Frankie & Benny's (F&B's) owner Restaurant Group (RTN) served its results up with a very generous helping of humble pie. Non-executive chairman Debbie Hewitt said its internal review had identified that casual dining competition wasn't the only culprit for recent weak performance and several "own goals" played a major role. Above-market price hikes for food and drink at Frankie & Benny's has alienated its cost-conscious clientele, as have fewer available discount offers. Add to that the removal of popular dishes as part of a new menu rollout - which wasn't tested on customers first - and it now seems clear why underlying sales have fallen so steadfastly. Families will now be a key focus for the brand.
Meanwhile, a £59.1m exceptional charge has pushed the group into the red. This reflects the closure of 33 underperforming sites (including 14 F&B's and 11 Chiquitos) and the write-down of 29 more that it believes can still be rejuvenated. The often bullish opening schedule has also been dialled down: between 24 and 28 restaurants will open in 2016, compared with 44 in 2015.
Analysts at Peel Hunt have their forecasts under review, but had predicted pre-tax profits of £72.9m for the year to December 2016, leading to EPS of 28.2p, compared with £86.8m and 33.5p in 2015.
| RESTAURANT GROUP (RTN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 426p | MARKET VALUE: | £857m | |
| TOUCH: | 425-426p | 12-MONTH HIGH: | 728p | LOW: 230p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 47 | |
| NET ASSET VALUE: | 119p | NET DEBT: | 15% | |
| Half-year to 3 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 334 | 37.0 | 14.3 | 6.8 |
| 2016 | 359 | -22.5 | -11.2 | 6.8 |
| % change | +7 | -161 | -178 | - |
Ex-div: 15 Sep Payment: 13 Oct | ||||
