Plunging profits hit two London restaurant groups

Two of the best-known midmarket London-based restaurant groups, Chez Gérard and the Signature group, revealed significant falls in profit in their latest financial results this week.

A recovery plan put in place earlier this year helped Chez Gérard to make "significant progress" in the last six months of the year, the restaurant group said this week.

In the 12 months to 30 June, pre-tax profit at the group fell by 55% to £900,000, compared with £2m for the same period last year. Taking into account costs related to the closure and disposal of several restaurants, the group actually recorded a pre-tax loss of £3.4m.

Pre-tax profit in the first half of the year fell by more than 80%. Turnover for the year was broadly flat at £37.6m, compared with £38.2m for the same period in 2001.

Chairman Neville Abraham said the group's recovery programme, which included offering cheaper dishes to customers, was now "in full swing".

Chez Gérard has also earmarked eight restaurants for sale, five of which have now been sold, and reduced the size of its central office.

Tough trading conditions in central London prompted Signature Restaurants to sell off poorly performing Belgo and Bierodrome restaurants and focus new openings on its Strada brand.

In the year ended 30 June, group profits before tax, goodwill amortisation and exceptional items dropped by 27.5% from £4.32m to £3.13m. Turnover slipped by 1.4% to £39.4m from £39.97m.

The group blamed reduced tourism after 11 September, weak financial markets that cut spending by City workers, and increasing competition.

While the the Ivy, J Sheekey and Le Caprice performed well, Signature's mid-price Belgo and Bierodrome division saw like-for-like sales plunge by 15%. It sold the Belgos in Dublin, Bristol and Ladbroke Grove to leave two branches, and sold the Bierodromes in Fulham and Clerkenwell and has three left.

It also sold the Collection restaurant and put Daphne's under the management of Caprice Holdings, where it has responded well. Bam-Bou and Pasha remain profitable. Three new Stradas brought the total to nine and two are under construction.

by Angela Frewin and Samantha McClary