Hostmore heads get Friday feeling

Hostmore owns the UK rights to the TGI Friday’s franchise, which has been rebranded as Fridays. It operates 89 restaurants, mostly under the Fridays brand but three cocktail-themed outlets trade as 63rd+1st, after the Manhattan corner where the first TGI Friday’s opened in 1965.

Fridays has had a presence in the UK since 1986, initially under Whitbread’s (WTB) ownership. Most (68 per cent) of its sites are based in retail parks or shopping centres. Its prospectus made much of the opportunity to recapture a bigger share of a casual dining market hit hard by the pandemic. For instance, The Restaurant Group (RTN) used a company voluntary arrangement agreed in 2020 to close 125 sites, most of which operated under competing American-themed brand Frankie & Benny’s.

Business has been tough. Hostmore reported a £1.6mn loss in the 53 weeks to 2 January, despite a 23 per cent rise in revenue to £159mn. A trading update for the 20 weeks to 26 May said revenue was 6 per cent lower than pre-pandemic levels due to the “more challenging” consumer environment. Full-year sales are likely to be 8 per cent lower than in 2019, while a 10 per cent jump in food costs is putting additional pressure on margins.

Hostmore’s steep share price fall means the company’s market capitalisation has now slipped to £52mn, or less than half of its net asset value of £125mn in January.

The directors clearly feel the sell-off has been overdone. Among them, chairman Gavin Manson, chief financial officer Alan Clark and non-executive David Lis bought more than £228,000 in the week ending 3 June, with Clark purchasing a further £42,000-worth of shares on 6 June.