The Restaurant Group has reported like-for-like sales down 3.9% for the 27 weeks to 3 July and has reported the first results of its strategic review.

The group has identified 33 underperforming sites for closure or sale and has written down the asset value of a further 29, with an associated £59.1m exceptional charge.

Chairman Debbie Hewitt said work was underway to refine the proposition of Frankie & Benny’s with a greater focus on customer service. She said the brand had suffered because of an insufficient focus on value, unsuccessful menu development and poor operational execution and stressed that increased competition was “not a major factor behind the weak performance”.

She said trading had improved slightly in recent weeks with like-for-like sales for the 34-week period to 21 August down 3.7%.

Over the half-year the group saw total revenue climb 3.4% to £358.7m, with operating profit down 4.4% to £37.5m.

Hewitt said the pubs and concessions sides of the business had performed well during the period.

The company opened seven new sites in the first half (2015: 12) and expects to open 24 to 28 sites in the full year compared to 44 last year.

Hewitt said: “This has been a challenging trading period for our Leisure brands, albeit with a good performance from our pubs and concessions businesses. The Board has moved quickly to undertake a review of the operating strategy and we now have clarity on the issues facing our Leisure brands, particularly Frankie & Benny’s. The brand remains relevant and popular and we are confident that improved performance will be achieved by being more customer-focussed and data-driven, and through better operational execution.

“A new executive team is in place to lead the implementation of this first phase of the review and to apply the learnings to our other brands.”

The company said that given its confidence in the current trading forecast and the strength of its balance sheet, it would maintain the interim dividend of 6.8 pence per share.

The review into Frankie & Benny’s highlighted three main internal drivers of underperformance:

· The brand lost value-conscious customers, a result of significant price increases and the removal of popular value offers. Hewitt said above market increases in food and beverage pricing in 2013 and 2014 were compounded in 2015 by a reduction in value offers and the removal of a fixed price menu, actions which significantly reduced covers.

· Hewitt also criticised the introduction of more “authentic” menus without sufficient testing of the concept. She said this led to the removal of many popular dishes from the menus and led to a further decline in covers.

· She said the absence of leadership for this key brand in the past two years resulted in weaker operating discipline and therefore an inconsistent and unsatisfactory service experience for many customers.

However, she insisted that the research confirmed Frankie & Benny’s brand and concept remain well loved by our customers but that TRG had over-priced the offer, removed some of their favourite dishes from the menu and lost focus on operational execution.

She said: “The review has helped us to achieve a much better understanding of our target customer: families who are “out and about”, who are celebrating a specific family occasion or simply having a treat. Although it is clear that we also have wider appeal, the target market of families is very distinct and is the primary focus of our efforts as we rejuvenate the brand.

“We are now clear about where we want to focus, who we want to measure ourselves against and how we will deliver. We have a detailed action plan, with many actions already underway.

“We have taken decisive action on those sites that don’t meet the Frankie & Benny’s positioning or returns criteria, with a number now set for closure, as set out earlier in this statement.”

The company will now examine the pricing architecture of the menu, re-invigorate the value offer and seek to understand how it can use supply chain relationships to price engineer more effectively. It has already launched a series of pricing tests and menu trials, supported by local marketing initiatives in order to re-price for growth.

Hewitt said: “Although we have slowed down the current restaurant roll out programme, the review indicates that once we have resolved these internal issues, there will be scope for further roll out of the Frankie & Benny’s estate. This will be done in conjunction with a more disciplined framework for assessing each investment case.”

The next phase of the operating strategic review will focus on the remaining Leisure brands: Chiquito, Coast to Coast, Joe’s Kitchen and Garfunkel’s.

Hewitt said: “From some initial diagnostic work undertaken, it is evident that some of the issues identified in Frankie & Benny’s are also apparent in these brands. We will therefore be undertaking a thorough review of their propositions, pricing structure and menu architecture.

“While our Pubs and Concessions are performing well, we also intend to examine these businesses and evaluate what we can do better.”