The Restaurant Group will close at least 124 of its Frankie & Benny’s and Chiquito branches over the next six years, after it tumbled to a £79m first-half loss.
Sales at Frankie & Benny’s and Chiquito continued to fall, despite improvements to the menus, along with the benefit of comparison against a weak trading period last year during a period of “extreme weather” and the men’s football World Cup.
About half of the group’s 352 original casual dining sites, mainly Frankie & Benny’s and Chiquito as well as Garfunkel’s and Coast to Coast, are expected to be closed as their leases expire or they reach a contractual break period, or even earlier if possible.
Of these, about 15 will be converted to the Wagamama brand, which the group bought in a controversial £559m deal last year. Eight branches were converted in the first half and another eight were closed.
The first-half losses came after a £115.7m writedown of the value of property assets.
Debbie Hewitt, the chairman of the group, said it was taking a cautious approach to the struggling casual dining chains amid a “consumer environment that is tough with all sorts of uncertainty.”
But she said the results reflected the strength of the Wagamama acquisition which was delivering a strategic repositioning of the company.
“We are mindful of the headwinds in the casual dining sector and the meaningful uncertainties created by the potential of a no?deal Brexitand are planning with this in mind. However, our business is now better diversified and purposefully positioned to benefit from multiple opportunities for growth,” she said.
Andy Hornby, the former HBOS executive who joined as chief executive of the Restaurant Group last month, said he supported the Wagamama acquistion and it was clear “the group is being transformed” .
“Despite the well documented challenges facing the casual dining sector, the group’s diversified set of brands provides firm foundations,” he said.
Sales at the group’s established sites rose 4% in the six months to 30 June, driven by a 10.4% surge at Wagamama and a strong performance at its pubs and airport concessions.
Total sales rose 58.2% to £515.9m and underlying pretax profit was up 36% to £28m.