Tasty PLC on Tuesday announced a restructuring plan to combat ‘difficult recent trading conditions’, and struck a loan agreement to bolster its coffers and ‘stabilise the company’ in 2024.
The London-based casual dining restaurant operator announced its proposal to close 20 underperforming sites, two of which have been shut already. To fund the new restructuring plan, Tasty also announced the agreement of a loan of up to £750,000.
Tasty shares fell 17% to 0.87 pence each in London on Tuesday afternoon.
For the 53 weeks to December 31, Tasty expects to report revenue of £46.9 million, a 6.6% increase from the £44.0 million of revenue in the year prior.
It expects to post a loss before interest, tax, depreciation and amortisation of £900,000 narrowing from a loss of £2.7 million.
‘The group has made reasonable progress since the year end and despite difficult recent trading conditions, management continue to navigate through challenging times to mitigate cost rises and lower trading performance,’ Tasty said.
‘The cost-of-living crisis, transportation strikes, and interest rate rises continued to significantly impact 2023 revenue and inflationary pressure on labour, food and utilities continue to adversely affect profitability. The group’s financial performance has been inhibited by a tail of underperforming sites, despite efforts at improving operational performance.’
Tasty said it has aimed to reduce costs and cash outflows by amending opening hours, cutting staff numbers, adjusting the menu and closing temporarily during quieter periods. It noted it made ‘significant redundancies’ during the pandemic and reduced capital expenditure too.
Tasty said the new restructuring plan will facilitate an Ebitda improvement of up to £2.1 million between 2023 and 2025, includes head office savings of £600,000 per year, and it predicted lease savings from closed sites of £2.1 million in 2024.
Tasty said: ‘Group financial performance continues to be inhibited by a tail of underperforming sites, despite efforts at improving operational performance.’
It added: ‘Having invested significant time and resources, the board unanimously believes that progressing the loan agreement and restructuring plan are in the best interests of the company.’
The loan agreement is with Will Roseff, a ‘high net worth investor’ who is a shareholder in bet365. He is also a director at the gambling firm.
The loan has a 15% yearly interest until such a time that the restructuring plan is approved. Thereafter, it will have a 10% interest rate.
The financing will ‘provide additional working capital, to stabilise the company in 2024 and to meet new opportunities in the sector in 2025 beyond existing operations’.
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