The Restaurant Group to downscale up to 90 Frankie & Benny's, Chiquito sites
The company cited the challenging leisure sector trading environment for this cause.
The Restaurant Group (TRG) announced it is reducing the store number of its leisure brands, Chiquito and Frankie & Benny’s, up to 90 stores by the end of 2021, as the segment lags behind the growths posed by its pubs, concessions and newly-acquired Wagamama businesses.
In their recent financial disclosure, the company cited the “chronic overcapacity” in the leisure sector and “significant” cost pressures, especially with labour, as reasons for its move to rationalise its trading restaurants.
Amongst the company’s divisions, only its leisure segment has reported a year-on-year decline of 2.8%.
With this, TRG has decided to temporarily suspend its dividend.
“We have therefore concluded that the temporary suspension of the dividend is the most sensible way to ensure that we retain the flexibility to grow the business, whilst facilitating an acceleration of our Leisure estate rationalisation and strengthening our balance sheet,” chairman Debbie Hewitt said.
From the current 350 Frankie & Benny’s and Chiquito sites running, TRG plans to operate between 260 to 275 stores through exercising break clauses, lease expiries, selective conversions and marketing other sites for disposal.
At least 31 stores, it noted, are slated to exit at break or lease expiry. Around 7 to 12 stores are to be converted to Wagamama over the next two years.
Also, the company expected to dispose of 25 to 35 restaurants in the year, along with the sale of 12 freehold properties.
Last January, the company appointed Mark Chambers as the new CEO of its leisure business, effective March.
TRG posted a 2.7% like-for-like sales growth across businesses over the past year, with its pubs, concessions and Wagamama estates’ like-for-sales up 4%, 4.1% and 8.5%, respectively.
Photo Credit: Frankie & Benny's Facebook
