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Fri 27th Feb 2015 - Restaurant Group reports LfLs up 2.5%, aims to open 50
Restaurant Group reports LfLs up 2.5%, aims to open 50: The Restaurant Group has reported sales rose 10% to £635m in the year to 28 December 2014. Ebitda was up 8.5% to £117m and profit before tax rose 7.4% to £78.1m. A total of 40 sites opened in the year and between 42 and 50 new sites are expected for 2015. The company reported a strong start to the new financial year with total sales up 9.5% and like-for-like sales up 2.5% for the eight weeks to 22 February 2015. Chief executive Danny Breithaupt said: “TRG has delivered another strong set of results in 2014 with growth in turnover, profits and cash flow. We have continued the acceleration of our opening programme with 40 great new restaurants and pubs opened in the year, and a further increase expected in 2015. TRG is a people business and these results have only been achieved as a result of the hard work, skill and commitment of the whole team. I would like to record my thanks to all of our people for producing another great set of results and I am looking forward to leading them through the next exciting phase of TRG’s development. Looking forward, with our strong portfolio of brands and offerings, a great team of people and an improving UK economy, I am confident that TRG will continue to grow and prosper in 2015 and over the coming years.” Chairman Alan Jackson said: “The Group has delivered another record set of results in the 2014 financial year with significant growth in revenues, profits and cash flow. These results have been achieved following more than a decade of consistent year on year growth in earnings, underscoring the strength of the Group’s business. Like-for-like sales were 2.8% ahead of the previous year and I am very encouraged that this positive trend has continued into 2015. We again increased our openings programme during 2014 with a total of 40 new restaurants opened in the year. Since 2009 we have increased the number of new site openings every year, and we fully expect this trend to continue going forward. We have excellent visibility on our opening programme over the next few years. During the year the Group passed a number of key milestones, with turnover exceeding £600m and the total number of restaurants in our portfolio increasing to over 470. The continued growth and success of the Group is the product of the hard work, experience and dedication of our Directors, senior management and staff. On behalf of the Board I would like to record our thanks and appreciation to all of our teams across the country. As a result of the strong financial performance in the year, the Board is recommending a final dividend of 9.3p per share to give a total for the year of 15.4p, an increase of 10% on the prior year. This dividend is covered almost two times by earnings per share, in line with our stated dividend policy. Subject to shareholder approval at the Annual General Meeting to be held on 14 May 2015, the final dividend will be paid on 8 July 2015 and the shares will be marked ex-dividend on 18 June 2015.Danny Breithaupt took over as chief Executive of the Group on the 1 September 2014, following the retirement of Andrew Page. I am delighted to report that the transition has gone extremely smoothly and Danny has already clearly demonstrated that he is the right person to lead The Restaurant Group through the next stage of its evolution. During the year Sally Cowdry joined the Board as a non-executive Director and is making a valuable contribution to the work of the Board. Since the year-end we have announced that Debbie Hewitt will be joining the Board from 1 May as non-executive Director, further strengthening and broadening the skill base of the Board. The new financial year has started well with total sales growth of 9.5% and like-for-like sales growth of 2.5% for the first eight weeks of the year. We have an outstanding business with market leading brands across a range of segments in the eating out market and an experienced management team with real strength and depth. With these core strengths and an improving UK economy, I am confident that TRG is well placed to continue making further profitable progress in 2015 and over the coming years.”

Of its major brands, the company stated:

Frankie & Benny’s (247 units): Frankie & Benny’s traded well during the year with growth in turnover and profit. During the year we introduced a number of menu initiatives, notably the introduction of a chicken section on the menu which has proved to be hugely successful. We also took further steps to strengthen the management team as the brand continues its rapid rate of growth. During the year we opened 19 new restaurants, reaching a total of almost 250, an increase of some 20% in the size of the estate in the last three years. As in previous years these are in a range of different locations including new developments, the extension of existing schemes and the conversion of units from other operators. Trading at our new openings has been strong and they are set to deliver excellent returns. We anticipate opening between 14 and 18 new Frankie & Benny’s in 2015. The strength of the Frankie & Benny’s brand, its breath of appeal, high levels of customer recognition and strong family appeal all contribute to a consistent track record of success. This gives us great confidence about the continuing success and further roll out of this brand.

Chiquito (80 units): Chiquito had an excellent year with strong growth in turnover and profits. Several years ago we made some significant management changes in this brand. This has been supplemented in the last 18 months by an evolution of both the fit out and the menu. The strong improvement in financial performance is clear testament to the success of these initiatives and we are now confident in increasing the rate of openings in Chiquito. During 2014 we opened eight new restaurants (compared to four in the previous year). These are trading superbly and are set to deliver strong returns. In 2015 we expect to open between eight and ten new Chiquito restaurants. Most of our Chiquito restaurants are co-located with Frankie & Benny’s, either as part of a new development or as a new site on a scheme where we already successfully trade with the Frankie & Benny’s brand. We are excited about the prospects for Chiquito and are confident that this is a style of cuisine which is becoming more mainstream and familiar across the UK.

Coast to Coast (13 units): Coast to Coast also had an excellent year financially with substantial increases in turnover and profit. Following its launch at the end of 2011 in Brighton, Coast to Coast is now a well established and successful part of the Group’s portfolio of brands. Most of our Coast to Coast restaurants are co-located with Frankie & Benny’s and in a number of cases both Frankie & Benny’s and Chiquito. It has a distinct market position and as a result we see negligible levels of cannibalization in such co-located situations. Our location strategy for Coast to Coast tends to be on leisure and retail schemes in larger markets. We are also confident that the brand can work well in some UK city centre locations, following the successful Birmingham Broad Street opening at the end of 2013. During the year we opened three Coast to Coast restaurants all of which are performing well and set to deliver strong returns. In 2015 we expect to open between seven and ten Coast to Coast restaurants. We are also delighted to have secured our first Coast to Coast restaurant in an airport environment as part of the major redevelopment at Stansted, which will open during the first half of the year.

Garfunkel’s (15 units): Garfunkel’s is a good business generating significant cash flows and excellent returns on investment. As other parts of the Group continue to grow rapidly, Garfunkel’s is becoming a smaller proportion of the total. We do not have any specific roll out strategy for Garfunkel’s, but will consider new sites on an opportunistic basis.

Pub restaurants (52 units): Our pub restaurant business had a very strong year with substantial increases in turnover and profits. The Pub business is focused on delivering exceptional food and drink in attractive buildings and locations and as a result has won a number of national and regional awards including the 2015 Good Pub Guide, Best Town Pub of the Year awarded to the Old Harker’s Arms in Chester. During the year we opened three new pubs, all of which are performing well and are set to deliver strong returns. In 2015 we expect to open between three and five new pubs. Our Pub business has the potential to grow over the medium-term to be a substantial business as a nationwide operator of high quality, food-led pubs.

Concessions (58 units): Concessions had another really strong year with good growth in turnover and profits. We have a strong market position in most of the leading UK airports. During the year we opened seven new sites, including taking over all of the catering operations at Southampton Airport and opening the very successful Wondertree restaurant in the new Heathrow Terminal 2. We are delighted with the performance of our new openings this year all of which are set to deliver strong returns. In 2015 we expect to open between five and seven outlets in our Concessions business. This includes three outlets in the re-developed Stansted airport, including the first Coast to Coast in an airport, as described earlier.

Revolution Bars Group expected to be valued at £110m on flotation: Revolution Bars Group announced the expected price range for its Initial Public Offering. Expected price range for the Offer has been set at between 200 pence to 240 pence per share. At the mid-point of the price range, Revolution Bars Group’s market capitalisation at admission would be approximately £110 million. Final pricing will be announced on or around 13 March. Mark McQuater, chief executive of Revolution Bars Group, said: “Revolution Bars Group is one of the leading players in the UK’s premium drinking out and casual dining out markets, with a well-invested trading estate of 58 bars that is generating market-leading returns in this sector. Both Revolution and Revolución de Cuba are premium brands which target a growing market where we believe a premium offering is in demand. We believe that a successful listing will complement the Group’s growth strategy and help support our roll-out plans for the Group’s branded bars in the UK.”

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