Nando’s profits lessened by costly expansion drive

HIGH expansion costs held back profits at Nando’s, but the restaurant chain bucked casual dining gloom with rising sales.

Operating profit for the international business, which is owned by South African firm Yellowwoods, was down from £46.7m to £42.8m in the year to February 28.

This was put down to investment costs as the total number of sites rose to 937, compared to 908 at the same time last year.

Of these, 711 are owned by the company and a further 226 are franchises.

In October, the company announced the opening of another branch at discount retail park The Junction in Antrim — its seventh in Northern Ireland. It has also opened at Rushmere Shopping Centre in Craigavon.

Capital expenditure was £101.2m, which Nando’s said reflected high levels of confidence in the business and its growth prospects. Revenue jumped 14.3% to £969.3m.

In the UK, sales were 11.7% higher at £722.4m.

By the end of the period, the chain had 391 locations in the UK having added more than 20.

Nando’s said it would continue to open new sites at a similar pace, as well as looking to improve like-for-like sales at its existing eateries.

The group’s expansion comes amid testing times for the casual dining world, with several businesses closing UK stores due to rising prices of food, rents and labour.

Gourmet Burger Kitchen, which is owned by Famous Brands, another South African company, is the latest to shutter sites. The company is in the process of closing 17 locations.