The Restaurant Group (TRG), the operator of Frankie & Benny’s, has this morning reported like-for-like sales growth of 4% for the first nine weeks of 2008. A year ago its like-for-like sales were growing at 5%.
Unveiling preliminary results for 2007, the company said it anticipated a “tighter consumer market” in 2008 but would still press ahead with at least 30 new openings this year, focusing on delivering “great service and value”.
TRG said that while it was encouraged by the performance in its current financial year, it was mindful of some tough comparisons against last year’s figures for Q2 and Q3, when like-for-like sales were ahead 8.3% and 7.3% respectively.
Andrew Page, chief executive, said: “We have made a solid start to the year and, providing there is not a significant further deterioration in the UK economy, we are confident of continuing our progress in 2008.”
The company, which now operates 330 restaurants and pub restaurants, predominantly in leisure and travel locations, said like-for-like sales for the 12 months in 2007 rose 5.5%, after a significant slowing of growth in the final quarter of 2007.
Adjusted underlying profits (ebitda) rose 22% to £67.8m, on sales up 17% to £367m. At an adjusted pre-tax level, profits were up 24% to £43.5m. Adjusted operating profits were up 23% to £48.2m. The figures were adjusted to exclude non-trading items.
Margins improved at both divisional and group levels, with group adjusted operating profit margin increasing 60 basis points to 13.1%.
During the year it spent £37.8m opening 36 new sites, including the acquisition of two freeholds, which were all funded from existing cashflow. It also spent £9.6m maintaining its existing restaurant portfolio.
The group’s leisure division recorded operating profits of £61.6m on sales of £285.2m. Operating margins were 21.6%.
Following a “superb” performance at Frankie & Benny’s, TRG said its family-oriented American diner could be expanded from its current 159 sites to over 250. It opened 20 last year.
At the 53-strong Chiquito chain, operating profit margins improved 90 basis points and ebitda growth was close to 30%. It opened eight Chiquito’s in 2007 and expects to open 5-8 this year.
The company said that its 26-strong Garfunkel’s business was flat, given that 19 weeks of trade were lost in the first half to refurbishments, resulting in significant uplifts in the second half. It said that Garfunkel’s, which was now in its 29th year, continued to deliver “excellent profits and returns”.
Following its acquisition of the 15-strong Brunning & Price pub business last year for £32m, its pub-restaurant arm now comprised 42 units. During the year six new Blubeckers were opened. TRG said it expected to open 5-10 new pub-restaurants and longer-term, the division has the potential to become a significant part of the group.
At the group’s concessions business, which operates in airports, sales were £81.2m, with operating profit of £12.5m and operating margins of 15.4%. During the period it opened two units. Later this month the group will open five new units at the new Heathrow Terminal 5, and then a restaurant will close when Terminal 2 closes.
During the year losses from non-core activities decreased by £0.55m and the group said it would take further steps to reduce non-core losses.
Losses from its 40% share in Living Ventures were £0.7m. The group also made a £1.7m provision against the value of its investment in Living Ventures, as previously announced.
The group said it was insulated from short-term rises in costs of many supply items, although it had not fixed long-term agreements for the supply of dairy and meat – its buying team anticipated a reasonable possibility of prices softening later in the year.
TRG said it was confident of the future. Page said: “Eating out, particularly at our popular price points of £10-£16 spend per head, has become a habitual part of most people’s lives and is something many are reluctant to give up.”
