Large Romanian restaurant operator returns to profit in Q3 despite challenging context

Sphera Franchise Group (SFG), one of the biggest restaurant operators in Romania, recorded a net profit of RON 17.6 million (EUR 3.6 mln) in the third quarter of this year (Q3), just 12.3% lower compared to the same period of 2019, as the sales were 20.5% lower than in Q3 2019.

However, the group's turnover in the third quarter – RON 198 mln (EUR 40.8 mln) – was almost double compared to the previous quarter (Q2), when the company took a significant blow due to the COVID-19 pandemic and the related restrictions.

"After an extremely difficult second quarter, the third quarter showed signs of recovery. During this period, we reopened all restaurants and focused mainly on expanding delivery services, optimizing menus to suit market conditions, redesigning customer and production flows, analyzing and improving cost structures to maximize performance," said Calin Ionescu, general manager of Sphera.

In the third quarter, Sphera implemented cost-cutting measures in the restaurants and on the administrative side.

The group benefited from state aid from the Romanian Government, which contributed to the decrease of salary expenses by a third, and managed to reduce rent expenses by 20.7%.

Overall, for the first nine months, Sphera Franchise Group reported total sales of RON 502 mln (EUR 103.5 mln), down 27.6% year-on-year, and losses of RON 4.7 mln (almost EUR 1 mln), compared to a net profit of RON 38 mln in the same period of 2019.

Sphera Franchise Group operates the KFC, Pizza Hut, and Taco Bell franchises in Romania and also has KFC restaurants in Italy and the Republic of Moldova. The group opened four new restaurants in Q3, three in Romania and one in Italy, reaching 158 units.

The company is listed on the Bucharest Stock Exchange, where its shares have lost a third of their value this year. However, in the last week, they gained 6% (as of November 12).

(Photo source: the company)