Restaurant Group reveals sales slowdown
Frankie & Benny's owner Restaurant Group dived in value in the UK today after it revealed a sharp slowdown in sales in the run-up to Christmas.
The group, which also owns the Chiquito and Garfunkel's restaurant brands, said like-for-like sales were 1% higher in the final quarter of 2007, compared with an average 7% increase seen across the rest of the year.
Shares dived 15%, even though the firm said it remained on course to meet the mid-range of market forecasts, currently between £42m (€56m) and £44.9m (€60m).
The group, which has 300 outlets based mainly in leisure locations and airports, noted that demanding comparatives and tighter consumer spending had failed to prevent it from achieving growth in the months from October to December.
Overall, the company said like-for-sales grew 5.5% in 2007.
Andrew Page, chief executive, added: "Following on from like-for-like sales growth of 5% in 2006, and against a more subdued economic backdrop, this is a good performance and a credit to our team."
He added that the group remained in a "sound financial position", with committed banking facilities of £120m (€160.25m) for five years until December 2012.
Despite the upbeat comments, Panmure Gordon analyst Douglas Jack downgraded his forecast for 2008 profits by £4.5m (€6m) to £46m (€61m), given the pressure of absorbing higher food and beverage costs. He has left his profits forecast for 2007 unchanged at £43.5m (€58m).
The company's shares have more than halved over the past year, despite an expansion programme involving the opening of 36 new restaurants. It said the performance of the new sites had been very encouraging.
