Leading analyst Nick Batram at Peel Hunt says that The Restaurant Group should post a solid H1 next week (28 August), with like-for-like sales expected to be close to the +2% reported at the AGM in May. He expects all component parts of the business to have performed well.
He said: “H1 has historically accounted for 41-43% of profits and this would suggest £35-37m PBT. With the exception of wages, cost pressures have been benign and we expect them to remain so for 2015.
“In terms of the living wage, the impact on Restaurant Group before mitigating actions is likely to be £2-3m in 2016. However, the group has an excellent track record in terms of margin consistency, even during periods of rising costs.
“There is little doubt that restaurant supply is increasing, wage costs are set to rise well above inflation and a rise in interest rates moves ever closer.
“However, this is a reflection of the improvement in the consumer backdrop and nothing the group has not experienced before. Furthermore, a strong H2 for cinema, together with softer comparatives, presents an opportunity to surprise on the upside.”
