Changes on the menu at Frankie & Benny’s
THE Restaurant Group is preparing to serve up radical changes to entice customers back to its eateries after declining sales accelerated in the last three months of 2016.
Shares in the FTSE 250 group, which operates about 500 restaurants and pubs through brands such as Frankie & Benny’s, Chiquito and Coast to Coast, plunged 46p to 300p as it warned trading conditions would remain tough over the next few months.
Profits will also come under pressure from rising costs from the national living wage, the apprenticeship levy, higher energy taxes and the impact of a weaker pound.
The company, which is facing increased competition at leisure and retail parks where it operates, has admitted some of its woes are self-inflicted after it introduced menu changes and hiked prices.
It has already announced 33 sites will close and new chief executive Andy McCue, the former Paddy Power boss, will unveil further details of a strategic review at the group’s annual results in March.
Although total annual sales increased by 3.7 per cent to £710.7million, like-forlike turnover was down 3.7 per cent. The downturn accelerated by 5.9 per cent in the fourth quarter, the fifth straight quarter of declining business at outlets open for at least a year. McCue said price and menu trials across Frankie & Benny’s had confirmed that “substantial price and proposition changes are required”, and the review of other leisure brands had revealed “a need for similarly significant change”.
He added: “I have been impressed by my colleagues’ passion for our brands, and commitment to our customers through what has been a very difficult trading period.” Liberum analyst Wayne Brown, said McCue has a “golden opportunity” to execute a new strategy, including further site closures, as well as restoring former core value menus.
Further out, he said management could consider a break-up of the group by selling off pub restaurants and concessions, using likely proceeds of over £400million for acquisitions or returns to shareholders.