TRG sees 4% LFL sales uplift but earmark 42 restaurants for future closure

The Restaurant Group plc has posted interim results for the 26 weeks ended 30 June 2019, showing a like-for-like sales rise of 4%, and total sales up by 58.2% to £515.9m (2018: £326.1m).

Adjusted profit before tax stood at £28.1m (20183: £20.7m), while adjusted EBITDA came to £61.4m (20183: £38.4m).

On the strategic front, for Wagamama plans are on track and progressing well, with market leading like-for-like sales performance continuing and a strong pipeline of growth opportunities.

For Concessions, like-for-like sales are consistently ahead of passenger growth, and there is further development of the brand portfolio with partnerships.

Pubs continue to drive growth, with strong like-for-like sales outperformance versus the market. Customer ratings remain consistently high, and there is a healthy pipeline of new site opportunities.

With the Leisure (restaurant) business, there are ongoing initiatives to improve food offering, service standards and brand proposition.

Regarding leases in the Restaurant Group’s Leisure division, primarily to the Frankie and Benny’s and Chiquito brands.

At the full year results presentation in March this year, TRG outlined that analysis had identified 76 sites within Frankie and Benny’s which are in structurally unattractive locations and that the group would seek to exit these locations in future years. Following further analysis, today the firm announced that it has now identified a further 42 sites across our other Leisure Brands that are also in structurally unattractive locations.

This doesn't mean that TRG are committing to the closure of all these sites, and certainly not with any immediacy. To illustrate this point, Leisure sites have an average of six years to their first potential exit date. But when the leases do come up for renewal, TRG will take a considered and disciplined approach, on a case-by-case basis.

Debbie Hewitt MBE, Non-executive Chairman, commented, “We have traded well throughout the first half of the year, delivering 4% like-for-like sales growth, driven by the market outperformance of Wagamama and our Concessions and Pubs businesses.

'Our Leisure business delivered a marginal decline in like-for-like sales despite benefitting from the weaker comparatives following last year’s extreme weather and football World Cup.

'We continue to focus on improving our brand offerings and delivering the best possible experience to our customers whilst optimising our Leisure business to enhance the overall Group performance.

'We are mindful of the headwinds in the casual dining sector and the meaningful uncertainties created by the potential of a ‘no-deal Brexit’ and are planning with this in mind. However, our business is now better diversified and purposefully positioned to benefit from multiple opportunities for growth.

'I am pleased to welcome Andy Hornby as our new CEO, who is bringing a strong consumer, brand and people focus to the business.”

Andy Hornby, Chief Executive Officer, commented, “I am delighted to have joined The Restaurant Group in August. Our three growth businesses of Wagamama, Concessions and Pubs are all out-performing the market and have potential for further growth.

At the same time, we have an acute focus on optimising our Leisure business, through targeted operational initiatives and disciplined estate management.

'Despite the well documented challenges facing the casual dining sector, the Group’s diversified set of brands provides firm foundations.”

In current trading, the group's like-for-like sales are up 3.7% for the first 34 weeks of the financial year, benefiting from soft comparatives in the prior year.

Like-for-like sales in the most recent six weeks were up 0.2%, driven by the strong performance of our three growth businesses which have continued to outperform their respective markets, largely offset by our Leisure business reverting back to a trend of modest like-for-like sales decline.

In summary, trading remains broadly in line with our full year expectations.