The company behind the Frankie & Benny’s and Chiquito restaurant brands reported a fall in underlying sales last year but insisted that its turnaround was still on track.
The Restaurant Group, which also owns Garfunkel’s, said that despite the challenging trading backdrop it continued to make steady progress and expected 2017 pre-tax profits to be in line with expectations.
Shares in the group, which had been soft before yesterday’s trading update, rose by 14p to 278½p as investors breathed a sigh of relief that the turnaround plan put in place by Andy McCue since his appointment as chief executive almost 18 months ago had not been derailed.
The Restaurant Group, formerly known as City Centre Restaurants, was founded in 1987 and opened its first Frankie & Benny’s in 1995. Today it has 497 restaurants, many of them on leisure parks next to cinemas.
Mr McCue, a former chief executive of the bookmaker Paddy Power, said that the company had continued to make good progress against the key elements of the strategy, the main one being to rebuild volumes by cutting the prices of its leisure brands and improving the food quality and service.
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In addition he is focusing on expanding Brunning & Price, its chain of 60 pub-restaurants, and its airport concessions business, confirming that both had achieved like-for-like sales growth during the year.
Like-for-like sales for the group as a whole fell by 3 per cent last year and accelerated to 4 per cent in the last few weeks amid heavy discounting in the wider casual dining sector. Total sales for the year were down 1.8 per cent.
“It’s an intensely competitive environment at the moment but we are seeing volume momentum coming through the leisure business and both our pubs and concessions businesses continue to trade well,” Mr McCue said.
Prices at Frankie & Benny’s, its biggest brand, were reduced by 7 per cent. “That had an inevitable impact on short-term like-for-like sales, but we had to make that correction to give better value to our customers,” he said.
“We’re very happy with our progress. Our results are exactly in line with expectations this time last year.”