The owner of Wagamama and Frankie & Benny’s thinks the coronavirus will cost it as much as £500m in lost sales.
The Restaurant Group, one of the UK’s largest restaurant operators with 600 sites, generated revenues of £1.07 billion in 2019 and had begun the first six weeks of this year by posting a 5% increase in sales.
But the temporary closure of its restaurants following government restrictions to curb the Covid-19 pandemic has forced it to remodel its financial expectations for the rest of the year, using what it describes as a “pessimistic scenario”.
This scenario assumes that all its restaurants and pubs will remain closed until the end of June.
Furthermore, with the government indicating that social distancing measures will remain in force post-lockdown, management at the firm believe there will be a slow recovery in footfall during the rest of this financial year.
It said it expects to be “extremely disciplined” in the phased reopening of its restaurants through July to December 2020 and would anticipate reopening around 400 of its 600 sites across that period, potentially with some restrictions on operations immediately following lockdown.
The company is therefore predicting an overall decline in group like-for-like sales of 45% for the year, caused by a 60% reduction in the first half and 30% in the second.
The reduction in total sales is likely to be 50%, which would leave it with a turnover of around £535m, compared with more than £1 billion last year.
The company said it was also slashing capital expenditure by more than half to £30m, while adjusted EBITDA is predicted to between £45m and £55m, compared with £137m last year.