Frankie & Benny’s owner The Restaurant Group (RTN) has served up mixed results as it anticipates meeting profit expectations - despite falling sales.
Its latest trading update for the year to 31 December 2017 reveals a 3% decline in like-for-like sales in line with analysts’ expectations.
Shares in the company, behind restaurant chains such as Chiquito and Garfunkel’s, dipped 1.4% to 260.6p. The reaction was softened thanks to strong progress in its strategy to lure hungry diners to its restaurants.
Back in 2017, prices were cut by 7% following a backlash from customers when Frankie & Benny's removed value offers and popular dishes, leading to profit warnings.
This strategy is paying off as the new prices and improvements in food quality and marketing have helped to boost volumes.
In an economy dominated by rising costs and stagnant wage growth, customers have focused on value in a sector crowded with competition.
UPGRADES FROM LIBERUM
Liberum Capital's Wayne Brown says his 2017 £52.8m pre-tax profit forecast appears ‘too prudent’ and has upgraded his estimate by 6% to £56m.
He believes the strategy coupled with the ‘volume-led recovery’ will deliver flat sales in the second half of 2018.
Numis Securities' Tim Barratt expects a return to growth in the same period as a small drag from the FIFA World Cup this summer is expected to be offset by Frankie & Benny’s refreshed re-launch.
