Restaurant Group raises profit target despite hard Christmas

Chiquito and Frankie & Benny's owner The Restaurant Group bounced back from a snow-hit December to upgrade its full-year profit expectations.

The group, which also owns Garfunkel's, said like-for-like sales dropped by 1% after freezing temperatures prevented punters getting to its restaurants in the final quarter.

This equated to a decline of 8% over November and December and meant the snow cost the chain an estimated £5million to £6million in sales, analysts said.

Despite the disruption the company expects to deliver full year profits ahead of the current market consensus of £55.4million for the 2010/11 financial year.  

Frankie & Benny's

CEO Andrew Page: 'Trade bounced back as soon as the weather abated'


The group, which runs most of its 380 restaurants from leisure parks, partly relies on the performance of cinemas nearby as movie-goers sit down for a meal before watching the film. Last week, Cineworld warned the adverse weather had a negative impact on box office and retail revenues.

But chief executive Andrew Page said a strong performance from the group's new restaurants helped lift profits for the full year.

 

He said: 'The snow impact was particularly prevalent on the evening trade, as people were fearful of travelling in dangerous conditions. Trade bounced back as soon as the weather abated.'

Looking ahead, Mr Page said the next Pirates of the Caribbean and Harry Potter films should pull more people into cinemas and in turn the restaurants.

The company has had a turbulent year after the volcanic ash crisis hit sales in the 40 restaurants it owns in airports. This was compounded by a poor performance during the World Cup in June and July as customers either stayed at home or ate in pubs showing the tournament.

Despite this and recent woes caused by the weather, new restaurant openings and a strong film line-up at cinemas has lifted profitability. The company said new openings in the period were up on the previous year, with 24 new restaurants opened in 2010. The group hopes to open 22 to 27 new restaurants this year.

Douglas Jack, analyst at brokers Numis, said Restaurant Group's performance reflected 'good cost control, high returns from new sites and strong cash flow'.

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