Shares in Frankie & Benny's owner Restaurant Group (RTN) are up 8.4% to 355p as investors focus on a steady dividend and strong action plan over mixed financial results.
The full-year dividend has been maintained at 17.4p, which is a sign of confidence from the company behind high street brands Chiquito and Coast to Coast.
Management plans to focus its Coast to Coast brand more on steaks and burgers.
Restaurant Group has had a difficult time on the stock market over the last year as its higher prices and removal of value offers and popular dishes deterred customers and thus hurt earnings.
SHOULD INVESTORS BE REASSURED?
Langton Capital analyst Mark Brumby believes the plan to improve customer service, slow the roll-out of leisure sites and grow its pubs and concessions business is a good start.
However, he is concerned about executing the plan and warns that Restaurant Group’s recovery could take longer than its target for the second half of 2017.
Brumby is also uncertain about not cutting the dividend as this was an opportunity to generate more cash.
Broker N+1 Singer analyst Sahill Shan is more optimistic with a ‘hold’ recommendation as the full year results are not as bad as expected.
While pre-tax profit is 11.2% lower at £77.1m, this is in the upper end of the company’s guidance of £74m to £80m and slightly higher than the analyst’s £76.9m expectations.
‘Make no mistake there is significant work to be done to rebuild profitability, but today’s strategic review is a step in the right direction’ says Shan.
