Life was tough for UK consumers last year, but Restaurant Group (RTN), owner of the Frankie & Benny's and Garfunkel's eateries, still outperformed the market with sales, profit and margin growth. Management put a lot of the success down to a focus on value, choice, and service rather than competing for customers on price. Chief executive Andrew Page, who is to retire this year, says eating out is an affordable luxury that people are reluctant to give up even in times of financial hardship.
The strategy seems to be working. Frankie & Benny's delivered significant growth in cash profits and will open 18 to 22 more sites in 2014, while Garfunkel's "traded superbly" and the pubs grew profits and margins. Performance at Coast to Coast, a roadside burger chain whose numbers doubled to 10 in the year, was "excellent, in a handful of cases truly exceptional".
As a result, group like-for-like sales grew 3.5 per cent and operating profit rose 13 per cent to £75m, while free cash was £7.9m higher at £77m. This growth rate has continued into the current year, when 36 sites are earmarked to open, slightly higher than last year's 35. Peel Hunt expects pre-tax profit of £78m in 2014, giving EPS of 9.1p.
