Frankie & Benny’s

Restaurant Group to close scores of outlets

THE Restaurant Group (TRG) plans to close scores of “unattractive” Frankie & Benny’s outlets, radically reducing the size of its biggest chain. The company plans to exit nearly one third of its 248 Frankie & Benny’s as the casual dining sector is buffeted by headwinds such as rising rents, punitive business rates and higher staff costs.

TRG said that its casual dining chains accounted for less than a third of its profits. It had therefore “analysed every restaurant” across its 368-strong portfolio, which also includes Chiquito and Garfunkel’s.

“In the case of Frankie & Benny’s, 31pc of sites are in structurally unattractive locations, and as such, we will seek to exit these locations in future years,” TRG said.

Annual profits at the company halved to £13.9m following the industry turbulence and England’s extended run in the World Cup last summer.

TRG shocked investors last year with the £559m acquisition of Wagamama. The deal angered some investors, who were forced to hand over cash to fund it as part of a deeply discounted rights issue despite opposing it. The acquisition of the popular noodle chain was completed on Christmas Eve, having only a negligible effect on its results for the year to Dec 31.

Shares, which sank to an eight-year low in the wake of the Wagamama transaction, climbed 10pc yesterday as flash figures for the start of 2019 impressed investors. Like-for-like sales were 2.8pc higher in the 10 weeks to March 10, the company said.

Outgoing chief executive Andy Mccue, who is to step down soon for personal reasons, said the business was now “orientated strongly towards growth”. With 140 Wagamama restaurants included, TRG operated 660 sites and employed more than 22,000 people. Frankie & Benny’s remained its biggest chain. Citi analysts said that the 2019 sales growth “will reassure” but warned that “questions remain around CEO succession and integration of the Wagamama acquisition”.

“The announced departure of Andy Mccue during a key period of integrating Wagamama leaves us concerned about future leadership and direction, as well as the delivery of synergies from an already expensive deal.”

Greg Johnson, at Shore Capital, said the 2018 results were a “sideshow” to the Wagamama deal. “The group’s strategy remains on track,” he said, praising the selection of Alan Leighton, the former Asda and Royal Mail boss, as TRG’S senior independent director, who could provide “heavyweight pedigree and experience”.