The Restaurant Group is preparing for a “transitional” year ahead as it revealed this morning that like-for-like sales fell 4% to £710.7m.
The company, which runs nearly 500 restaurants, said it was pursuing a new and focused plan to turn around the business after it recorded a statutory loss before tax of £39.5m, versus a pre-tax profit of £86.8m the year before.
Price investment and proposition changes are underway, while the roll-out of its leisure sites has been slowed down and £10m of cost savings have been identified for delivery in 2019.
Chairman Debbie Hewitt MBE said that 2016 had been a “challenging” year for the group with a “consistently disappointing” trading performance exposing fundamental issues across its three main leisure brands, although it continued to benefit from a strong performance from Pubs and Concessions.
“We have taken decisive action by implementing a strategy review across all of our leisure brands,” she said. “It is clear that we had added an unsustainable premium to pricing in our leisure businesses and that changes to our menus had been insufficiently tested with our customers. Complex operational processes have added costs and the business operating model had become inefficient.”
Hewitt said the group, which owns Frankie & Benny’s, Chiquito, Coast to Coast and Brunning & Price, said the company has a rigorous plan in place to address these issues.
“2017 will be a transitional year during which we will implement measures to restore profitability, growth and ultimately transform the business,” she said.
There has been substantial change to the board and to the executive leadership team to support the turnaround programme over the past year.
Hewitt became chairman in May 2016 and the board was refreshed with the appointment of two new non-executive directors, Mike Tye and Graham Clemett in April and June respectively.
Andy McCue joined TRG as chief executive of the business in September. He is the ex-CEO of Paddy Power and brings substantial experience of managing a turnaround in a multi-site consumer business.
Hewitt said TRG would take a more disciplined approach to the allocation of capital, including slowing down site roll-out plans until it can be sure that the group’s brand and location strategy is sufficiently robust.
It has vowed to take action to close underperforming sites where it does not believe they are capable of generating adequate returns.