TRG hit harder by recent tiering but looks to 2021 for strong recovery

The Restaurant Group plc (TRG) today provides a further update on the evolving impact of Covid-19 and the associated government restrictions on the company.

Through a range of decisive management actions, cash-burn during the November national lockdown was minimised to c. £5.5m for the month. This is £2m higher than during the first lockdown due to rents payable under the terms of the Leisure CVA as well as employer contributions towards furlough payments.

Additionally, the working capital outflow and increased cash exceptional costs as a consequence of the November lockdown totalled £15m.

The firm notes the recent announcement by the UK Government on the latest tiering restrictions, which come into effect on 19 December 2020. Following on from earlier announcements by the English, Scottish and Welsh Governments over recent months, the Group anticipates further significant disruption on trading whilst these restrictions remain in place.

As per the latest tiering restrictions announced by the UK government, TRG will have approximately 145 sites which will trade for dine-in across the UK, 142 sites which will provide delivery and takeaway services only, with the remaining 103 sites closed. This is significantly worse than when the initial tiering restrictions came into effect.

TRG stated, 'Clearly the mix of locations impacted across the tiers will continue to evolve, but if UK tiering allocations were to remain the same as currently in place throughout the first quarter of 2021, this will have a significant adverse impact on the group, and indeed the wider hospitality sector.

'Whilst the tiering restrictions make the outlook for the first quarter of 2021 extremely challenging, the Board is encouraged by the welcome news of the Covid-19 vaccine being rolled out in the first half of next year.

'The Board believes the Group is well positioned to benefit from a sustained removal of restrictions given its previous strong trading performance following the first lockdown. We therefore expect a strong recovery when there is a return to more normal levels of customer activity. The timing of that will depend primarily on government restrictions being eased.: