As a South African there is a handful of things you miss when you live abroad and the greatest pride overcomes you when you stumble upon a product from your mother country, and one of those is our Spur restaurants. Some critics may argue that Allen Ambor was lucky and that the market was just ready for a steak house when he opened up. This might be true but over the years many new comers entered the market just to disappear or to come second to The Spur.

1. SPUR CASE STUDY
By JJ Bindemann
For AAA School of Advertising
Date: 29 October 2011

2. Index
Introduction pg 2
The History and Background Pg 2
Outlook for the future pg 8
Market analysis and consumer insights pg 10
Competitive Strategies pg 17
South African Food and Beverages Industry Challenges pg 23
competitors pg 29
Positioning of the Spur pg 31
Promotions and advertising pg 31
Consumer Promise Pg 31
Product Elements Pg 34
Distribution, Procurement & Logistical Management Pg 37
Pricing Strategy Pg 37
Brand equity Development & Management: 38 Pg38
Brand Hierarchy for the Spur Corporation Restaurants39 Pg39
Questions related to case study: 41 Pg41
Future Recommendations: 42 Pg42
Reference List P45
1

3. INTRODUCTION:
As a South African there is a handful of things you miss when you live abroad and the
greatest pride overcomes you when you stumble upon a product from your mother
country, and one of those is our Spur restaurants. Some critics may argue that Allen
Ambor was lucky and that the market was just ready for a steak house when he
opened up. This might be true but over the years many new comers entered the
market just to disappear or to come second to The Spur.
The purpose of this case study is to analyse the Spur Corporation and the market, for
future marketing or Brand Management courses.
THE HISTORY AND BACKGROUND: Spur Corporation is a truly South African multi brand
restaurant business listed on the travel and leisure sector of the JSE Limited. The Spur
Corporation consists out of 3 restaurant brands namely: Spur Steak Ranches, Panarottis
Pizza Pasta and John Dory‟s Fish & Grill. The group provides consumers with a
reasonably priced dining experience in a family orientated environment. This multi-
million Rand Corporation was established 44 years ago when the founder and current
Executive Chairman, Allen Ambor,
invested R4 000.00 to open the
Golden Spur in Newlands, Cape
Town – 1967. It fast developed a
reputation for taste, nutrition and
value for money meals. According
to Spur Corporation (2011)the
winning recipe for their success was
that they started with a warm,
relaxing family friendly environment.
They added generous portions of
great tasting food and a hearty
helping of quality.
2

4. Over the 4 decades the Group has excelled to grow into one of the most recognized
brands in the country and today the Spur is proudly know as the official restaurant of
the South African Family.
In December 1990 the second restaurant brand, Panarottis Pizza Pasta was created on
the same principal that made the Spur Steak Ranch a household name. Like some
critics may say again, Panarottis opened its door just at the right time to capitalize on
the growing popularity of Pizza and Pastas.
John Dory‟s Fish and Grill , a KwaZulu-Natal based franchise comprising of seven outlets
was drawn into this stable by the Spur Corporation‟s purchase of 60% shareholding
within John Dory. Today the Spur Corporation owns 65% shares of the Mediterranean
culture and charismatic John Dory Fish & Grill.
The Spur Group was listed on the JSE in 1986 with a total of 43 franchised Spur Steak
Ranch outlets. In 1999 major restructuring was needed to reform the Spur Corporation
as we know it today. The Spur Corporation is an investment holding company. Through
its subsidiaries, primarily the Spur Group (Pty) Ltd, John Dory‟s Franchise (Pty) Ltd, Steak
Ranches International BV, Spur Corporation UK Ltd and Spur Corporation Australia Pty
Ltd, the group carries on the business of franchisor in the family sit down restaurant
market. Through subsidiaries, Spur Advertising (Pty) Ltd, Panarottis Advertising (Pty) Ltd,
John Dory‟s Advertising (Pty) Ltd, Spur Advertising UK Ltd, Spur Adve rtising Australia
(Pty) Ltd and Panarottis Advertising Australia Pty Ltd, the
group provides marketing and promotional services to
franchisees. A subsidiary of the company, Spur Group
Properties (Pty) Ltd owns certain properties which are
owner-occupied from a group perspective. The
company also has indirect interests in various companies
in the United Kingdom and Australia which own and
operates Spur and Panarottis restaurants in
According to the Spur Corporation (2011)1their success is greatly due to the love shown
by all stakeholders, the franchisees, staff, shareholders and the South African public for
the Spur Brand. The stakeholders comprises largely out of the franchise businesses of its
3

5. three trading brands, Spur Steak Ranches, Panarottis Pizza Pasta and John Dory‟s Fish &
Grill, and its manufacturing and product distribution business.
Smaller operating segments include the group‟s training department, export business,
décor manufacturing business and radio station.
The group has seen sustained growth in
the recent years and passed the 300
restaurant mark in early 2006. By 30th
June 2010 this had increased to 359.
There are 245 Spur Steak Ranches and
50 Panarottis Restaurants and 26 John
Droy Fish & Grill outlets. Internationally
the group has 32 Spur Steak Ranches
and 6 Panarottis Pizza and Pasta
Restaurants in Africa, Australia,
Mauritius, United Emirates and the United Kingdom. According Spur Corporation(2011)
the Managing Director, Pierre van Tonder said that “the rapid growth in the middle
income market in South Africa – the prime target group of the Spur – has lead to
opportunities for restaurants in new areas as population demographics has shifted.”
The development of new shopping malls and entertainment centers also creates
opportunities for expansion while restaurant re-location and refurbishments provides an
opportunity to increase customer volumes. According to Spur Corporation (2011) “Spur
is constantly re-inventing and innovating to exceed consumer expectations.”
According to BusinessLIVE (2011)
“the Spur reported an increase in revenue of 15.9% to R403.4 Million for the year June
2011 as improving consumer‟s sentiment in South Africa resulting in stronger second half
trade performance. But the Spur Group said trading conditions remain difficult in the
foreign markets in which it operates, particularly in the United Kingdom and Ireland .”
Due to the uncertain economic environment the group has decided to consolidate
their UK operations by appointing a full time executive to head the group‟s operations
in the UK as this is expected to improve their performances.
4

6. According to Spur Corporation (2011 “The Spur will focus primarily on Africa where new
restaurants are expected to be opened in Malawi, Tanzania, Namibia, Nigeria and
Mauritius.” They also plan to strengthen their footprint in South Africa with 11 Spur‟s, 2
Panarottis and 2 John Dory restaurants.
According to Spur Corporation (2011, Spur‟s vision is to be the best family sit-down
restaurant in the markets in which they trade. Their mission is to be dedicated at all
times to their customers and employees and to provide a “taste for life” for their
customers and be a “great place to work” for their employees.
Spur Corporation is South Africa‟s leading family sit-down restaurant group. Its value-
based quality family offerings across Spur Steak Ranches, Panarottis Pizza Pasta and
John Dory‟s Fish & Grill have capitalised on the increased spending power of the rapidly
growing middle class in South Africa.
They plan to continue their restaurant expansion across Spur Steak Ranches, Panarottis
Pizza Pasta and John Dory‟s Fish & Grill in South Africa, while growing our international
operations on a sustained basis as they enter some new and unchartered markets.
Along with the growth in the size of their market and potential customer base, new
opportunities arise as the population demographics of the country shift. The opening of
shopping malls and entertainment destinations always create scope for new outlets,
while restaurant relocations and refurbishments also provide an opportunity to increase
customer volumes, according to Spur Corporation , 2011.
Spur Corporation assists franchisees in a number of areas both before and after
opening. Initial support includes compiling a business plan and cash flow forecast,
assistance in choosing a site and negotiating a lease, as well as operational guidance
with the opening and initial running of the restaurant. The well-trained, motivated and
experienced operations team provides ongoing backup, support and assistance to
franchisees. The team is responsible for upholding the high quality of the brand and its
products, as well as assisting the franchisee in all aspects of building and maintaining a
successful business. Support is also provided by way of the evaluation and training of
5

7. employees, integrated information systems and the Spur Corporation marketing plan.
Regular restaurant visits ensure that the Spur‟s high operational standards, external
health and safety regulations and their customers‟ demands for quality and service are
met and maintained.
Being part of the South African culture for so many years the Spur Corporation and its
affiliations have a strong social awareness philosophy and a commitment to improve
their quality of life of disadvantaged South Africans. The Group assists in the upliftment
of communities primarily through sport. Internally the focus is on people development
and the creation of a stimulating work environment which supports the group‟s mission
of making Spur a great work place.
Through the years Spur has been committed to sustainability practices to ensure the
long-term success of the group. More than 140 sport and recreational events was
sponsored by the Spur during 2010 – examples of these events are: Spur Soccer
Masidlale, , Junior Rugby Development, The Spur
annual charity golf tournament, the Teddy Bear Clinic
and Reach for a Dream events.
According to Spur Corporation (2011 “it recognized
that these practices are becoming a business
imperative and no longer a Nice to have.” In
answering this they have established a sustainability
committee, whose mandate is to establish Green
policies and to assist management in developing a
sustainability strategy for the group.
The Spur Group‟s sustainability strategy is based on three segments:
6

8. Economic:
According to the Spur Corporation (2010)Annual Report their strategies are critical to
include the identification and expansion into new markets, capitalizing on all feasible
opportunities within the local market, increasing the utilization of existing manufacturing
and production capabilities, increasing customer frequency and spend and ensuring
financial feasibility of the Group.
Environmental:
The strategy will answer issues with waste management, sustainable energy, water
management and biodiversity. According to Spur Corporation (2011) energy in the
form of electricity has been the biggest threat to the survival of the Spur Group.
Social:
Part of the success of the Spur Group up to date is their social strategy and according
to the Spur Corporation (2011 “Consideration is being given to expanding these
strategies with particular focus on skills development within and external to the group
and giving back to the communities.” For years Spur has been part of the community
and one of their greatest successes is to promote from within their own company.
Several directors and Executive Management have started out their career on the
floors of a Spur. This reflects the family values of the Spur Corporation.
According to Spur Corporation (2011 “Second only to trademarks, people are its most
valued and important asset.” The Spur aims to attract, develop and retrain highly
energized individuals. Over the last few years increased focus is being placed on
creating a more sustainable work environment. Recent policies compiled will focus on
skills development and the basic conditions of employment. According to Spur
Corporation (2011
“all human resource policies are aimed to eliminate discrimination in the
workplace and the group is committed to removing barriers to enable
previously disadvantaged employees to reach their true potential.”
7

9. This is a reflection on the strenuous shortcomings of qualified personal for the restaurant
industry.
To address the shortcomings of skilled labour and customer service excellence, which is
a vital part of the service delivery, an in-house training unit is being created to ensure
that franchisees and their staff members, together with head office employees, acquire
the skills to perform in line with the groups high standards. A wide range of training
courses are offered to franchisees at training centers in Cape Town And Gauteng.
According to Spur Corporation (2011 “during the past year 7 624 delegates attended
internal and external workshops. In addition classroom training is supplied with practical
training at a number of accredited training restaurants in Gaugeng, KwaZulu Natal and
the Western Cape for new franchisees and management.
Financial assistance by the Spur Corporation is provided to employees for skills
development. This includes external courses, part time studies at universities and other
tertiary institutes. Several employees are current registered for degrees, diplomas and
courses through a number of independent institutes. This financial assistance is
extended to employees dependants for primary and secondary educational
requirements.
Incentive bonus schemes which are based on groups and individuals performances
includes a share incentive scheme which was introduced in December 2004 to allow
management to participate in the growth of the Spur Corporation and to assist the
group in retaining directors and management of the highest caliber.
Outlook for the future
According the Spur Corporation (2011Van Tonder said “although consumer optimism
has improved in recent months, heavy debt burdens, increasing fuel, utility and food
prices and the anticipated increase in inflation remain a challenge.”
In today‟s economic environment, sales growth of their restaurants will be driven by
value added and innovative promotions so that franchisees profitability is well
8

10. managed and Spur remain competitive by tailoring their menus to meet their
customer‟s demands.
Spur recently launched their smaller format Spur restaurant model which enabled the
brand to increase the penetration into rural areas. Spur Corporation (2011Van Tonder is
of the opinion that “this model makes it feasible to operate
in smaller towns which have growth potential and where we
have not traded until now. The start-up costs are
substantially lower than the standard format Spur outlet
owing to the smaller trading area and simplified menu
offering. Two such outlets were opened in Nylstroom and
Groblersdal and have delivered rewarding returns.”
Internationally Spur is increasing to 38 restaurants in Aberdeen (Scotland), Mandurah
(Western Australia), Durbai (United Arab Emarites), Maseru (Lesotho) and the first Spur
Express outlet in Gaborone (Botswana).
Over the past year several rumors appeared in the media claiming that Spur might buy
Famous Brands. In March 2011 according to Spur Corporation (2011)Van Tonder said it
was highly unlikely that Spur would buy additional restaurant brands. “We are
expanding our off-shore interests so it‟s likely some of the cash pile will be used for
international operations.” This was contradicted by the Spur Corporation‟s acquisition
of 60% stake in Cappuccino‟s, the café and pizzeria restaurant franchise, for
approximately R25 million in cash. Cappuccino‟s currently operates 15 franchise
restaurants, with the majority of the outlets being in Gauteng. This contradicting action
is a reflection of a shift in priorities of the Spur group due to the international
economical turndown.
The past years market conditions suppressed trading conditions in the local restaurant
environment and in the international markets in which the group operates. The rising
food, fuel, retail renting prices and emerging food shortage within South Africa remains
a relevant constant threat to the group.
According to Spur Corporation (2011Van Tonder said, “the turnover was up only 6% to
R175m, but operating profits came in almost 20% higher at R66m.”
9

11. The Spur Corporation addresses these environmental threats by creatively and
innovatively designing menus and recipes to be cost effective and highly profitable.
The Spur group also invested in stabilizing their purchases through the acquisition of bulk
produce through cost effective channels and outsourcing distribution. To address the
rise in rental costs the Spur continuously negotiates on behalf of its franchisees and uses
its bargaining power, since the group has Panarottis and the Spur trading within the
same retail spaces. The East Rand Mall is an example where the Spur has built a stand-
alone store adjacent to the Mall and has improved their volume considerably.
MARKET ANALYSIS AND CONSUMER INSIGHTS:
The Spur competes with a wide variety of competitors within the South African food and
beverage market for the share of wallet. Spur is very clear that they consider
themselves as a sit-down family restaurant. Within this market there is a vast amount of
competitors. Spur as by definition even though they do provide sit-down service could
be classified as a fast food restaurant. This places Spur in the unique predicament
where it enjoys very nigh brand awareness and strong brand knowledge but with all the
advertising and marketing it is a very good fast food restaurant and a nice family Steak
House therefore this study will consider the entire food and beverage industry as a
competitive factor.
The South African restaurant industry i.e. market structure and competitive strategies
The food and beverage industry in South Africa is evolving and it comprises out of
independent restaurants, coffee shops, franchised restaurants, fast food outlets, large
supermarket chains, informal traders as well as independent food caterers and other
catering services providers.
Over the last twenty years the restaurant industry in South Africa (SA) has been
reengineered. According to Maumbe (2010) Due to globalisation, urbanisation, an
increase in the black middle-class, and women in the workplace, the food and
agricultural supply chain, consumption patterns of the population, and food industry
competition has altered In addition, Maumbe (2010) recently claimed that the South
10

12. African restaurant industry is making use of a combination of vertical and horizontal
market coordination, branding, and product differentiation strategies to assist the cost-
effective production, consumption, marketing and distribution of food products.
Regardless of the economic crisis SA market trends show an increased demand for fast
food by South Africans. In 2009, the take-away and fast food restaurants showed a
staggering 8.1% growth Maumbe (2010) Customary home-cooked meals tend to
decrease, seeing that both household incomes and standards of living rise, more
people are eating fast foods and at restaurants. Globalization and westernization of
diets is also driving food consumption patterns ( Pingali, 2007). As a result the
configuration of the restaurant industry structure has changed notably. For instance,
the industry used to be dominated by oligopolistic market configuration, however in
recent years a more multiplicity structure has evolved i.e. multi-national and regional
franchises, independent food caterers, and informal traders. Even though most South
African restaurant industries are coordinated as franchises, others are owned by
independent entrepreneurs that have thrived under the Broad-Based Black Economic
Empowerment (BBBEE) Act of 2003 Maumbe&Van Wyk(2008)
11

13. Competitive advantages in the food and beverage industry
The Porter model is a useful analytical framework to determine how to gain competitive
advantages by intentionally arranging a business within an engaging industry
environment and then leveraging these advantages over rival competitors.
Bargaining Power of
Customers
1. Limited disposable
income
2. Relatively low
average purchase
3. Rising segment of
discerning consumers
4. Consumer Council of
South Africa
5. Promotion of Access
to Information Act,
2000
6. Consumer Protection
Act 2010
Buyer Bargaining Power of
Buyers Potential Entry
1. Regional franchises Industry Rivalry 1. Relatively high initial
has the market power 1. Very High capital outlay
2. Many suppliers 2. Low pricing 2. Growing industry very
3. Very low operator power fast
brand loyalty 3. Low profit 3. Scale of economies is
4. Switching costs is low margins important
(e.g. distribution 4. Market 4. Logistics in South
channels) overpopulate Africa is expensive
d 5. BBBEE greats new
opportunities for new
entry’s
Threats of substitutes
1. High meal solutions
options
2. Switching costs is low
for customers
3. Regional franchises
control the market
market
12

14. Overall the restaurant industry has become increasingly global and highly competitive
food and beverage industries are gaining a competitive advantage by using a
combination of strategies. According to Maumbe (2010). These strategies include co-
branding, employee empowerment, international as well as domestic franchises and
installing information and communication technologies (ICT).
An example of co-branding includes filling stations and fast food companies that are
making joint investments, thereby operating as one. This allows them to raise consumer
awareness of their food services as well as expand sales. It is crucial for success that
South African restaurant industries implement BBBEE agreements. Not only does this
improve employee empowerment but may also be used as a competitive edge. The
Franchising Association of South Africa (FASA) is the governing body for franchisees in
the South Africa. In the food and beverage industry, FASA supervise competition and
best interest issues for the small to medium and micro-enterprises (SMME). Finally ICT, if
implemented properly, can be a valuable competitive and communication tool.
Structuring ICT plays a fundamental role in facilitating the search characteristics of food
products, the making and processing of food orders, and the expansion of
communication channels with industry suppliers and other key stakeholders.
Consequently this would influence the flow of market information thereby lowering
costs in the restaurant food supply chain.
Economic
There is no doubt that the food and beverage industry and economy has a synergetic
relationship.
In 2007, the total income for the food and beverages industry was R26 604 million. It
would be fair to say that the restaurant and coffee shop segment contributed the most,
since this segment contributed the largest percentage share (47%) of the total income
in the food and beverages industry, next was the fast food outlets (29%) and then
caterers and other catering services such as „ready made‟ meals (25%) (Statistics South
Africa, 2007). Also in 2007, the food and beverage industry in South Africa employed
181 373 people. A further break down showed that restaurants and coffee shops
13

15. employed 92 500 people, constituting the largest percentage (51%), followed by
caterers and other catering services with 54 412 (30%) and finally fast food outlets with
34 461employees (19%).
The strategic importance of ICT according to Maumbe (2010) in the South African food
and beverage industry is demonstrated by aggregate expenditure of R382 million per
annum (30%) on computer technology and software, second to plant and heavy
equipment R679 million in 2007. The trend on national ICT investment indicates rising
importance of ICT as a source of competitive advantage in the South African business
sector and food and beverage industry in particular.
Before the international economic crisis, South Africa was ranked 25th by the Global
Competitiveness Report out of 75 countries, and had a sound economic growth rate
estimated at 4% per annum. International multi-national food service chains such as
McDonalds and KFC have invested in South Africa. According to Maumbe (2010) “This
may be attributed to South Africa‟s progressive stable political situation, sound
economic growth rate under a stable African National Congress (ANC)-led
government and its competitive and advanced business environment. This growing
consumerism provides major investment incentives to global food and beverage firms.”
South Africa was isolated during the apartheid regime from the international business
world. The end of apartheid meant that international companies could penetrate the
highly profitable South African market since it was socially acceptable. The companies
who entered the market the soonest capitalized on the well developed infrastructure
and economical environment created by the old South African regime.
Market structure
South Africa has a well-developed food and beverage industry with various market
structuring.
14

16. Regional and global multi-national corporation franchises:
The franchise food and beverage chains include global multi-national corporations as
well as regional franchises. The main regional franchises in SA include the King Pie,
Nando‟s Group, Spur Group and Famous Brands and occupy a dominant market share
in the food and beverage industry according to Maumbe (2010), of which the later two
are the foremost. The leading regional franchises have outlets located in all the major
cities in South Africa and have entered the fast food market in other African countries
as well. For instance, the Famous Brands Group operates over 2000 outlets in South
Africa and 15 other African countries. .
The global multi-national corporation franchises (GMNCF) are the main competitors in
South Africa‟s developing food and beverage market. The two leading franchises are
Tricon Global Restaurants [TGR] (i.e., KFC and Pizza Hut) and McDonalds. The Tricon
Global Restaurants chain offers its traditional chicken meals and pizzas. McDonalds on
the other hand is a major global fast food chain, however it does not occupy a
dominant market share in South Africa‟s competitive food & beverage industry. The
GMNCF competes with the regional franchises which dominate the domestic market
and are now expanding into global markets.
Supermarket food chains:
Supermarket chains have gain access to the market segment which traditionally used
to be dominated by franchised fast food operations and are aggressively selling hot
meals to urban consumers. According to Anon, (2011a ) the main supermarket food
chains in South Africa are Pick ‟n Pay, Shoprite Checkers, while Woolworths has focused
on a growing organic food market niche.
A recent investigation in China (Yu and Abler, 2009) indicates that rapid economic
growth leads to structural changes in food demand and, as incomes rise, it shifts
consumer preferences away from grains towards meat and dairy products. South
Africa‟s rapid economic growth, the preference for American-style cuisine,
urbanization, and rising consumerism are all factors which have resulted in the
15

17. appearance of new supermarket chains and independent restaurants that market
take-away foods according to Maumbe (2010).
Contract food caterers:
The Contract food caterers sector is fairly concentrated and is dominated by relatively
few large catering companies and the leading caterers (based on the number of
contracts) are Compass Southern Africa, Reserve Holdings and ICS Holdings.
According Maumbe (2010)
“Both the private and public sectors subcontract their catering services to these
leading contract caterers. Contract caterers purchase the bulk of their supplies
directly from local manufacturers, catering wholesalers, and distributors on a
contract basis”.
Informal independent traders:
Informal traders provide and market food directly to consumers, thereby cutting out the
middleman. This group include individual street vendors operating on the roadside,
main public transport terminuses, and other designated or non-designated places for
selling food.
According to Maumbe (2010) I”n most urban areas, such informal traders rent space
from local municipality “and sell hot burgers, sandwiches, and pies to passers-by. This
food service segment is a major part of the so called “second economy” in local
townships.
Global and domestic forces:
The restructuring of South African food and beverage industry is being influenced by
the global and domestic forces of change according to Maumbe (2010) . At the
global level, major trends driving food and beverage industry are demanding efficient
marketing, product consistency price stability, safety and nutrition, and predictable
product availability. (Jekanowski, 2001). In South Africa, similar trends are affecting the
food and beverage industry including many new entrants, co-branding, ICT
deployment, customization, health consciousness, multi-franchising, service
16

18. differentiation, and employee empowerment. Irrespective of food and beverage
industry location, success belongs to those firms that can prepare food better, faster
and safer than competitors. The food and beverage industry are generally quick to
adapt to constantly changing taste and preferences of their customers.
In the US, the food and beverage industry answered a growing consumer demand for
healthy diets by offering salads and vegetarian options. According to Maumbe (2010)
Global trends indicate that food and beverage industry competitive strategies depend
on a combination of factors such as culinary experiences, strategic industry alliances,
and global food market developments.
Competitive Strategies
Franchising Strategy
The South Africa‟s food and beverage industry is dominated by the regional and global
franchises. South Africa has an extensive franchise restaurant chain that serve wide
variety of meals. According to Maumbe (2010) “About 90 percent of franchises in
South Africa have been locally developed while 10 percent were developed
internationally. Franchising industry contributes about 12 percent to Gross Domestic
Product (GDP) in South Africa.” Approximately 165 franchisers and affiliates are
registered with the Franchise Association of South Africa (FASA) and over 6000
franchisees. The franchising strategy aims to overcome stiff competition between
regional and global franchises.
Market Coordination Strategies
The South African food and beverage market is highly influenced by the backward and
forward linkages into agriculture and retailing.
Partnerships have been forged between food and beverage outlets and other
strategic industry partners such as farmers, specialist retailers (e.g. bakeries, butcheries,
17

19. and green groceries) and wholesalers. Specialist retailers are the main suppliers to
restaurants. Dry groceries are often purchased through catering wholesalers, while
perishables and frozen products are purchased directly from the manufacturers or
designated distributors. The effective coordination of each link in the South Africa‟s
food and beverage industry food supply chain is critical as it affects key strategic issues
such as food security, food safety, nutrition, health, corporate social responsibility and
environmental sustainability.
According to Maumbe (2010)
“The South Africa‟s food and beverage industry is characterized by the use of
production contracts, tight supply chains, and ICT to enhance coordination of
product and information flows up and down the supply chain”.
In production specification contracts, the producers and food and beverage outlets
sign product specification contracts whereby producers promise to deliver certain
quantities and quality of their products. On the other Maumbe (2010) said hand the
food and beverage outlets pledge to buy the delivered amount at the stipulated price-
quality relationship. Rigid supply schedules are usually maintained to minimize
marketing risks associated with the nature of food products.
In market specification contracts, the food and beverage outlets provide both
managerial and financial support to farmers. In addition, the buyer specifies the
varieties of the food products to be grown. These types of contracts are commonly
used by GMNCF such as McDonalds, KFC‟s and Tricon Global International. Maumbe
(2010) found that supermarkets in Gauteng province of South Africa use dual
procurement strategies involving direct purchase from farmers and sourcing from Fruit
and produce markets.
South African consumers are becoming more discerning and according to Maumbe
(2010), 2010 South Africans “are not willing to compromise on these attributes”. The
development of centralized distribution centres in South Africa ensures that standard
food or meal solutions are delivered to numerous outlets around the country. Although
18

20. food and beverage outlets have different operator owners, the basic requirement for
the franchisor is to market a uniform product across the chains at all times. According
Nagengast and Appleton (1998) “The relationship between farmers, wholesalers, and
food and beverage outlets across the county is typical of vertical market coordination
while the collaboration among franchised outlets is characteristic of horizontal market
coordination”. Both forms of market coordination mechanisms are widely used in food
and beverage industry in the supply chains for dairy products, meats, and fresh
produce (Gibbons, 2004). The potato supply chain is the „mainstay‟ of the food and
beverage industry globally Nagengast and Appleton, (1998). Most of the popular food
and beverage outlets franchises in South Africa (e.g., KFC, Nandos, Chicken Licken
etc.) are vertically linked with producers through centralized wholesalers.
Maumbe (2010), founded that “Vertical and horizontal coordination strategies yield
several benefits to the food and beverage industry such as assured supply, building
trust-based supply chains, the ability to market quality products, and reduction in
procurement costs in the long term. “
Co-branding Strategies
In Co-branding it is expected that the alliance will generate profits for both parties. In
many cases this can cut down on expenses, especially advertising costs.
There are a number of co-branding efforts in food and beverage industry in South
Africa. For instance Maumbe (2010), found that Engen and Wimpy co-branding on
national highways, they are advertised together and both benefit from each other.
Secondly, Steers, Fish Aways and Blockbuster video co-brand their products. By
providing convenience and variety this grouping is bound to become a lazy night
destination point. McDonalds co-brands its products with McCain which supplies the
potatoes that are used to make the McFries.
19

21. Product Differentiation Strategies
The South African Restaurant industry is faced with stiff competition from the major
supermarkets (e.g. Spar, Shoprite Checkers and Pick‟n Pay), other retail chains,
convenience stores, independent food caterers and informal traders. The Restaurant
industry competes with supermarkets which offer ready meals daily to urban
consumers. Maumbe (2010) stated that this is a “growing challenge posed by the
increasingly popular meals in the deli sections of leading supermarket chains,
meaningful product differentiation has become imperative”.
The marketing of well-known brands is a key driver of product differentiation in South
Africa. Most consumers perceive branded products and their product extensions as
superior quality products. In South Africa, KFC is considered a top-brand with a huge
following of loyal customers. KFC attracts a large customer following and is perceived
as the most popular fast food restaurant chain in South Africa (Brand and Branding
Award).
The second driver of product differentiation in food and beverage outlets industry is
diversification of menus to cater for different socio economic, religious, and cultural
groups. The practices of upsizing meals, adding extensions to meals and bundling meal
solutions (e.g. providing toys at a cost on children happy meals) are common in South
Africa. Pingali (2007) argues that globalization and growing urban middle class has led
to rise in fast food consumption and convergence toward Western Diets. As already
mentioned, supermarkets are entering the arena offering stiff competition by widening
meal solutions and diet choices. As dual income households rise, the demand for
meals for school children has increased creating further expansion in meal solutions and
diet offerings.
A third driver of product differentiation is the sale of healthy products. There is a
growing awareness among South Africans about the benefits of healthy eating. As
health conscious consumers increase, the food and beverage outlets industry is being
forced to adapt. Global trends towards lighter meals, low salt, fat-free, no sugar, and
20

22. low-carbohydrates have filtered among South African consumers. Although health
conscious consumers prefer low calories, they are usually unwilling to compromise on
flavour. In response to the above changes in consumer attitudes and lifestyle, the
South African food and beverage outlets industry has devised strategies for healthy
food products. For instance, McDonalds South Africa has introduced healthy options
such as salads, fruit and low-carbohydrate options. According to Maumbe (2010),
“Nando‟s promotional strategies are aimed at raising awareness of its wide range of
healthy options. KFC has introduced lower-fat wraps”. In addition to the l diet trend,
South African consumers are demanding more natural foods. Customers are seeking
products that are organic, wholesome, and unprocessed. In response, Woolworths
adopted a strategy to promote its organic product range. The demand for its Kauai
brand is growing as consumer preferences for fresh produce without chemicals or
preservatives have increased. According to Statistics South Africa (2011) Chicken and
fish consumption has also increased while red meat consumption has declined.
Consumers aremore discerning in South Africa, and the food and beverage outlets
industry has responded to the shift toward health consciousness. A number of South
African food and beverage firms have adopted healthy product strategies to
penetrate market segment of health conscious consumers. .
Service Differentiation Strategies
The South African food and beverage industry competes on a number of fronts
regarding service offering. The service differentiation strategy revolves around meal
variety (e.g. kids meals, grilled, fried, salads, etc), drive-through facilities, home delivery
of meal orders, family friendliness, operating hours, convenient locations, and customer
care. Most restaurants are smoke-free zones following legislation to ban smoking in
public in South Africa. Maumbe (2010) is of the opinion “The rise in black middleclass,
stable market conditions, and rise in demand for recreation and eating out offers huge
opportunities for the Restaurant industry.” In South Africa, local products are being
marketed using the “Proudly South African” label highlighting the popularity of buy
local campaigns as global communities strive to protect local food economies and
local jobs. Consequently, consumers and other advocates of locally integrated food
21

23. economies tend to associate such national campaign with products and services
made in South Africa.
Some fast food restaurants provide consumer advice on healthy living on their website
as part of service differentiation.
Customer Relationship Management (CRM) Strategies
The restaurant industry is using various customer retention strategies. Examples of
customer loyalty programs are free drinks for children and special meals to attract
consumers to restaurants. Some food and beverage firms recognize birthdays and offer
free desserts.
According to Maumbe (2010), “Making restaurants family oriented is a key strategy
used for customer retention and market share expansion. Some new food and
beverage outlets have launched coupons whereby after purchasing a certain number
of items, customer qualifies for a free item”.
Such deals are attractive for large families who would normally buy more than one item
for their meals. Some pricing special deals tend to target students who consume food
in large numbers or in a group setting.
Corporate Social Responsibility (CSR) Strategies
The strategy comprises three main areas, management control, skills development,
preferential procurement, socio-economic development, and employment Maumbe
and Van Wyk, (2008)
The restaurant industry‟s BBBEE charter specifies the targets and milestones that have to
be met depending on the size of the firm. For instance, the appointment of females as
Board of Directors is one of the key strategies used by food and beverage firms to meet
their BBBEE requirements. Training and professional advancement of the restaurant
22

24. crew is also a vital strategy for meeting targets on BBBEE score cards Maumbe and Van
Wyk, (2008). In South Africa, food and beverage outlets have the responsibility to craft
unique strategies needed to meet BBBEE requirements as detected by the BBBEE
Charter. The ability to meet BBBEE targets is key to operating a successful food and
beverage firm in South Africa.
South African Food and Beverages Industry Challenges
Strong Rand
The South African Government under pressure from Trade Unions and large
manufacturing companies are constantly trying to stabilize the South African Rand.
According to the Trade Unions and large industries a weaker and stable Rand will
increase employment among South Africans. A weaker South African Rand and
especially an unstable Rand means that South Africans has to pay premium prices for
basic living expenses therefore contradictory to the popular belief that a weaker Rand
is beneficial for South Africa. South African restaurants are highly dependent on
disposable income of the South African consumers. At the same time restaurants also
have to compete with international new entries to the South African market which have
the benefit of stronger currency backings.
Political stability
The South African political system affects the entire South African Food and Beverages
Industry and determines the context within which businesses operate. Central
government and local authorities are major employers in South Africa; in many towns
they are the biggest employers. A change in policy can have major effects on the local
economy and on the South African Food and Beverages Industry.
Government departments frequently consult pressure groups about new regulations
and legislation. Pressure groups exist to influence government and politicians. Their
activities can also have a major impact on industries and individual firms, for example
the attempt by animal rights activists to prevent live exports of cattle. South African
23

25. Food and Beverages Industry has to be prepared to deal with the effects of pressure
group campaigns and to counter propaganda.
The South African political environment must be seen more and more as part of a wider
international context. An example can be seen in the European Union, which often has
more a different political bias from that of its member countries. Obligations under
international treaties must also be met, such as compliance with trade rules.
In the recent months the ANC Youth League leader, Julius Malema has been very
outspoken about the political and social dissatisfaction among the black youth of
today. A growing call for social and economical justice among the economical
oppressed can no longer be ignored. Restaurants in South Africa are one of the largest
employment industries today and growing pressure is being placed on restaurants to
provide better work conditions, salaries and opportunities for previously disadvantaged.
Among the complaints of the South African Youth is education and today 17 years after
independence the education system has failed the majority of them. This has a
detrimental impact on the availability of qualified and trainable staff.
The Growing Problem of Obesity
The Restaurant sector is blamed for selling unhealthy cheap food that encourages
people to overeat. The so called fast food restaurants are known to create a false
sense of abundance by providing a ready supply of condiments or items that cost the
restaurant almost nothing.
The South African Food and Beverages industries are also characterized by overworked
and over-managed young workers who work low wage jobs Schlosser (2004) and are
lured by free lunches. With the problem of obesity rising, the South African Food and
Beverages Industry is under attack for negligence despite the fact that it remains
unclear that fast food cause obesity Collins and Baker ( 2009). Nonetheless, the obesity
problem persists and remains a huge challenge for the restaurant industry in South
Africa and globally.
24

26. Social Inequality
According to Econobee (2009), the sector challenges are two-fold; the need to
become more inclusive, and globally competitive. Promoting inclusiveness requires
greater participation in economic activities and decision making by disadvantaged
groups such as blacks, coloureds and Indians in the sector. The challenge for South
African Food and Beverages Industry is to achieve certain targets on the score card
identified by 4 of the 7 focal areas of empowerment and transformation namely
ownership, management control, employment equity, skills development, enterprise
development, preferential procurement, and socio-economic development that are
designed to address historical imbalances in access to opportunities and benefits.
Food Safety Legislation
South Africa has had its fair share of food scares. There are numerous press reports on
incidents of contaminated food ranging from chickens to beef to unhygienic kitchen
conditions.
According to Mergenthale (2009) “Such reports have evoked widespread concern
about food safety. Supermarket chain, Woolworths, has established a cold chain of
organic or hormone and antibiotic-free products to promote safety. In South Africa,
food safety regulations and legislation are weakly enforced and this is fairly common
in other African countries “.
Food safety administration is controlled by provincial and local government authorities
in South Africa. Food safety lapses have been associated with outbreaks of foot and
mouth, E-coli, and Rift valley fever, among others. In South Arica and other developing
countries, beef, dairy, poultry, and fruit and vegetable supply chains are major sources
of food risks. Food safety concerns from disease outbreaks and traceability continue to
afflict global food markets Mergenthale (2009) “The challenge is not the lack food
safety legislation, but its enforcement.”
25

27. Production Risks: Energy and Water Problems
South Africa is facing serious electricity shortages that have resulted in load shedding
and blackouts. The rapid pace of economic development has outstripped the
country‟s capacity to provide reliable energy supplies. According to Wolson (2007)
“Intermittent energy shortages started in 2005 and have worsened overtime. Policy
makers have blamed South Africa‟s economic boom as the major cause for the energy
crisis. Short-term solutions have led to cuts in supplies to neighbouring countries such as
Zimbabwe, Botswana, and Mozambique.”
The South African Food and Beverages Industry is one of the sectors severely
threatened by the electricity shortages. Food and agricultural products are unique in
that they are perishable, rapidly loose quality, and spoil easily resulting in loss of
freshness and safety hazards to the South Africa Food and Beverages Industry food
supply chain. According to Collins & Baker (2009) “Irrigated crops face the risk of yield
losses while food marketing firms faces uncertainty due to product grading and quality
variations” . The lack of dependable energy supplies is compounded by concerns
about South Africa Food and Beverages Industry supply chain exposure to
contaminated water supplies. Marketing contaminated vegetables and meat products
from livestock that graze on pastures located on contaminated water sheds are a
source of anxiety for the food industry.
Energy usage of the restaurant industry
45%
40% Lighting
38%
35%
30%
25% Heating,
20% 21% Ventilation and
15% 15% Cooling
16%
10% IT Equipment
5% 6%
0% 1%
Water Heating
-5% 0 1 2 3 4 5 6 7
-10%
26

28. The problems of electricity and water, both key inputs in the South Africa Food and
Beverages Industry supply chain are a cause for concern and require long term solution
from policy makers.
Restaurant Waste Disposal and Environmental Degradation
The South African Food and Beverages Industry present some threats to sustainable
environment management. Waste packaging materials used by customers cause
environmental degradation. In-store recycling is not a major phenomenon although
McDonalds has initiated its own in-store recycling programs in South Africa. These
initiatives are likely to have a major impact if extended to other South Africa Food and
Beverages outlets.
All restaurants need to step up action on handling and disposal of behind the counter
waste, promote reusable items, and minimize solid waste. Although agriculture
biotechnology is a major global challenge, it seems there is no robust demand for
ethical products from South African consumers according to Maumbe (2010).
Lack of Hygiene, Slow Customer Response, and Standardising
The South African Food and Beverages Industry still face serious problems of hygiene,
slow response time, and standardising. Regarding hygiene, some fast food outlets serve
food that is prepared by workers without gloves or by people who operate tills and
handle bank notes at the same time. It is common for consumers to stand in long
queues and be served their food after prolonged waiting period defeating the
meaning of the term “fast food”.
In contrast, some restaurants pre-prepare food in advance to cut down order
processing time but that compromises product freshness. South African consumers
complain about small portion sizes and not getting value for their money. Some
discerning consumers are also concerned about the use of biotechnology products,
which raises ethical and moral questions about the environmental, medical, and
human welfare impacts.
27

29. Conclusions
Twenty years ago hardly anybody in South Africa knew what basil pesto was. Today
irrespective of the consumers demographic or geographical position, knows not just
what basil pesto is but has a vast knowledge of culinary arts. This is due to DSTV‟s
cooking channels and other media influences. Therefore expectations from the South
African consumers are very high.
The over-populated market environment creates a very competitive and unstable
business environment. Large international and local franchises enjoy great brand
awareness and marketing budgets but this does not necessarily guarantee success
within the industry. Consumers frequently visit food and beverage outlets not
necessarily because they hungry but for the experience therefore to differentiate the
restaurant from other competitive restaurants vast investments is required to ensure a
completely satisfied consumer experience.
The South African Food and Beverages Industry in South Africa have transformed food
production, marketing and consumption patterns. The industry has added tremendous
diversity to the available restaurant food products thereby changing the traditional
consumption patterns of ordinary South Africans. The restaurant industry is undergoing
restructuring that is characterized by a proliferation of regional and global franchises,
and the entry of challengers such as Fast Food chains, independent food caterers and
informal traders that are competing with well-established restaurants.
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30. COMPETITORS:
Due to Spur‟s product offering and style of service it competes with a wide variety of
competitors for the share of the consumers wallet ranging from steak houses to burger
take-aways. Spur Corporation essentially operates a franchise style business strategy
which is targeting the South African middle class family market. Therefore the two most
aggressive franchise operating companies who offer similar product ranges with a
similar pricing structure (value for money) is Famous Brands Limited and Taste Holdings.
Famous Brands share most of Spur‟s common retail space and have a wide family
orientated brand. Taste Holdings is relatively a new comer to the market but has shown
strong challenger potential.
Famous Brands Limited – The leading competitor in the market.
Famous Brands Limited its 2000th restaurant this year is planning to open up another 120
out lets according to Cape Times (2011: 31). The company opened is a public
company listed on the Johannesburg Stock Exchange in South Africa. The company is
Africa's leading quick service and casual dining restaurant franchisor. The company's
has 2000 franchised restaurants spread
across South Africa and has grown with over
245 restaurant with in two years. Famous
Brands Limited was previously Steers Holdings
Limited, which was listed on the
Johannesburg Stock Exchange in March
1994, and was later renamed Famous Brands
Limited. The company expanded through
the years by acquiring other fast-food brands and extending its manufacturing.
The group consists of the following: Steers, Mugg & Bean, Wimpy, Wimpy (UK),
Debonairs Pizza, FishAways, House of Coffees, Brazillian Café andBlack Steers The
company also consists of a manufacturing, Famous Brands Limited follows a strong
cobranding marketing strategy and for the future they would look for opportunities
29

31. within the brands by addressing trading formats. This could be seen where Famous
Brands launch its new forecourt format for Mug & Bean.
Famous Brands continuously advertise and promote their products to a very similar
market segment. Famous Brands Wimpy positioned themselves also as
a favorite family sit-down restaurant. In the mind of the consumers
Spur‟s and Wimpy‟s offer very similar services and products.
TASTE holdings – the challenger competitor
TASTE Holdings with 246 outlets are the owners of Maxi‟s, Scooters Pizza St Elmo‟s. Over
the last years, TASTE Holdings has shown great growth and are challenging the larger
franchise brands. According to Cape Times 2011 “the group posted a 27 percent rise in
system wide sales to R416 million and a 23 percent rise in reven ue to R113.4m”
According to Cape Times (2011: 31) Carlo
Gonzaga said the group will continue to focus
on the vertical integration of the food business
and in the long run they want extend their range
of food product by the company to improve on
the quality and price for it‟s franchisees. Their
strategy will include implementing a distribution
and warehousing capacity.
TASTE Holdings continues to take a reasonably
large portion of the disposable income from Spurs target market. Even though TASTE
Holdings brands are lesser known the growth rate of their new outlets will soon make
them a leader in the market. Maxis and Schooters Pizzas focus on value for money
strategies whereas St Elmo‟s have a strong value for family strategy.
The threat of larger international competitors are a reality which Spur will have to
address. Tricon are planning to reintroduce their Pizza Hut brand to South Africa.
30

32. POSITIONING:
Spur has positioned itself for more than 40 years as a family style sit-down restaurant in
South Africa. Very little has changed and due to the success they had over the years
Sue Biller is of meaning that this is the success of Spur.
South Africa‟s Family Restaurant.
Spur positioned itself as a family restaurant for the growing middle class market.
PROMOTIONS:
“Nothing satisfies us more than pleasing you our customers.”
Consumer Promise
According to Spur Corporation (2011) “Food is our passion. Welcoming you is our
pleasure. And our greatest reward is presenting our delicious meals. Whether it‟s a Spur
Burger, Panarottis Pizza or John Dory‟s Catch of the Day, our food is prepared to please
and fulfil. Big on quantity, big on aroma and especially big on taste. When you meet at
your home from home you are treated as family. We never hold back on our portions,
our laughter, or our welcome. Nothing satisfies us more than pleasing you, our
customer. This is our simple philosophy.”
Van Tonder (2011) “Value proposition remains strategically focused”
Spur Corporation again showed its resilience in overcoming challenging trading
conditions in the restaurant economy locally and internationally to post a competitive
financial and operational performance. While lower interest rates, higher real wage
increases in several sectors, declining food price inflation and stabilizing fuel prices have
been positive for consumers but household debt levels are high and consumers remain
under financial pressure.
In this continued tight trading environment they have capitalized on the strength of
their brands and the loyalty of their customers through value added marketing
campaigns.
31

33. According to Spur Corporation (2011) “Their marketing
department, which employs 22 staff members, has an
extremely important role in interacting with each and
every one of the restaurants, not only on a local
advertising-needs basis, but also regarding the myriad
of enquiries and interactions involved in
communicating on television and radio and other
national promotions. Together with our advertising agencies, DraftFCB Cape Town (Spur), JWT
Cape Town”
Through the years their brand equity remained strong, for Spur performing well in the
Sunday Times research findings. Their brand strategy remains focused on creating South
Africa‟s “Most Liked Home Grown Brand Icon”. DrafrFCB creates each year 6 – 8
campaigns for the Spur from which 6 would be promotional and 2 normally branding
campaigns.
The media choice for the
communication is TV, Radio and
outdoor billboards. Traditional media
will maintain the focus but a strong
increase in digital media with CRM will
be seen in the future. According to Sue
Biller Spurs advertising and promotional
campaigns revolves around the
universal family values and the value
added benefits of Spur. Convenience and the Spur experience is a central theme of
their campaigns.
According to Sue Biller, the account director at
DraftFCB, who is responsible for Spurs advertising
campaigns the Value Added Campaigns continued
to deliver positive results in terms of growing turnover
and building brand equity and this strategy will be
32

34. continued. Sue Biller also mentioned that the Spur “Monday Night Burger” promotion
which was aimed at the student market has delivered excellent results and has been
instrumental in ensuring a return to positive foot count growth for the brand.
During the past year Spur also launched its breakfast campaign to attract the business
sector for early morning breakfast. According to Sue Biller this was also a great success
and most probably will be continued in the future.
The Spur Unreal Breakfast promotion has
created an additional revenue stream and
captured market share from other national
chains who have previously dominated the
market.
Spur has launched their Spur Family Card
loyalty program as well as a gift card program which is expected to further entrench
customer loyalty and benefit restaurant turnovers. Brand loyalty will be driven through
these aggressive marketing campaigns. According to Sue Biller consumer relationship
management systems will play a central part of future promotions and marketing for
the Spur.
Managing director, Pierre van Tonder, said cording to Spur Corporation (2011) the
group‟s performance benefited from new restaurant openings locally and
internationally, the launch of the Spur Family Card loyalty program and value-based
promotional campaigns. "It is also pleasing that we have seen an increase in the
frequency of customer visits across our three brands."
Last year, new websites for Spur and Panarottis were launched and have shown an
increase in digital activity, including direct website access and Facebook involvement.
They continue to invest in improving their store management, franchise agreement and
operations reporting systems, in order to assist with the managing of operational
33

35. standards. The development of their data warehouse is progressing and they have
started delivering meaningful statistics to their franchisees, operations teams and
marketing department to assist them in their decision making.
Discussing the outlook for 2011 in the Spur Corporation (2011), Van Tonder said ,while
the economy should continue its slow recovery, consumer spending is expected to
remain muted in the year ahead.
“In this environment we need to ensure our brands continue to offer an attractive and
affordable proposition, that franchisee profitability is well managed and that we remain
competitive by tailoring our menus to meet customer demand.” Spur Corporation
(2011)
PRODUCT ELEMENTS:
The Spur Steak Ranch, the much-loved family restaurant, as we all got to know the
brand consists out of the following product elements: atmosphere, menu, marketing,
intellectual property and operational support. Spur Corporation is a intellectual
property company and although this would
be the last product element we would
consider. For most of us the Spur is a family
restaurant which serves mainly burgers and
steaks.
Atmosphere - lifestyle
Over the years Spurs have created their own
unique friendly and lively atmosphere weather you
are travelling by car or by plane it is always a
friendly fact to see. According to Spur
Corporation (2011) “each Spur restaurant is
designed to cater for the whole family, from
comfortable, spacious seating for adults to
34

36. designated children‟s activity areas. Parents can relax while enjoying a delicious meal,
knowing that their children are in an environment where they can have fun in a safe
area.” The Spur is essentially more than just a restaurant you go to with friends, family
and/or co-workers – it‟s a lifestyle. It is not impossible to create your own restaurant as a
restaurateur but the Spur has monopolized this very particular atmosphere in the hearts
and minds of the consumers.
Intellectual property
Whether you are a hungry potential guest or a hungry restaurateur Spurs formula of
success attracts your attention. Spur operates predominantly as a franchise operation,
with each individual outlet owned and operated by independent franchisees. Spur has
used this model for years which has proved to encourage entrepreneurship and
business success. According to Spur Corporation (2011), “Spur takes pride in their
intellectual property and operational know-how and actively assists franchisees through
operational assistance and continuous training.” The lessons Spur has learned through
the years at great expense us their greatest asset. In today‟s financial world very few
entrepreneurs could have thought starting up a business without financing and one of
the convincing factors for financial institutes are the fact that Spur has the intellectual
know-how to exponential success.
A menu
Spur has been the greatest influence in South African‟s culinary perception until DSTV
Food Channel. For example a milkshake is not a milkshake if it is not made the way Spur
makes it. A restaurant is not a restaurant if it does not have a Dom Pedro. For years a
Cappuccino was coffee with cream the way
Spur makes it. There is no onion rings like Spur
onion rings.
There‟s something to suit everyone‟s taste at
Spur, from the young to the young at heart. The
menu boasts an array of feasts, from supreme
35

37. steaks to top-quality ribs and mouth-watering burgers, to name but a few.
They take pride in their value-for-money meals and exceptional service. With today‟s
high food costs and food shortage the Spur offers any entrepreneur the opportunity to
use their bulk purchasing bargaining power.
Operational support
The well-trained, motivated and experienced operations Spur team provides ongoing
backup, support and assistance to the franchisee. According to Spur Corporation
(2011) “The team is responsible for upholding the high quality standards of the brand as
well as assisting the franchisee in all aspects of building and maintaining a successful
business.” Spur also provides ongoing support in the form of evaluating and training of
staff, products from our Central Kitchens, an integrated information system and Spur
Marketing.
Marketing to your community
Recent studies regarding brand equity
and the influences it had on consumer
loyalty proved that brand awareness is
the main factor in decision making of
purchase. In modern South Africa
restaurants are on every corner with wide
variety of menus to choose from therefore
to differentiate yourself from the
competitors Spur offers a great marketing platform. According to Spur Corporation
(2011) “Spur Marketing, situated in Cape Town, will assist with the conceptualization,
design, production or media placement of your advertising ensuring your business
stands out in your community. “ Spur aims to improve customer satisfaction and to
increase sales and profitability through creative brand management and innovative
product development, market research, advertising, sales promotions, public relations
and local marketing.
36

38. DISTRUBUTION, PROCUREMENT & LOGISTICAL MANAGEMENT:
Spur has a centralized distribution and procurement strategy which forms a key part in
the success of Spurs. This strategy ensures efficient, stable supply of consistent quality
products to customers which at the same time limit the financial risk related to key raw
material prices to the franchisee body. Due to production efficiencies margins in the
manufacturing divisions improved due to a reformulation of certain products and more
stable food prices. Sales of their retails sauces continues to grow due to brand
awareness with several new products launched during the past year. The spur
conducts regular supplier audits to increase food safety standards and transparency.
The manufacturing and distribution revenues increased by 16.0 percent to R109.0
million. Recently the groups manufacturing facilities were consolidated into 1 facility in
Cape Town. This improved efficiency and cost effectiveness and for R10 milliion a new
warehouse for the Décor production company was established.
For years Spur managed their in-house distribution with the help of smaller distribution
agencies. Recently spur contracted Vecor for the distribution of their manufactured
and product supply to restaurants. According to van Tonder in Spur Corporation (2011)
this had a vast cost saving influence on the company and improved the cold chain
between the production warehouses and restaurants. This is essential for the food
safety and hygiene required for customer satisfaction.
PRICING STRATEGY:
During these past years suppressed trading conditions in the retail market the Spur
brand in South Africa enjoyed had a successful year. Food prices remain relatively
constant during this year but increasing electricity tariffs, rentals and rates makes it
difficult to maintain the Spur‟s value for money pricing strategy .
According to the Spur Corporation “these factors necessitated a menu increase of 7.3
percent for the year. Continuous menu engineering and ongoing reinforcement for
standards through regular training are key elements of the brand strategy going
forward which is added value”.
37

39. BRAND EQUITY DEVELOPMENT & MANAGEMENT:
Spur Corporation has a working and very active brand management system which is
monitoring the brands equity. In the past they have realist the need to create brand
equity among adult .They have discovered that the market place has a great appetite
combo meals. As a result of research, some innovations items have been added to
their permanent menu. In addition to main meal items, they are about to launch a
range of innovative, extremely tasty desserts, which according to Pierre van Tonder in
Spur Corporation (2011) “they are confident will increase their customer spend per
head and engender continued loyalty to the Spur brand in terms of wanting to taste
the combination of offerings which are available under at Spur.
Product Line
Spur Steak Ranch American Style Express Retail sauces and other
Steak House Fast Food condiments
Sit Down Restaurant
Brand Lines
Panarottis Italian Style Express
Pasta‟s and Pizza Fast Food
Sit Down Restaurant
John Dory‟s Fish Greek Style See
and Grill Food
Sit Down Restaurant
Over the past number of years they have grown their brand to be the dominant player
in the family sit down serviced restaurant industry. According to Spur Corporation 2011
they make certain that in this market their quality is of the highest standard, as is the
Spur‟s value for money. This is the reason why the Spur has increased their market share.
Together with their effective marketing and high quality adult and kids promotional
offerings, has created great customer loyalty and brand approval from the South
African middle class.
38

40. Brand Hierarchy for the Spur Corporation Restaurants
Source: Spur Corporation 2011
According to the Spur Corporation 2011 “ When addressing issues of branding, it is
pertinent to mention that when publications
such as the Sunday Times do brand research,
they tend to group us with fast f ood
establishments. This is of course erroneous, as
we do not regard ourselves as a fast food
organization, although, we are more than
capable of providing a swift meal for our
customers”
39

41. The Spur brand has a challenge for the future to positioning within the mind of the
consumers and media as the sit down
serviced restaurant since this the positioning
of the Spur at presented is in the mind of the
consumer is of a fast food restaurant. There
are servile reactions for the perception one of
them is the product offering (Menu) and the
association the public has with franchise and
fast food
Spur is one of South Africa‟s iconic brands
and the perception that it competes within the fast food market has a great deal to do
with its American heritage and speedy service. This perception of Spur being a fast
food restaurant is precisely what gave
Spur its competitive edge. Spur offered a
fast food restaurant with a friendly sit-
down service to the South African
public. This is why Spur succeeded to
exceed customer‟s expectations for
years. The question today is whether
consumer‟s expectations of the Spur
brand are being exceeded. From
individual interviews it has become apparent t hat Spurs consumer promise is not being
met in the minds of consumers. Brand awareness is still a key aspect for the reason why
consumers still support the Spur.
40

42. QUESTIONS RELATED TO CASE STUDY:
Spur regards themselves as competing in the sit-down restaurant market segment but in
the consumers mind Spur is considered a fast food outlet. Why is this so?
According to the case study who is Spur‟s primary target market sand what is Spur‟s
position statement?
How do they plan to penetrate new opportunities within the South African market?
Who do you consider Spur‟s competitors?
What is Spur‟s product offering and what unique benefits are associated with the Spur
brand?
Spur consider their brand as their single largest asset. What do they consider to be their
second most valued asset and what effect does this have on the Spur brand? The Spur
prides itself as a family. What evidence of this could be found within this case study?
The future of Spur‟s marketing campaigns would continue with traditional media. What
according to Sue Biller would be the focus for the future and what legal implications
need to be considered?
According to the research done regarding consumer insights what plays the largest role
in consumer‟s decision on where to dine.
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43. FUTURE RECOMMENDATIONS:
The Future of the Spur brand is to be determined by
which decisions the Spur Corporation makes over the
next two years. With the present marketing strategy
focusing on expanding in the new markets
and penetrating the existing South Africans,
Spur has to consider the strength they have
with in the South African market. Spurs
greatest asset is its brand and the perceptions
the South African public has of it. New and
market segments within Southern Africa and
stability
within
Southern Africa offers the Spur brand opportunities
within South Africa market. The greater energy,
employment and foods cost should also be consider
for a sustainable future.
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44. Using the Ansoff matrix we could determine what future options would be the most
feasible. The following factors would need to be considered:
Environmental factors such as technological, political, economical, regulatory and
social.
Category factors such as threats of new entrants, buying power of buyers, buying
power of suppliers, current category rivalry and industry capacity.
Aggregate Market factors such as market size, market growth, stage of product live
cycle, sales cycle, seasonability and profit.
Products
Current New
Market Penetration Product Development
Penetrate the market by increasing share of market in Redevelop the Spur express to include drive throws and
volume of outlet 24 hour services
Increase distribution to retail stores
Current
Develop a Meat product ranges for the retail stores
Increase Point of sales at sport events and retail stores
New Menus for the changing markets needs to portray
Increase Spur’s promotions in schools activities and a heather menu
universities
Develop a frozen dessert product range for the retail
Increase Spur’s advertising stores (waffles, ice-creams and cakes)
Build a stronger relationship with the market
Markets
Market Development Diversification
Enter the Angolan market Develop a new brand of fast food outlets to compete
with competitors
Develop the non-family middle class market
New
Develop a new brand of sit down restaurants for the
Enter the South American market romantic middle class
Enter the low income market in South Africa with Spur Develop a new brand of bistros for the South African
express business community
Enter the new higher income market of South Africa Develop a Spur road house ( drive-through and self-
service) for the 18 to 35 middle-class market
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45. Suggestions:
Therefore considering these factors the recommendations are made for the future to
address the challenge to position the Spur Brand as a sit down restaurant and to
protect the market share.
Create a distinctive new format of product offering which will change the brand
associations with fast food. To achieve this Spur will create a brand extension to its
brand profile. The spur we know today will stay the Spur Steak Ranch with an improved
modern menu with the focus on wholesome goodness of South African products to
exceed the expectation of the consumers. Target the middle class family market that
has a “Taste for Life.” This will create greater brand associations with quality and
healthier food and capitalize on the increased spending power of the rapidly growing
middle class in South Africa.
Capitalizing on the growing demand of Westernized fast food with a more frequent
sales cycle and less seasonal fluctuation Spur should create their new brand called Spur
Road House (fast food /drive through diner) which is focused on convenience and
speed. This new brand of restaurant will only be free standing properties owned by the
Spur Corporation in convenient locations. This will address the environmental threats to
the Spur (high rentals, energy and staff costs).
This new brand will be similar to Spurs new smaller outlets which are available in less
densely populated environments. The success of this new brand will be based on the
following four P‟s:
Product: Free standing Spur Roadhouse
Place: First phase: South Africa‟s suburban areas and City Centers
Second phase: On route to popular tourist destinations
Price: Value added strategy with the focus on combination meals
Promotion: To promote Spur Roadhouse, communication will be focused on building
a meaningful relationship with individuals between ages 14 – 35, which
have a Taste for the outdoor Life. The traditional Spur media and
promotional strategies would be included to promote the new
Roadhouses.
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