TRG accelerates Frankie & Benny's and Chiquito's closures
The Restaurant Group (TRG) is accelerating plans to reduce the footprint of its leisure business from 116 sites to 76 due to poor trading at Frankie & Benny's and Chiquito's.
The announcement was made in the group's half-year financial results, which reported strong overall like-for-like sales driven by Wagamama and its pubs and concessions businesses.
But the leisure arm of the business, which includes brands Frankie & Benny's and Chiquito's, reported below market trading. Like-for-like sales declined 2% in Q2 and Q3 to date, while year-to-date like-for-like sales were down 3%, although recent trading has been more buoyant thanks to the popularity of blockbuster films at cinemas.
TRG expects to accelerate its site closure plan to reduce sites from 116 at the end of last year to around 76 by the end of this financial year, "delivering the planned two-year rationalisation programme in 12 months".
It plans to use break clauses on 14 sites, while also selling eight freehold sites in Q4 which would generate £5m. Three sites are also planned to be converted into Wagamamas by the end of FY24. A further 12-17 sites would be disposed of through mutual agreement with landlords or alternative tenants.
Across the remaining sites, the group has been investing in staff training and retention programmes as well as looking to enhance their core offering.
TRG as a whole reported strong overall sales and earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first half of 2023, leading the group to make a "moderate increase" in expectation for its full-year financial results.
Total revenue across the group increased 10% to £467.4m for the 26 weeks ending 2 July 2023, while adjusted EBITDA was up 15% to £36.3m. Profit before tax stood at £7.2m up from a loss of £0.1m in H122.
Sales at Wagamama increased 9% with the group saying it plans to accelerate its expansion plans for the brand to eight to 10 per year from 2024. Meanwhile, pub sales from its Brunning & Price brand were up 10% and concessions up 31%, thanks to the increase in UK air travel.
"We are encouraged by the significant progress made in the first eight months of the year, delivering strong like-for-like sales growth despite the consumer backdrop. In light of the strong trading we are increasing our expectations for FY23 adjusted EBITDA," said chief executive Andy Hornby.
"We are making excellent progress on our medium-term plan and the board continues to actively explore strategic options to further accelerate margin accretion and deleveraging."
Earlier this summer, there were fresh calls to replace the TRG board from activist investors.
Irenic, which owns a 2.4% stake and does not have a seat on the board, said at the time that improved trading at the group highlighted how its current share price was "significantly lower" than the company's true value.
It added that shareholders had "lost confidence" in the company's willingness to align executive pay with shareholder returns and sell off its wider brands to focus on Wagamama.
Image: Shutterstock
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