Fulham Shore, operator of the Franco Manca and Real Greek restaurants, has warned that its performance results are likely to be below current market expectations.
In its trading update and annual general meeting statement, the group said that, despite hitting targets for the first quarter of the financial year and headline earnings before interest, tax, depreciation and amortization (EBITDA) being significantly higher than last year, it had seen a slowdown in trade during July and August, primarily from restaurants in London suburbs.
“We believe this is a sector-wide trading pattern and not unique to our brands,” said the statement, but shares in Fulham Shore were down 25% today following the announcement.
In addition to the slowdown in revenue growth, the group added it is experiencing higher costs to support its increased level of operations, especially at the Real Greek. The group said it does not intend to raise menu prices in the short term.
Fulham Shore announced EBITDA growth of 36% to £7.1m with operating profit up 152.7% to £1.3m, thanks in the main to new openings. Total turnover for the year to 26 March 2017 was £41.2m.
In the current financial year to date, Fulham Shore has opened seven Franco Manca pizzeria in the UK and three Real Greek restaurants. This takes Fulham Shore’s restaurant portfolio to 56 sites, comprising 15 the Real Greek, 40 Franco Manca and one Bukowski Grill.
The group will open a further two Franco Manca pizzeria, in London and Bristol, later this autumn, and continues to anticipate launching 15 new restaurants in the current financial year, in line with expectations (10 have been opened so far).
However, given an increased availability of sites for sale due to the pressures on other restaurant operators, it has decided to review its opening pipeline and seek to improve terms with landlords of new sites it had already identified..
The company also announced that to simplify operations and focus on the group’s core brands, it intends to sell its Bukowski Grill franchise and site in London’s Soho.
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