Leading analyst Nick Batram at Peel Hunt believes there is potential for acceleration in like-for-like sales at The Restaurant Group and expects the company to deliver a strong update next Friday.
He said: “Although cinema admissions have been weak over the quarter, the Greene King Leisure Spend Tracker shows good yoy growth in spending on eating out. LFL sales for the 34 week period were +3.5% vs 2.5% in H1, suggesting a very strong start to Q3 (>6.5%). Given this and the Greene King data there is a good chance that LFL sales for the 45-week period will have accelerated further.
“If this is the case then there will undoubtedly be speculation about upgrades. However, Christmas is a key period and management are naturally conservative so any shift in guidance at this stage would be a surprise.
“The Restaurant Group is a core holding in the sector, with an impressive track record, excellent returns and a growing pipeline. The market is competitive and there is growth in supply but the company has proven its ability to outperform and we see no reason for this to change.”