Sfinks: PLN 8.8 million gross profit on sales and PLN 6.1 million EBITDA

Monday, February 27, 2012 - 10:44

Sfinks Polska

Sfinks Polska Capital Group – which manages the Sphinx, WOOK, and Chłopskie Jadło restaurant chains – achieved a consolidated sales revenue of PLN 170.7 million in 2011, which means an increase of 5.7% compared to the previous year. During the whole twelve months of 2011, the group earned a gross profit on sales of PLN 8.8 million, while in 2010 it reported a loss of PLN 3.7 million. Additionally, Sfinks reached a positive EBITDA last year, which amounted to PLN 6.1 million, constituting an improvement of PLN 13.6 million in comparison with 2010, which ended with an EBITDA of PLN -7.5 million. This years’ plans of Sfinks for this year predict, among other things, further development of full scale restaurant chains for Sphinx and WOOK, as well as rebranding and other changes in the Chłopskie Jadło chain.

Among the brands possessed by Sfinks, the largest increase in revenue last year was reported by the WOOK chain, with a sales dynamics of 17.5% for that period. The Sphinx chain reported a rise of 6.3% in 2011. The operating results of the group also improved notably – by PLN 21.1 million. At the end of 2011 this amounted to PLN -6.9 million in comparison with PLN -28 million reported in 2010. A similar scale of improvement, PLN 21.2 million, was reached at the level of the group’s net result: after 12 months of last year it amounted to PLN -15.7 million, while in the previous year it was at PLN -36.9 million.

“We consistently perform actions with the aim of raising the group’s profitability, which is reflected in our financial results. We also have a systematic growth of turnover. We surely still face much work related to making up for past losses; however, the improvement to date is vast. An agreement concluded last year with the banks deferring capital payments for three years, a partial redemption of one of the loans, and a successful issue of shares gave us the possibility to dispose of funds for the recreation and development of the chains. Thanks to an improvement in the functioning of the restaurants, the implemented pro-sales programmes, and the improved offer, which was made more attractive, our chains operate increasingly efficiently. The plans for the following months assume further work on the improvement of the financial results and the systematic development of full scale franchise restaurants, while securing the profitability of the chains,” says Sylwester Cacek, the President of Sfinks Polska.

Currently, only 16% of the restaurants are Sfinks’s own restaurants, the remaining 54% are franchise premises, and 30% of the restaurants are run as an operating model. This means that in total, at the end of last year, 62 out of all restaurants operated as franchises, and 35 were run by operators. At the same time, 2011 saw a significant increase in the interest in cooperation on the part of potential franchisees. The number with whom we began talks increased by 67%.

For the first quarter of 2012, Sfinks planned at least 7 new restaurant openings, all of which would operate as franchises. The reduction of opening costs of new restaurants has a significant impact on the further development of the chains, and it has been achieved partly through the elimination of unnecessary expenditure, more favourable prices of equipment and furnishings, and lower construction and finishing costs. Currently, the cost of opening a new restaurant oscillates around PLN 500-650 thousand, while before this was PLN 800-1200 thousand.

“The considerable reduction in the opening costs of new restaurants also influenced the decisions regarding the tested express concept. It turned out that launching full scale restaurants currently requires similar expenditures as for the express concept. This is an economically important factor, which has led us to deciding that we will concentrate primarily on the development of full scale restaurant chains. More so because the consumer research we conducted last year shows that Sphinx restaurants are viewed by the customers as places close to the idea of fast casual dining. Additionally, investing in both full scale restaurants and the pilot express project is not economically justified, as it would mean doubling work and costs,” says Sylwester Cacek.

This year will see significant changes in Chłopskie Jadło. One of them is the rebranding of the chain. The implementation of a visualisation containing a new logo is scheduled for the first half-year of 2012. The signboards will be replaced first. The Polish cuisine on offer will change along with the visual elements related to it. Moreover, a new web page will be launched in the first half-year of 2012, and the modification of the restaurants’ interior will begin. Dedicated promotional and marketing programmes are also planned. These measures aim at, among other things, broadening the target group of the restaurant by customers from the casual segment, a more distinctive visual identification, and a rise in recognisability of the Chłopskie Jadło brand.

At the same time, the company will gradually modernise the chain by refreshing and renovating successive restaurants, and organise marketing campaigns to increase sales. As a preparation for the European Football Championship, some of the Sphinx restaurants will contain fan zones, equipped with monitors where football fans will be able to watch match broadcasts. Moreover, a promotional campaign began in February, in which the clients of Sphinx can collect a special publication in the first half-year of 2012 – the Fan’s Collection dedicated to the teams playing in the football championship. The pro-sales measures also include the WOOK restaurants. A new menu was introduced, where the choice of sets was significantly expanded, occasional offers and promotional campaigns are also being introduced.

The changes also concern the foreign operations of Sfinks Polska. At the beginning of this year, the company signed a 10-year master-franchise cooperation agreement with its current partner in Hungary which took over the management of a Sphinx restaurant located there. By the end of 2012 another restaurant should open in Budapest, and the final plan is to open at least 6 new Sphinx restaurants in Hungary.

Mon, 2012-02-27