The Restaurant Group, the Frankie & Benny’s and Chiquito operator, has reported on trading for the 26 weeks to 2 July, showing:
Like-for-like sales fell 2.2%
Like-for-like sales for the 34 weeks to 27 August are down 2.5%
Total sales were down 1.9% on a 26 week comparable basis; down 7.1% on a statutory basis
Adjusted profit before tax dropped from £36.6m in the same period last year to £25.5m
Adjusted EBITDA was down from £59.6m to £44.3m
On the outlook, the group said current trading was in line with expectations and that it expected to deliver an adjusted pre-tax profit outcome for the full year “in line with current market expectations”
The group said it expects to open open between 18 and 20 units in 2017 with associated capital expenditure of between £18m and £20m
Refurbishment and maintenance capital expenditure, including technology investment, in 2017 is expected to be c.£20m.
Andy McCue, chief executive, said: ”We have made good progress against our strategic initiatives outlined in March. Our Leisure customers are enjoying a better value, higher quality product; our growth plans for our Pubs and Concessions businesses are advancing well and we have made good progress in delivering cost efficiencies. I’ve been impressed with our colleagues’ receptiveness to change and thank them for their contribution to stabilising the business.”
The group said that its pubs had performed well in the period, helped in part by favourable weather but also driven by strong operational delivery.
It said it had committed increased resources to identifying sites to enable us to increase the rate of openings, and consequently, the pipeline of prospective sites is steadily growing.
The group’s Concessions business continues to perform “strongly, driven by both solid growth in passenger numbers and by strong execution in maximising the throughput of customers”.
On the Concessions side, it said that its pipeline of new opportunities has strengthened in recent months and that it expects to secure several new contract wins in the second half of the year.
Brand focus:
Frankie & Benny’s (258 units)
The company said it was focused on restoring the brand’s value credentials, “deepening the distinctiveness of our offer to families and marketing to attract back lapsed customers”.
In January, its trialled and then launched an improved, cheaper fixed price menu (£9.95 for two courses) which it said continues to perform well.
It launched a new core menu in two waves in March and May. It said that the new menu is considerably more competitive than the previous version, with entry prices reduced by 22%, and like-for-like dishes, on average, 7% cheaper. As a consequence, the company said that
McCue said: “While there remains a lot to do, there are early signs of customer awareness of our changes, with recent data showing an uptick in value for money ratings, net promoter scores and the brand rankings for quality of ingredients and freshness of food. The pace of change in the business is accelerating and in the second half of the year we will refine our menus, making changes based on insights gathered to date, as well as trialling a series of new product innovations which, if successful, will feature more broadly in 2018. Towards the end of the year, we also plan on piloting a low cost ‘capital refresh’ of some of our older properties which will focus on improving the look and feel of customer facing areas.”
Chiquito (83 units)
In February this year, the company re-introduced fixed price value menus to Chiquito offering two courses for £10.95 and three courses for £14.95, which it said generated a “significant improvement in the proportion of sales channelled via fixed-price menus and highlighting the value-conscious nature of our customer base”.
McCue said: “Consistent with our intention to broaden the appeal of the brand, we have been trialling a fundamentally changed menu in 20 sites, which has received encouraging feedback. This new menu provides the customer with the ability to custom-build tortillas and vary the spiciness of their sauce, all at a highly competitive price point of £9.95. We will make some changes to that menu in the coming weeks, extending the trial to a further 20 sites, with a view to rolling out the proposition across the estate thereafter.”
Other Leisure brands (38 units)
The group said that Coast to Coast’s like-for-like trading performance continues to be challenging, albeit it had managed to improve the trading trajectory in recent months through discounting.
It said that its focus has been on developing a new proposition, Firejacks, which offers high quality flame-grilled steaks and burgers at highly competitive prices.
As previously flagged up by MCA, the company has converted the Coast to Coast in Northampton to Firejacks, and re-launched the restaurant earlier this month.
McCue said: “This pilot site will enable us to test and refine the concept and determine the potential for roll-out via conversions of further Coast to Coast sites. Our remaining brands, Garfunkel’s, Filling Station and Joe’s Kitchen are performing solidly. We don’t consider these brands to be strategic priorities that justify significant focus or resource at this time.”
