Fulham Shore, owner of the Franco Manca and The Real Greek brands, has said that despite hitting its targets for the first quarter of its financial year, during the holiday season in July and August it experienced a slowdown in trade, primarily from its restaurants in London suburbs.
The group said it believed this was a “sector-wide trading pattern and not unique to our brands”.
In addition to this slowdown in revenue growth, as previously indicated, the company said it was experiencing a higher fixed cost element to support its increased level of operations, especially in The Real Greek.
As a result of these two factors, the company expects that, while Headline EBITDA (as defined in the company’s accounts) for FY18 will be significantly higher than that achieved in FY17, it is likely to be less than current market expectations.
At the same time, the David Page-led company said that given an increased availability of sites for sale due to the well-publicised pressures on other restaurant operators, it has decided to review its opening pipeline and to seek to improve terms with landlords of new sites we had already identified. It said that this may delay some of ouitsr openings to later in this financial year.
In March, the company announced that it was reviewing the progress of its third business, a single franchise of the Bukowski Grill. In order to simplify operations and focus on the group’s core brands, the company said it has decide to sell its Bukowski franchise and site in D’Arblay Street, Soho.
In the 2018 financial year to date, the company has opened seven Franco Manca pizzeria in the UK, one Franco Manca franchise in Italy and three The Real Greek restaurants. This takes Fulham Shore’s restaurant portfolio to 56 sites, comprising 15 The Real Greek, 40 Franco Manca and one Bukowski Grill. Many of the group’s new restaurants are located outside London, in line with the company’s strategy of extending the reach of its core brands.
It is currently building two more Franco Manca pizzeria, in London and in Bristol, which are due to open later this autumn. The group continues to anticipate opening 15 new restaurants in the current financial year, in line with expectations (10 have been opened so far, the latest two being Franca Manca Oxford and The Real Greek Dulwich Village).
Page said: “The Board is confident that the Group’s Franco Manca and The Real Greek brands offer customers delicious, well-priced dining options in congenial surroundings. The Board believes that these strengths will see Fulham Shore through the current uncertain market conditions. We believe that both of our key brands have significant further growth potential and we continue to anticipate opening 15 new restaurants in the current financial year.
“Whilst the casual dining sector continues to face a number of cost pressures, the Group does not intend to raise menu prices in the short term as we believe this is one of the fundamental reasons for the success of both The Real Greek and Franco Manca. In addition, the Group will continue to pay at least the national living wage to all its employees, including those under the age of 25, and we will look for more ways to retain and incentivise our talented and committed team.”
