The Restaurant Group chief executive Danny Breithaupt has told MCA that the group’s pub portfolio is becoming an increasingly important part of its overall estate mix with the openings pipeline doubling for this financial year.
Speaking to MCA after yesterday’s full year results announcement, Breithaupt also insisted that Coast to Coast was now an established brand and accused competitors of copying some of its offers.
He said the company was continuing to evolve its flagship Frankie & Bennys format but ruled out introducing a high street version of the brand.
He said the company was pleased with the initial performance of the fledgling and said it rollout potential would be gauged at the end of this year after doubling the estate to six.
On the strategy for the group, he said: “I want to bring more balance to the portfolio, which as I’ve said before has been unduly weighted towards Frankie’s in the past. So now we are opening Chiquito’s, we are opening Coast to Coasts and pubs and with that sometimes comes a little bit of short term pain but a lot of long-term gain. The profitability from the sites is still very strong. We couldn’t have grown our profits by 11% last year with only 1.5% lfl growth if our new sites weren’t performing incredibly.
“We expect to open a similar number of sites this year – 44 would be a great number in 2016.”
On Coast to Coast: “It is an established brand now. We believe it can get to 100 sites and it’s interesting now that our competitors are starting to copy some of the things that Coast to Coast does. We saw this week that TGI Friday put a tomahawk steak on their menu. We’ve been doing that at Coast to Coast for a good number of months so it’s clear people are looking at Coast to Coast as a market leader.
“The offer is good. We’re comfortable with the look and feel. The menu and the cocktail list are where we want them to be. It’s a really good all round offer and very unique in its space. The average sales in the new Coast to Coasts are best in class. Last year we averaged £50k a week in new Coast to Coasts which is pretty staggering.”
On Frankie & Bennys: “When you are one of the biggest brands out there people are going to take a shot at you and come after your market space. Frankie & Bennys is still a great brand but it does have its challenges and some of those are of our own making. It’s also got some reasonably heavy exposure to retail and we’ve seen retail footfall down in recent months and we have to continue to come up with solutions for that.
“We are tending to continue to focus on mixed use so where there’s a cinema or a strong shopping focus, that’s good for us. We’re not about to go into the high street or change direction significantly.”
On the pubs estate: “We have got 54 pubs. We opened three last year. We are going to double that this year. They are becoming more and more important and key to the balance of the portfolio. They offer us something different. They trade well in the summer but what we have seen in the last six months or so is that they trade well during the winter as well and there’s some real momentum there.
“It’s a very different market. They are drive to destinations and during the day you may well get affluent people who have retired and at the weekend it’s full of families. It’s very different experience to a leisure park.
“That’s key to what we are doing. We want to have businesses that are market leaders in different segments of the sector that can give us a fantastic balance so we are pulling lots of customers from lots of different pots.
“The pub business is a business we expected to see much more growth in.”
Breithaupt said the company’s airport sites were performing well and further expansion was planned but ruled out an international push.
He said: “We’ve got enough to go after in the UK and we are building a good reputation in the UK mainstream airports and that continues to be our focus.”
On Joe’s Kitchen he said: “We opened three Joe’s Kitchens last year and plan to do another three this year. It’s early days and we never run before we can walk but it has been doing well. We’ll take a view at the end of the year on what we do strategically in terms of rollout.”
He said there were no plans for another brand this year, adding: “We are comfortable with what we have got and are focussing on building those brands. We have a good track record of developing our own brands but this year we will focus on what we have got.”
On trading so far this year, he said: “It is important to note that the results last year represent the best performance TRG has ever recorded.
“The year has started off with some difficulty. In a sense it’s no surprise because we were always up against our best performance in the first part of last year. We’ve seen cinema attendances – which is 50% of our business – down 8% in January and we’ve been up against 50 Shades of Grey in February. There have been significant headwinds.
“To be negative after 10 weeks is disappointing but there is a long way to go in the year and if you look at the very family friendly film slate that is coming up, that’s encouraging for us.
“Our focus at the moment is on total growth. We’re looking at opening a similar number of sites this year and all through our own cashflow. Sometimes like-for-likes have got to take a bit of back seat, as I suppose they are at the moment because you can’t always have both.
“We have a very successful brand with Frankie & Bennys but we are also targeting those locations with Chiquitos and Coast to Coasts, which is inevitably going to do some short-term damage to like-for-likes at that F&B. However, it will give us some significant top line and bottom line advantage.”
