar Grill.
RocoMamas has grown from five outlets when Spur acquired the brand in 2015 to 64 restaurants in South Africa and six international outlets.
Anthony Clark, an analyst at Vunani Securities, said Spur had shown it was adept at buying and expanding great franchise businesses. Aside from expansion possibilities, Clark said there could be cross-synergies with The Hussar Grill.
Nikos Coalgrill Greek’s franchised restaurants are in Durban North, Sandton, Randpark Ridge, Ballito, Fourways and Pretoria East with a further four outlets confirmed to open in the coming months.
The deal proposes Spur initially buy a 51% shareholding from the founding family members Peter, Nicolette and Nicholas Triandafillou, and Pano Economou – who will retain the balance of the shareholding and continue to manage the business. Spur would also have an option to acquire an additional 19% shareholding.
No transaction price was disclosed – but Spur noted the purchase price would be calculated on a five-times earnings multiple after three years.