Restaurant Group plans 'substantial' revamp as sales continue to fall

After like-for-like sales continued to slip in the fourth quarter of 2016, The Restaurant Group's new chief executive, Andy McCue, plans a "substantial" revamp of its casual dining chains as part of a group-wide "transformation programme".

Like-for-like sales in the final three months of the year were down 5.9% as trading continued to be challenging.

For the 53-week period to 1 January, the FTSE 250 group generated revenue of £710.7m, having closed 37 outlets and opened 24.

This was 3.7% higher than the 52-week prior year or up 0.9% on a 53-week versus 53-week basis, and down 3.9% on a like-for-like basis.

After a review in the first half of the year across the Frankie & Benny's estate confirmed that substantial changes were required to the chain's price and proposition, ex Paddy Power boss McCue joined in September and said his strategic review of the other brands, including Chiquito, Garfunkels, Joe's Kitchen and Coast to Coast, "has revealed a need for similarly significant change".

He said the transformation programme would focus on improvement of the proposition to ensure the restaurants were "competitive on value with a distinctive offering that meets customers' needs", while also improving operating processes to deliver better service aligned with trading patterns.

Finally McCue wants to build "a better business which is leaner, faster and more focused", implying costs cuts as the industry faces well documented external cost pressures from the increases in the National Living Wage, the Apprenticeship Levy, business rates, higher energy taxes and increased purchasing costs due to the weak pound and commodity inflation.

March's results will see McCue will deliver an update on the proposition development in Frankie & Benny's, the strategic reviews of the other leisure brands and the wider opportunities for cost cutting.