Restaurant Group swings to loss, to close 33 outlets

In the 27 weeks ended 3 July, the group posted a loss before tax of £22.5m compared to a pre-tax profit of £38m the year before.

Meanwhile, like-for-like sales were down 3.9%, and Restaurant Group said it plans to exit 33 underperforming sites immediately as it reckons they are incapable of generating adequate returns.

The outlets include 14 Frankie & Benny's, 11 Chiquito sites and eight others.

The company said it has made an exceptional charge of £39.3m in the period including an impairment of fixed assets, provision for onerous leases and other associated costs as a result of this decision.

The interim dividend was maintained at 6.8p per share, which the group said reflected confidence in its current trading forecast.

Chairman Debbie Hewitt said: “This has been a challenging trading period for our Leisure brands, albeit with a good performance from our pubs and concessions businesses. The board has moved quickly to undertake a review of the operating strategy and we now have clarity on the issues facing our Leisure brands, particularly Frankie & Benny's.

“The brand remains relevant and popular and we are confident that improved performance will be achieved by being more customer-focussed and data-driven, and through better operational execution.”

Shore Capital said the results were better than feared. “Overall, we see the headline metrics as encouraging, given the recent past, although there remains a lot to do stabilise the business and at this stage we are unsure what the investment will mean to margins in 2017f. Given the share, despite the recent rally, trade sharply below the intrinsic value we retain our buy stance.”

At 0900 BST, shares were up 5.3% to 428.80p.