Large restaurant operator in Romania sees signs of recovery after sharp sales drop in H1

Romanian restaurant company Sphera Franchise Group (SFG), the owner of the KFC, Pizza Hut and Taco Bell franchises in Romania and KFC franchise in Northern Italy, sees signs of recovery after it recorded consolidated sales of RON 304.6 mln (EUR 63.5 mln) in the first half of this year, down by 31% compared to the same period of 2019.

In the second quarter, the company’s turnover dropped by 54%, to RON 106.3 mln (EUR 22.1 mln).

Sphera thus recorded losses of RON 22 mln (EUR 4.5 mln) in the first half, compared to a net profit of RON 18 mln in the same period of 2019.

Economic restrictions imposed in Romania, the Republic of Moldova and Italy impacted the company’s results in the first half of the year. The most significant negative impact was recorded in April, when most of the restaurants were completely closed and delivery activity was limited, according to the group’s half-year report.

However, the company says it managed to cut costs and compensate part of the revenue decline and that its results were above average in the hospitality industry.

“It was certainly a difficult quarter for everyone in the HoReCa industry, but not only did we manage to overpass it by adjusting as things unfolded, we are also confident about the future. We significantly reduced operational costs, maximized revenues, and remained close to our customers. For the moment, we remain prudent and we continue to regularly analyze the performance of our individual markets, brands, and stores to respond to any potential evolution in an agile manner. Our swift response in Q2 through investments in the development of the restaurant network and the switch to digital channels will definitely bring revenues and access to new customers”, said Calin Ionescu, acting CEO of Sphera.

The company focused on developing news sales channels and closed partnerships with 8 online food delivery platforms.

In the second quarter, 47% of sales in Romania were done through delivery, compared to 7% in the same period last year. Since May, sales have been on an upward trend, due to partnerships with food aggregating platforms, the reopening of restaurants in shopping malls, and the overall resumption of economic activity in the markets where the group operates.

“We see clear signs of gradual recovery, following the relaxation of the restrictions meant to contain the pandemic. Even though restaurants remain closed indoors, in June 2020 we managed to reach 65% of pre-pandemic sales level. In July, the figure increased to 75%, thus giving us good reasons to be optimistic about our performance in the upcoming months,” said Valentin Budes, Chief Financial Officer of Sphera.

(Photo source: the company)