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Morning Briefing for pub, restaurant and food wervice operators

Fri 30th Aug 2013 - Breaking News - Restaurant Group reports 5% like-for-likes, plans 35 openings
Restaurant Group reports 5% like-for-likes, plans 35 openings: The Restaurant Group, which operates over 400 restaurants and pub restaurants throughout the UK, has reported like-for-like sales grew 5% in the 26 weeks ending 30 June. Total revenue grew 11.5% to £280m and profit before tax climbed 15% to £30m. Seven new sites opened in the first half year and between 30 and 35 new sites are planned for 2013 as a whole. It reported current trading is strong, with year to date like-for-like sales growth for the 34 weeks to 25 August 2013 at 4.25%. Chief executive Andrew Page said: “This is another strong performance from The Restaurant Group, with an 11.5% increase in revenues and a 16% increase in earnings. All of our brands grew like-for-like sales and profits, with the Group’s margins nicely ahead of the prior year. Free cash flow was also significantly higher, being 30% ahead of the prior year and net debt reduced by more than £11m to £27m. We opened seven new restaurants in the first half, have opened a further four since the half year and expect to open between 30 and 35 new restaurants during 2013. Our new restaurants are trading ahead of expectations, are on track to deliver high returns and the forward pipeline of new sites to 2015 and beyond is the best we’ve seen for many years and the quality is first class. After eight months, our like-for-like sales are 4.25% ahead of last year, with August’s like-for-like sales coming in ahead of the year to date run rate and, notwithstanding the fact that we enjoyed a very strong final quarter last year, we are confident of delivering another year of further profitable progress.” Of its major brands, it stated:

Frankie & Benny’s (226 units): “Frankie & Benny’s traded strongly during the first half of the year resulting in a sizeable uplift in revenues and profits. The breadth of appeal and excellent value for money of our offerings continued to encourage more customers to visit our restaurants including a significant increase in the sale of breakfasts, an area of potential growth that we have been focusing on. We opened five new restaurants during the first half and have opened a further two restaurants since the half year. Our new openings are trading well and are set to deliver strong returns. During 2013 we expect to open between 15 and 19 new Frankie & Benny’s restaurants.”

Chiquito (69 units): “Chiquito traded strongly during the first half with significant increases in margins and profits. Like-for-like sales were well ahead of the previous year and our focus on food quality, authenticity and service has yielded good results. We have noticed a steady increase in awareness and popularity of Mexican food and this is particularly apparent from the levels of digital media interaction. Digital media communication with existing (and potential) customers has been a key area of focus throughout our Group and we believe is an important tool for engaging with our customers; a theme that is also very apparent with our Coast to Coast brand. We recently opened a new Chiquito restaurant at Glasgow Fort and we expect to open a total of three to four new Chiquito restaurants during 2013.”

Coast to Coast (6 units): “Coast to Coast has performed superbly, building on a strong performance in 2012, with sales and profits increasing significantly. We opened a new Coast to Coast restaurant at Highcross, Leicester, in June and expect to open a further four or five new Coast to Coast restaurants during 2013. The performance of our Coast to Coast openings has been excellent; they are set to deliver strong returns, confirming our view that this new, third, Leisure brand has significant roll out potential.”

Pub restaurants (46 units): “Our pub restaurant business has delivered an excellent performance during the first half of the year. Turnover, margins and profits rose significantly. Having concluded the conversion of the ex-Blubeckers estate we are confident that the Pub restaurant model that we now have in place is set to deliver good growth. During the first half we opened the Bull’s Head at Mottram in Cheshire, it is trading significantly ahead of expectations and we are delighted that it has just been named as The Good Pub Guide’s Best New Pub of the Year. We expect to open a further two or three new Pub restaurants during the second half.”

Garfunkel’s (16 units): “Garfunkel’s has traded well during the first half delivering a substantial increase in turnover and significantly higher margins and profits. Although currently we do not have any new Garfunkel’s planned for the second half, we continue to seek out opportunities for new restaurants and will pursue these where we are confident that they will at least meet our targeted returns on investment.”

Concessions (59 units): “Our Concessions business traded well during the first half with sales, margins and profits all ahead of the previous year. UK passenger numbers (“pax”) were 2.1% higher than the prior year and it is encouraging to see our Concession business, again, outperform pax. We opened a new Frankie & Benny’s restaurant at East Midlands Airport in July which is trading well, and is set to deliver strong returns. We expect to open a total of three to four new Concession restaurants in 2013.”

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