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Friday 14 December 2018

Frankie & Benny’s firm to report amid challenging market

The results come at an increasingly challenging time for the casual dining sector.

Frankie and Benny’s (Anna Gowthorpe/PA)
Frankie and Benny’s (Anna Gowthorpe/PA)

By Chris Gibbings

Frankie & Benny’s owner The Restaurant Group is set to reveal another set of disappointing figures next week as fears continue to grow for Britain’s casual dining sector.

A consensus of City analysts forecast the company – which also owns brands including Garfunkel’s, Joe’s Kitchen and Chiquito – will report a pre-tax profit of £55.9 million.

While it marks an improvement on last year’s £40 million loss, those results were dragged down by a £117 million exceptional charge linked to restructuring efforts.

Stripping out exceptional charges, pre-tax profits for the year are expected to be down 27%.

The main determinants include an adverse £19 million from like-for-like sales decline, (and) minus £17 million from cost inflation Tim Barrett, analyst at Numis

Tim Barrett, analyst at Numis, said The Restaurant Group has been impacted by a “soft” UK dining out market, adding: “The main determinants include an adverse £19 million from like-for-like sales decline, (and) minus £17 million from cost inflation.”

The results come at an increasingly challenging time for the casual dining sector.

Burger chain Byron and Jamie’s Italian have both undertaken Company Voluntary Arrangements this year, which saw hundreds of jobs lost as dozens of restaurants closed down.

Prezzo is also set to close up to a third of its 300 restaurants as it begins an overhaul that will put hundreds of jobs at risk.

Soaring costs linked to the Brexit-hit pound, the resultant collapse in consumer confidence and rising business rates have combined to hammer the sector, with more pain forecast.

In January, The Restaurant Group said that like for like sales fell 3% last year, while total sales slumped by 1.8%.

The firm is pushing forward with an efficiency drive that it said has resulted in what it calls a “fundamentally leaner” business.

Chief executive Andy McCue is also expected to give an update on the progress of his overhaul alongside the results.

So far the shake-up has seen a revamp of pricing, food quality and marketing over 2017, with Mr McCue pushing the business to focus on expanding its pubs and concessions business.

Mr Barrett added: “We also expect The Restaurant Group to place more strategic focus on its pubs and concessions operations which are higher quality, operate in growth niches and currently account for 75% of the share price.”

The Restaurant Group operates 497 casual dining sites across the UK, as well as a raft of concession sites that tend to run in UK airports

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