The Restaurant Group, the owner of the Frankie & Benny’s chain, has said it would shut stores in its leisure business and temporarily suspend its dividend.
The Restaurant Group is expected reduce the size of its Frankie & Benny’s plus Chiquito’s leisure business by up to 90 sites by the end of 2021. The company plans to accelerate restructuring of the estate from 350 sites today to a target of 260 to 275 sites by the end of 2021.The company has been struggling with decreasing sales in its leisure business that have also offset robust performance in its Wagamama, Concessions and Pubs units.
“This will allow us to continue investing in our three high growth businesses, whilst facilitating an acceleration of our Leisure estate rationalisation and reducing our net debt”, Restaurant Group said.
The company reported statutory pretax loss of 37.3 million pounds for the full year ended Dec. 29, compared with a pretax profit of 13.9 million pounds last year.
Restaurant Group reported a 2.7% rise in its annual like-for-like sales, with total sales surging 56.4% to 1.07 billion pounds.
The company said trading for the first six weeks of 2020 was encouraging with like-for-like sales up 5.3%.
Chief executive Andy Hornby said: “Having joined the business in August last year I am particularly pleased with the continued and significant progress made following the acquisition of Wagamama and the integration of the business into the group, which has transformed the group’s growth trajectory and momentum. Our three growth businesses of Wagamama, Concessions and Pubs are all out-performing their respective markets and have clear potential for further growth.
“I am also acutely aware of the challenges facing our leisure business and the wider casual dining sector. It is therefore clear that our strategic priorities need to evolve in order to maximise shareholder value in the medium term. Following extensive review we have defined three clear strategic priorities for the next two years: Grow our Wagamama, Concessions and Pubs businesses; rationalise our leisure business; and accelerate our deleveraging profile.
“In order to support these strategic priorities, the board has taken the decision to temporarily suspend the dividend. This will allow us to continue investing in our three high growth businesses, whilst facilitating an acceleration of our leisure estate rationalisation and reducing our net debt. We have made an encouraging start to the new financial year with like-for-like sales up 5.3% for the first six weeks of 2020.”