Frankie & Benny’s owner plans to close 90 more restaurants

The owner of Frankie & Benny’s and Chiquito restaurants says it plans to shut up to 90 more sites by the end of next year as it continues to weigh on profitability.

The Restaurant Group (TRG) brought the shutters down on 18 outlets last year as the two brands within its leisure division continued to struggle against a backdrop of weaker consumer spending in the casual dining sector.

It has seen the likes of Jamie’s Italian collapse and scores of other rivals seek to cut rents and sites.

TRG has credited its £559m purchase of the Wagamama operation in 2018 as turning its fortunes around.

Alongside its annual results the company said it planned to convert 12 leisure sites into a Wagamama in the current year – building on its growing contribution to group sales.

But it said at least 31 other leisure restaurants would not have their leases renewed, 12 freeholds would be sold and it would dispose of 35 other sites.

The anticipated plan would see its leisure portfolio shrink to between 260-275 sites by the end of 2021, TRG said.

The impact on jobs was unclear at this stage, the company indicated, as it expected many workers affected by the site closures would likely be able to transfer to other outlets within the group.

Results showed TRG reported a pre-tax loss of £37.3m – building on a figure of almost £14m for 2018 as the leisure side of the business weighed more heavily.

That was despite like-for-like sales rising 2.7%.

Total sales were lifted by the acquisition of Wagamama – leaving them above £1bn for the first time.

Shares fell by 5%. It was explained by the company’s decision to temporarily suspend its dividend.

Chief executive Andy Hornby told investors: “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.

“Following an 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.”

Nigel Frith, senior market analyst at asktraders.com, said of the update: “Casual dinning is a difficult business to be in right now, as Restaurant Group highlighted with a £111.8m hit on its leisure business.”

He added: “In such a challenging industry and trading climate, strategy is key. TRG is bearing the brunt of falling footfall in leisure and retail parks where many of its restaurants are based.

“Add into the equation high costs and rent and compare that to an 8.5% increase in like for like sales at Wagamama and we can see that today’s strategic announcement makes a lot of sense.”

(c) Sky News 2020: Frankie & Benny’s owner plans to close 90 more restaurants