The Restaurant Group has reported excellent Interim results for the 26 weeks ending 30 June 2013, and expects this to continue for the second half year.
Excellent performance across the whole business:
- Total revenue increased 11.5% to £280m (2012: £252m)
- Like-for-like sales increased by 5%
- EBITDA increased by 13% to £46.9m (2012: £41.7m)
- Profit before tax increased by 15% to £30.0m (2012: £26.1m)
- EPS rose 16% to 11.2p (2012: 9.6p)
TRG is strongly cash generative; operating cash flow up 22% at £47.1m (2012: £38.5m) Net debt further reduced to £27.1m (2012: £38.4m)
Interim dividend increased by 17% to 5.25p per share (2012: 4.5p)
Continuing new site development
- Seven new sites opened in the first half year
- A further four new sites opened to date in the second half year
- 30-35 new sites for 2013 as a whole
Current trading strong, with year to date like-for-like sales growth for the 34 weeks to 25 August 2013 at 4.25%
The Board is confident of another year of continued good progress in 2013
Chairman’s statement
The Group has traded well during the first six months of 2013, delivering strong growth in revenues, margins and profits. Each of the Group’s businesses recorded good levels of like-for-like sales growth and the Group, as a whole, delivered like-for-like growth of 5%. Despite absorbing the anticipated inflationary cost pressures, the Group’s operating profit margin increased by 30 basis points. This is reflective of the strong sales growth of 11.4% during the first half, which resulted from more people dining in our restaurants (“covers” growth), higher levels of spend per head (partly through menu price increases and partly through customers trading up), sales contributions from new restaurants and good cost controls. Promotional activities during the first half were at a lower level than for the comparable period in 2012.
During the first six months we opened seven new restaurants and since June we have opened a further four restaurants. Our new openings are performing strongly and we anticipate opening between 30-35 new restaurants during the year.
Results
During the first half the Group delivered increases in revenue, margins, profits and earnings per share. Revenue increased by 11.4% to £280m (2012: £252m), EBITDA increased by 12.6% to £46.9m (2012:
£41.7m), operating profit increased by 14.2% to £31.1m (2012: £27.3m) and operating margins improved by 30 basis points to 11.1% (2012: 10.8%) reflecting strong sales and tight cost controls. Profit before tax increased by 15.2% to £30.0m (2012: £26.1m) and earnings per share increased by 15.9% to 11.2p (2012: 9.6p). Again, profits have been converted into cash at a very healthy rate and, for the first half, operating cash flow was £47.1m (2012: £38.5m) with free cash flow of £27.9m (2012: £21.4m).
As a result of this strong performance the Board is declaring an interim dividend of 5.25p per ordinary share (2012: 4.50p), an increase of 17%. The interim dividend will be paid on 9 October 2013 to shareholders on the register on 13 September 2013 and the shares will be marked ex-dividend on 11 September 2013.
Frankie & Benny’s (226 units)
Frankie & Benny’s traded strongly during the first half of the year resulting in a sizeable uplift in revenues and profits. The breadth of appeal and excellent value for money of our offerings continued to encourage more customers to visit our restaurants including a significant increase in the sale of breakfasts, an area of potential growth that we have been focusing on. We opened five new restaurants during the first half and have opened a further two restaurants since the half year. Our new openings are trading well and are set to deliver strong returns. During 2013 we expect to open between 15 and 19 new Frankie & Benny’s restaurants.
Chiquito (69 units)
Chiquito traded strongly during the first half with significant increases in margins and profits. Like-for-like sales were well ahead of the previous year and our focus on food quality, authenticity and service has yielded good results. We have noticed a steady increase in awareness and popularity of Mexican food and this is particularly apparent from the levels of digital media interaction. Digital media communication with existing (and potential) customers has been a key area of focus throughout our Group and we believe is an important tool for engaging with our customers; a theme that is also very apparent with our Coast to Coast brand. We recently opened a new Chiquito restaurant at Glasgow Fort and we expect to open a total of three to four new Chiquito restaurants during 2013.
Coast to Coast (6 units)
Coast to Coast has performed superbly, building on a strong performance in 2012, with sales and profits increasing significantly. We opened a new Coast to Coast restaurant at Highcross, Leicester, in June and expect to open a further four or five new Coast to Coast restaurants during 2013. The performance of our Coast to Coast openings has been excellent; they are set to deliver strong returns, confirming our view that this new, third, Leisure brand has significant roll out potential.
Pub restaurants (46 units)
Our Pub restaurant business has delivered an excellent performance during the first half of the year. Turnover, margins and profits rose significantly. Having concluded the conversion of the ex-Blubeckers estate we are confident that the Pub restaurant model that we now have in place is set to deliver good growth. During the first half we opened the Bull’s Head at Mottram in Cheshire, it is trading significantly ahead of expectations and we are delighted that it has just been named as The Good Pub Guide’s Best New Pub of the Year. We expect to open a further two or three new Pub restaurants during the second half.
Garfunkel’s (16 units)
Garfunkel’s has traded well during the first half delivering a substantial increase in turnover and significantly higher margins and profits. Although currently we do not have any new Garfunkel’s planned for the second half, we continue to seek out opportunities for new restaurants and will pursue these where we are confident that they will at least meet our targeted returns on investment.
Concessions (59 units)
Our Concessions business traded well during the first half with sales, margins and profits all ahead of the previous year. UK passenger numbers (“pax”) were 2.1% higher than the prior year and it is encouraging to see our Concession business, again, outperform pax. We opened a new Frankie & Benny’s restaurant at East Midlands Airport in July which is trading well, and is set to deliver strong returns. We expect to open a total of three to four new Concession restaurants in 2013.
Outlook
The results for the first half are strong and, again, reflect an outperformance against our sector. TRG benefits from operating in market segments with barriers to entry which have proved to be resilient and are growing. We have a strong portfolio of complementary brands with significant future roll out potential, our best ever pipeline of new sites stretching into 2015 and beyond and an outstanding team.
The second half has started well; year to date total turnover is up 10.5%, like-for-like sales are up 4.25% and I am confident that the Group is well placed to deliver another year of good progress.
Alan Jackson
Non-executive Chairman