Frankie & Benny owner nearly doubles earnings as Covid curb removal brings customers back in droves
- Restaurant Group’s half-year sales rose 95% to £423.4 million
- It still made a statutory loss of £26.1m due to significant depreciation
- In addition to Frankie & Benny’s, the company owns Barburrito and Wagamama
Wagamama owner The Restaurant Group said the easing of trade restrictions helped sales nearly double in the first half of the fiscal year.
The hospitality operator, which also owns chains Barburrito and Frankie & Benny’s, told investors on Thursday that revenue in the six months to July 3 jumped 95 percent year-on-year to £423.4 million.
With the exception of the concessions arm, which was impacted by the decline in international travel following the advent of the Omicron variant, all of the Company’s businesses saw good trading during the period.
Growth: Frankie & Benny’s owner, The Restaurant Group, said revenue in the six months to July 3 rose 95 percent year-on-year to £423.4 million
This allowed the company to report an adjusted pre-tax profit of £10.2m, compared with a loss of £19.9m a year earlier, when its branches were only able to fully trade for seven weeks.
However, a statutory loss of £26.1m was incurred as a result of significant write-downs related to worsening inflationary pressures and a challenging short-term economic outlook.
The Restaurant Group said utility bills rose by £2million more than it forecast in its last trading update in mid-May.
To counter future cost increases, the company has hedged all electricity and gas bills until 2024, a measure the company forecasts will save between £40m and £70m over the next two years.
It has also purchased interest rate caps on gross debt of £125m through November 2025 and repaid £89m of a credit facility, making it less vulnerable to potential interest rate hikes.
Precautionary measures: To cushion future cost increases, The Restaurant Group has hedged all electricity and gas bills until 2024, potentially saving £70m
“We have taken critical management actions to reduce the impact of cost pressures in the industry,” said CEO Andy Hornby.
‘While the uncertain consumer environment poses challenges for the hospitality industry, the group is well positioned to further develop our brands to provide long-term growth for all stakeholders.’
TRG’s like-for-like sales in most of its businesses outperformed the broader market for the 33 weeks ended Aug. 21, according to the Coffer Peach Tracker, a well-known industry monitor.
However, in the second half of the period, trading in Wagamama and the convenience stores slowed due to the summer heatwave and weaker supply orders.
Demand in concessions stores was also hit as airlines cut their summer schedule after staff shortages caused turmoil at UK airports earlier this year.
Lara Martinez, analyst at research firm Third Bridge, said: “Visit frequency has fallen among UK operators while spend per coverage appears to have increased, an early indicator that people are choosing to eat out less often but out more an occasion to make out.
“Nevertheless, we’re hearing how TRG’s younger brands, like Wagamama, could be shielded somewhat as their target audience doesn’t face the same cost hikes as older consumers, reflected in LFL’s well above-market sales growth. ‘
Restaurant Group shares rose 3.35 percent to 44.4 pence late Thursday afternoon, despite their value falling 55 percent year-to-date.