Analyst Ned Hammond at Berenberg has downgraded The Restaurant Group to ‘sell’ from ‘hold’, and said that said the strategy unveiled by the company’s new management appears “relatively credible” but it has “not altered our view that the company has a very tough task ahead”.

Hammond highlighted the company’s was up around 23% since the end of January, but added that the current valuation is unattractive.

He noted the company’s weak set of 2016 results and said that while management’s plan to turn the business around was laid out in fairly considerable detail, it has not changed his view that the group has a very tough task ahead, considering the extent of the changes that need to be made to the leisure brands.

Hammond said the plan to try to improve the performance of the leisure brands, which includes menu changes, pricing correction, improved labour scheduling and increased marketing, seems sensible.

However, his analysis suggested significant price correction is required to bring brands such as Frankie & Benny’s and Chiquito in line with competitors.

He said: “We continue to believe it could take considerable time for the brands’ reputations to improve sufficiently for volume growth to offset lower prices. As a result, we anticipate that like-for-like sales will decline 4.5% this year, and we feel that there is risk to achieving this figure.”

Hammond added that given the way the competitive landscape has evolved in recent years, it is “difficult to have confidence that the strategy will lead to a strong recovery”.