The Restaurant Group has reported Interim results for the 26 weeks ending 29 June 2014, delivering record results, with double digit growth in earnings, dividends and cashflow.
Highlights:
- Strong financial performance:
- Total revenue increased 10% to £308m (2013: £280m)
- Like-for-like sales increased by 2.5%
- Operating profit margins increased by 20bps
- EBITDA increased by 13.5% to £53.2m (2013: £46.9m)
- Profit before tax increased by 12.3% to £33.7m (2013: £30.0m)
- EPS rose 15% to 12.8p (2013: 11.2p)
- Operating cash flow of £55.9m (2013: £49.4m)
- Interim dividend increased by 16% to 6.1p per share (2013: 5.25p)
- Acceleration of new site development:
- 17 new sites opened in the first half
- A further three new sites opened so far in the second half
- 38-43 new sites expected for 2014
- Continued strong trading with year to date like-for-like sales for the 34 weeks to 24 August 2014 at 3.5%
- Board is confident of another year of good progress in 2014
Danny Breithaupt, incoming Chief Executive, commented:
“I am delighted to be taking on the leadership of TRG with the business in such great shape. TRG has a clear strategy, successful brands and a great team of people. This is a terrific platform for the further growth of the business, and I am looking forward to building on this and leading the Company through its next phase of development.”
Strong second half performance
Alan Jackson, Chairman stated:
“I am pleased to report that the Group has traded well during the first six months of the year, delivering strong growth across all of the key metrics, with sales, margins and profits all increasing. Total sales grew by 10%, like-for-like sales were 2.5% ahead of the previous year (against tough comparatives), operating profit margins increased by 20bps and profits were 12.3% ahead. This represents another strong performance from the Group.
“Like-for-like sales grew in each of the first five months but were slightly negative for June, essentially as a result of the impact of the football World Cup. Since the half year, like-for-like sales have grown strongly in July and August so that, for the 34 weeks to 24 August, the Group’s like-for-like sales are 3.5% ahead of the prior year, which bodes well for a strong second half performance.
“During the first six months of the year we opened 17 new restaurants and since June we have opened a further three restaurants. Our new openings are performing strongly and we anticipate opening between 38 and 43 new restaurants during the year.”
Outlook
“These are strong results and reflect an outperformance against our sector. The Group benefits from operating in market segments with barriers to entry which have proved to be very resilient. We have a strong portfolio of complementary brands and have an impressive pipeline of new sites, in terms of both quality and quantity. These factors will ensure that the Group remains on track to double in size over the next eight to ten years.
“The second half has started well; year to date after 34 weeks total turnover is up 10.4% and like-for-like sales are up 3.5%. With an improving economic outlook, lower inflation and higher levels of employment the prospects for TRG continue to look good. I am confident that the Group is well placed to deliver another year of profitable progress.”
Frankie & Benny’s (240 units)
Frankie & Benny’s traded strongly during the first half to deliver a sizeable uplift in revenues and profits. Frankie & Benny’s enjoys a loyal and growing customer base as a result of its wide range of offerings, with great value for money and high levels of customer service. Continued ongoing increase in the number of breakfasts sold, enhancing bottom-line profits. Nine new restaurants opened during the first half and another one since the end of the first half. The new openings are trading well and are set to deliver strong returns. Expect to open a total of between 18 and 21 new Frankie & Benny’s restaurants during 2014.
Chiquito (74 units)
Chiquito performed well during the first half recording strong increases in both revenues and profits. With the growing popularity of Tex-Mex cuisine and the focus on variety, authenticity, service and customer engagement, Chiquito continues to deliver good results. Expect to open a total of between seven and nine new restaurants in the full year.
Coast to Coast (12 units)
Coast to Coast has performed strongly with a substantial increase in revenues and profits. New restaurants in Rochester and Sheffield during the first half, both of which sit alongside existing Frankie & Benny’s and Chiquito restaurants. In each case, new Coast to Coast restaurants are trading superbly and are set to deliver strong returns. This further re-enforces the view that TRG have developed, with Coast to Coast, a new brand with significant growth prospects and one that complements the existing successful Frankie & Benny’s and Chiquito brands. As a result of landlord and developer delays, at least three sites anticipated to open during 2014 will now open in the earlier part of 2015. Notwithstanding these delays, expect to open at least one further restaurant this year, and a substantially higher number in 2015.
Pub restaurants (50 units)
Pub restaurant business has delivered an outstanding performance in the first half with significant increases in revenue and profit. As previously noted, there is now a well-established model for the Pub restaurant business which is scalable and capable of delivering sustained and high levels of return on investment. During the first half, opened a new pub, the Aspinall Arms, near Clitheroe – its performance since opening has been exceptional and it is set to deliver strong returns. Since then, The Red Lion has opened near Lichfield and expect to open two more new pubs during the remainder of the year.
Garfunkel’s (15 units)
Garfunkel’s traded well during the first half and continues to deliver good levels of margins, profits and returns. Currently no new Garfunkel’s planned for 2014, but are actively looking for potential new sites which will meet criteria for returns on investment.
Concessions (62 units)
The Concessions business traded strongly in the first half delivering strong growth in revenues and profits. UK passenger numbers (“pax”) continue to increase, growing by 4.6% in the first six months of the year. Once again, the Concessions business like-for-like sales growth outperformed UK pax growth over the first six months. During the first half, opened four units which included taking over all the catering at Southampton airport and launching the new Wondertree restaurant at the new Terminal 2 in Heathrow. All new restaurants are trading well and are set to deliver strong returns.
Recently announced winning tenders to open two new restaurants and a new bar at the re-developed Stansted airport. These include a Coast to Coast restaurant (the first in a UK airport) and will open in early 2015.