The Restaurant Group hails signs of improvement despite sales drop

31 August 2017 by
The Restaurant Group hails signs of improvement despite sales drop

The Restaurant Group has hailed early signs of improvement since it outlined its strategy in March to turn the business around, although like-for-like sales still dropped 2.2% in the 26 weeks to 2 July 2017.

That's according to the latest interim results of the troubled operator of Frankie & Benny's, Chiquito and Garfunkel's, which showed a total fall in sales of 1.9% for the period on a 26-week comparable basis, and a fall of 7.1% on a statutory basis to £333.1m.

It made an adjusted pre-tax profit of £25.5m, down from £36.6m in the same period a year ago. Statutory profit before tax was £2.8m, as compared to a loss of £22.5m in 2016.

In its annual financial results for 2016, published earlier this year, TRG posted a 3.9% drop in like-for-like sales. It put 23 sites up for sale in January this year and in March under new chief executive Andy McCue, it announced a four-point plan to improve the state of the business.

Among the elements of its strategy were targets to: re-establish the competitiveness of its brands; serve its customers better and more efficiently; grow its pubs and concessions business; and build a "leaner, faster and more focused" organisation.

The firm said customers were enjoying better value and improved quality as a result of these measures and that it was seeing "early signs of volume improvement". Sales, it added, would "inevitably be under pressure" in 2017, which it regarded as a transitional year.

TRG las launched a cheaper fixed price menu (£9.95 for two courses) at its 258 Frankie & Benny's restaurants and it has also invested in improved food quality to produce dishes consistently well.

In its 83 Chiquito restaurants it re-introduced fixed price value menus, offering two courses for £10.95 and three courses for £14.95, as well as trialling a fundamentally changed menu in 20 sites, allowing customers the ability to custom-build tortillas and vary the spiciness of their sauce.

However, like-for-like sales at its Coast to Coast brand continued to be challenging with the business resorting to discounting to improve its "trading trajectory".

It has also developed a new brand called Firejacks, offering flame-grilled steaks and burgers, and has converted the Coast to Coast in Northampton to Firejacks.

Its remaining brands, Garfunkel's, Filling Station and Joe's Kitchen are performing "solidly" and the business said it didn't consider the brands to be strategic priorities.

Andy McCue, chief executive officer, commented: "We have made good progress against our strategic initiatives outlined in March. Our leisure customers are enjoying a better value, higher quality product; our growth plans for our pubs and concessions businesses are advancing well and we have made good progress in delivering cost efficiencies. I've been impressed with our colleagues' receptiveness to change and thank them for their contribution to stabilising the business."

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