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Chain restaurants to escape Alternative Investment Market carnage

18 October 2006

Restaurant chains will escape the shares carnage that has overtaken the London Stock Exchange's Alternative Investment Market (AIM) in the past few months, say City analysts.

Restaurant groups have been prominent among the companies rushing on to AIM, with names such as La Tasca, Clapham House and Carluccio's floating.

In the past three years the number of firms listed on AIM has doubled to some 1,600 but since May the market has lost nearly a quarter of its value.

Adding to the jitters, accountancy firm Ernst & Young last week said profit warnings among listed companies were rising with 85 warnings in the past three months (61% relating to AIM).

However, it also pointed out just 3% of travel and leisure companies quoted on the exchange had issued warnings, against highs of 25% in some sectors.

An analyst who did not wish to be named said people still viewed the casual dining sector as a relatively attractive investment.

"There are obvious opportunities for growth in the sector and restaurants are not viewed as an especially volatile stock in the same way as a lot of AIM-listed companies are at the moment," said the analyst.

Oil and gas exploration, online gambling and technology firms are currently viewed as risky bets by investors.

By Nic Paton

E-mail your comments to Nic Paton](mailto:chris.druce@rbi.co.uk?subject=Chain restaurants to escape Alternative Investment Market carnage) here.

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