Shares in The Restaurant Group (TRG) fell 23p (7%) yesterday to 312.9p, on the back of a note from UBS, in which it stated that Frankie & Benny’s new menu was still 22% more expensive than branded pub chains despite cutting prices.

UBS downgraded TRG’s shares from ‘Neutral’ to ‘Sell’ and cut its target price to 275p from 310p and said that in its view “the turnaround for Frankie & Benny’s looks challenging based on changes implemented so far”.

UBS stated: “Core to the turnaround strategy for Frankie & Benny’s is a new menu, aimed at improving the value proposition. After its recent menu launch, we have analysed the new F&B proposition along with 20 key competitors, with our analysis indicating that, while prices have fallen (c6% on average), a value gap remains versus the branded pub chains which are on average 22% cheaper.

“Given these (pub) brands also focus on the family value-orientated market, we see risk that the Frankie & Benny’s price cuts will not drive the required footfall increase from the core family value-orientated customer F&B is looking to attract to offset price reductions.”

The bank cut its earnings per share estimates for 2017 and 2018 to 20.3p from 21.2p and to 19.1p from 23.0p respectively, given less confidence in the turnaround.

While UBS believed the strategy is moving in the right direction, it sees greater risk. UBS also highlighted the complexity of the Frankie & Benny’s menu, which has 67 main courses, more than double the peer average of 33.

It said: “We believe, given the importance of the new Frankie & Benny’s menu in turning around the brand, we are now more cautious on the near-term ability of the current strategy to turn around the group’s performance.

“Given these brands also focus on the family value orientated market, we see risk that the F&B price cuts will not drive the required footfall increase from the core family value orientated customer F&B is looking to attract to offset price reductions.

“As a result, they have cut their earnings per share estimates for Restaurant Group by 4% for 2017 and by 17% for 2018, and reduced their target price to 275p from 310p leading to its rating downgrade after a strong recent share price performance.”