Tasty plans to exit around 20 loss making sites as part of a company restructuring to secure its long-term future.
The company, which operates Wildwood and Dim T restaurant chains, has announced a £750,000 loan agreement with Bet365 shareholder Will Roseff to fund the plans.
The loan will stabilise the company this year and help it to “meet new opportunities” in the sector in FY25, the business said in an update.
“Following a period of external challenges which have impacted the company’s business and trading performance, the Board has explored strategic and restructuring options available to it.”
Tasty currently operates 54 sites comprised of 43 Wildwood, 6 Dim-T branded sites, two non trading sites and three sub-let sites.
The expectation is that the restructure would enable the company to exit 20 loss making sites, of which 2 are currently closed.
For the 53-week period ended 31 December 2023, the company expects to report revenue of approximately £46.9m, compared to£44.0m in 2022, alongside gross profit of £34.1m, compared to £31.4m in 2022, and an EBITDA loss of approximately £0.9m.
Tasty said that it had made reasonable progress since the year end and despite difficult recent trading conditions, management “continue to navigate through challenging times to mitigate cost rises and lower trading performance.”
“As previously reported, the cost-of-living crisis, transportation strikes, and interest rate rises continued to significantly impact FY23 revenue and inflationary pressure on labour, food and utilities continue to adversely affect profitability.
“It was added that financial performance has been inhibited by a tail of underperforming sites, despite efforts at improving operational performance”, the company added.
H2 2023 like-for-like revenue was +6.6% compared to +1.4% in H1 2023. However, trading has been “challenging” in FY 2024 and current like-for-like revenue is -2.1%.
Tasty expects the restructure to enable a significant EBITDA improvement of up to £2.1m between FY 2023 to FY 2025 through site rationalisations and other tangible cost savings, including head office savings of £0.6m per annum and expected lease savings from exited sites in FY 2024 of £2.1m.
Following completion, the group would operate 30 profitable restaurants with FY 2024 EBITDA expected to be £0.3m.
Revenue of approximately £33.4m and cash generation of approximately £1.3m is expected in FY 2025, with the loss in FY 2023 of £0.9m expecting to improve to a £1.2m profit in FY 2025.
