GBK has cut its openings pipeline for the rest of the year amid disappointing sales at some new openings and declining like-for-like figures, MCA understands.
The Famous Brands-backed burger chain will now open eight of a planned 10 sites in the financial year to February. The group’s final opening of the year will be at Sheffield Meadowhall.
Chief executive Alasdair Murdoch told MCA that he is confident the 90-strong business will bounce back and pointed to the company’s prior record of almost six years’ like-for-like sales growth of over 5%.
In its most recent published trading figures – for the 22 weeks to 30 July – GBK recorded system-wide sales up 12.1%, while like-for-like sales declined 2.6%. Murdoch said trading had been relatively similar since then, adding: “We are rolling very strong comparatives from last year, however it is fair to say that it is not quite where we want it.”
South African owners Famous Brands also gave an abbreviated update for the six months to 31 August, in which GBK record a pre-tax loss of £872,000. The loss is thought to be largely down to assorted pre-opening costs arising from 15 openings over the last calendar year.
Famous Brands said that “in the current macro-economic environment, the board is of the opinion that GBK’s return to profitability will only be achieved in the next financial year, however it remains optimistic that the operation will add value to the group in time”.
Murdoch admitted that not all of the seven restaurants opened so far this year had performed to expectations but said some, such as Maidstone, Bedford and Bracknell, had exceeded them.
He told MCA: “We have been affected by the normal headwinds that affect everyone else, added to that there has been significant competitive growth in the Better Burger Sector, coupled with landlords driving supply. Take for instance the centre of Glasgow - we opened there first and then within two years we had 5 Guys next door, Handmade opposite us and Byron a block away. We still trade well and make a decent return but our volumes there would be a lot higher without them. However, that is a fact and we get on and deal with it.
“Do not forget we are here to take a long term view and we had very close to six years like-for-like growth at over 5% per annum, so yes trading is not where we want it but we will get it back and will come out of this storm in a better shape and we are seeking to take opportunities where we find them. As an example the Meadowhall site came to us due to Ed’s Diner CVA last year.”
The management has implemented a number of measures to mitigate the problems. This includes significant work and investment into the group’s CRM capability which is allied to its loyalty app of 1.5 million customers.
Murdoch also pointed to the success of the group’s Brisket Burger campaign, adding: “It is selling extremely well, close to a 10% mix which is phenomenal, we are seeing great levels of engagement on social and in our restaurants and are looking forward to the Christmas season.”
