Frankie & Benny’s owner Restaurant Group (RTN) has revealed that like-for-like sales were affected by weaker cinema admissions in December, prompting concerns it could stall its recovery and sending the shares down 5% to 147p.
The group's restaurants are typically located close to entertainment venues like cinemas to appeal to hungry movie-goers.
Analyst Greg Johnson at Shore Capital estimates that like-for-like sales fell by 1% over the last ten weeks.
Under its recovery plan, Restaurant Group has already cut prices and improved its dishes at Frankie & Benny’s after getting rid of value offers and popular dishes.
However nostalgic fare such as Mary Poppins Returns has failed to pull in the crowds in the way that blockbusters like the Star Wars re-boots have done in previous years.
In the year to 30 December, like-for-like sales fell 2% although this is an improvement over the 3% decline in 2017.
Canaccord Genuity analyst Nigel Parson is hopeful that momentum will continue to build, flagging that sales in the second half were positive for the first time in three years.
STRONG TRADING AT WAGAMAMA BUT STILL EARLY DAYS
Wagamama, recently acquired by Restaurant Group, appears to be faring well as it continued to trade strongly over Christmas.
Buying Wagamama has been controversial due to the high price tag of £559m, with a third of Restaurant Group’s value wiped off since it was revealed in October.
But the Asian fusion chain has been performing better than its new owner with a 12% rise in like-for-like sales in the quarter to 11 November.
There is no guarantee that this strong performance at Wagamama will continue but early indications are clearly positive.
If Restaurant Group can successfully grow Wagamama it could be transformational for the group according to Shore Capital with new openings and synergy benefits driving earnings per share up from 11p last year to 22p by 2022.
