Gourmet Burger Kitchen (GBK) saw like-for-like (lfl) sales fall by 9.7%, compared to a 3.2% decrease seen in 2017, for the 26 weeks to 26 August 2018.

Its parent company Famous Brands was forced to issue a trading statement earlier this month, ahead of its H1 announcement today, due to GBK’s continued underperformance in the market.

An operating loss of £2.6m was reported for H1 – compared with £872k in 2017, while system-wide UK sales fell by 6.8% (2017 saw an 11.1% increase).

Last week the business announced it had initiated CVA proceedings, through Grant Thornton, in order to “reach binding agreements or compromise with GBK’s unsecured creditors, with a view to restructuring the business’s leased property portfolio in line with current market valuations”. Seventeen of its 85 restaurants have been earmarked for closure.

Famous Brands said that notwithstanding the effect of the difficult macroeconomic climate on the GBK business, management identified several areas at the end of the prior financial year as requiring urgent attention. These include: operational benchmarks which no longer met gold standards; the need for improved customer engagement across the offering; sub‐optimal management capacity; and lack of traction in key growth areas, including the delivery component.

It said a range of key strategic imperatives and corrective measures were outlined, and good progress has been achieved regarding the following: The core leadership team has been strengthened and management oversight improved. It has re‐established and leveraged GBK’s brand assets. A targeted refurbishment and high‐street brand facelift programme has commenced. It has simplified menu design and entry and exit pricing. The supply chain has been simplified and streamlined, and the targeted closure programme for distressed sites has progressed, with the closure of six stores.

The group said additional operational opportunities exist and are being explored for GBK, including launching a multi‐vendor delivery platform to increase the current offering from one to three vendors, which should enhance its competitiveness in an area in which it has lagged recently.

In light of the continued adverse trading conditions and sustained underperformance of GBK, an impairment of £46m (pre‐tax) has been recognised at Group level.

However the Board said that it was satisfied that the positive impact of remedial interventions under way in the operation and the inherent strength of the GBK brand will, in time, add value to the Group.

Famous Brands’ other UK business Wimpy UK reported a 13.6% increase in revenue over the six months to 31 August 2018.

Operating profit rose by 2.1% to £460k (R8.5m). Famous Brands said Wimpy’s collaboration with GBK to leverage commodity purchase volumes continued to deliver lower prices for core products, enabling the business to contain price increases.

At 31 August 2018, the network comprised 75 restaurants, with none opened or closed during the review period.