Franco Manca and The Real Greek restaurant business owner The Fulham Shore (FUL:AIM) reported strong growth in full year revenues, up 17% to £64m, driven mainly by good trading in the existing estate, giving the shares a 4% hike to 12p.
The company operates from 47 Franco Manca pizzerias and 16 Real Greek restaurants. It opened three new pizzerias after its year-end in March, in Bath, Cambridge and London.
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Franco Manca is differentiated from most other restaurants in that it controls the whole supply chain, signing contracts directly with growers in Italy thereby guaranteeing the provenance of all the ingredients on its menus.
MORE GROWTH TO COME
After a relatively quiet year in terms of new sites, the board has decided to step up the number of openings to between eight and 10 for the year ending in March 2020.
The roll-out will be financed by cash generated from operations, without the need to increase debt. In the year to March, the company generated cash of £6.1m, a 35% increase on the previous year.
A Franco Manca restaurant costs around £650,000 to open while The Real Greek, operating from a larger footprint, costs around £750,000.
PASSING ON THE BENEFIT OF LOWER RENTS
The continued difficulties for the high street and retail property landlords is leading to better rent terms for successful operators like Fulham Shore, which the company is happy to pass on to customers to underscore its value for money proposition.
As Chairman David Page comments ‘We have sometimes seen as much as a 30% fall in rent where an existing tenant ceases trading and the landlord re-lets the property. We believe this decline will continue. This has happened only once before in my 46 years of restaurant and property experience - during the 1989-93 recession’.
The company believes there are significant opportunities to grow customer numbers both at existing sites and at selected new sites across the country.
For example, the recent opening of the Greenwich Franco Manca was one of the busiest yet, serving more than 3,000 customers a week in its first month.
