Spur restaurants will not be opening when hard lockdown ends for fear of ‘catastrophic losses’

Business Insider SA
Spur closed
  • You won't be going to a Spur restaurant as soon as lockdown ends – or even getting a takeaway from one.
  • Closing stores came as a relief after the "hideous trading losses" that followed physical distancing rules, the chain has told landlords, and it is not having that again.
  • Winter coughs may mean better days don't come soon.
  • In the meanwhile Spur has told landlords to expect only small turnover-based rent payments, with the promise to shun those who drive franchisees into bankruptcy.
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There won't be any meals at Spur when South Africa's Covid-19 lockdown ends – and no takeaways either.

Spur stores will not reopen at the end of lockdown (when physical-distancing rules are expected to apply again) the restaurant group has told landlords, because that would be "commercial suicide".

Other than a few of the group's Rocomamas burger joints, all Spur and Panarottis restaurants will remain closed as long as they face restrictions on the number of customers and when they can sell booze, Spur group's chief operating officer Mark Farrelly said in a letter to landlords.

That decision comes from hard experience immediately before the lockdown, when such restrictions were first introduced.

"The restricted trade was so injurious that the lockdown almost came as a relief as the cost of individual closures was preferable to the hideous trading losses our franchisees were incurring," Farrelly wrote.

See also: McDonald’s SA could be making food again before lockdown ends – but it won’t be selling you any

"On average, our turnovers dropped over 70%, and it proved impossible to run a viable business with the restrictions in place."

Spur, he said, was not going to have its franchisees take on the cost of reopening after lockdown, "only then to sustain catastrophic losses."

Unlike other retailers and restaurants, Spur never said when it would reopen, instead telling customers they'll "be updated".

Nor did Farrelly tell landlords when stores in the group may start trading again, instead warning that winter could be rough for sit-down restaurants.

"One of our major concerns is that we are going into winter (the flu season) and rightfully, people will continue to be alarmed by anyone coughing and sneezing," he said.

See also: A third of SA tenants haven’t paid their full rent this month – and May could look much worse

Once Spurs do open again, landlords should expect no more than 6% of turnover as a rental payment, he said, at a time when business "will initially be diabolical".

Landlords need to remember that Spur restaurants are good for shopping malls, he said.

"We will not grant a franchise on any site driven to closure by unrealistic landlord expectation."

Spur has more than 600 outlets in its stable, and says its franchisees employee more than 30,000 people directly.

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