27th Feb 2015 13:18
LONDON (Alliance News) - The Restaurant Group PLC Friday reported a higher profit for 2014, driven by a 10% increase in revenue on the back of new restaurant openings, which Chief Executive Danny Breithaupt told Alliance News he plans accelerate over the next few years as he looks to balance out the portfolio.
The group owns restaurant chains Frankie & Benny's, Chiquito, Coast to Coast and Garfunkel's. At the moment, just shy of 250 restaurant it operates are Frankie & Benny's out of a portfolio of around 475.
"We are very much changing our approach. One of the things we want to do is really balance out the portfolio of openings, which will allow us to grow the business at a faster pace," Breithaupt told Alliance News.
"In the past it has been very Frankie's focused, but it would be really remiss of me to just keep on that path, because a) you're not going to be able to increase the number significantly too much, as there is a finite number you can do in a year, and b) we've got other great brands to rollout too," he added.
Restaurant Group posted a 7.4% increase in 2014 pretax profit to GBP78.1 million, up from GBP72.7 million in 2013, driven by a 10% increase in revenue to GBP635 million, from GBP579.6 million. Like-for-like sales were up 2.8%. Its profit margin dipped to 12.7%, from 12.9%, as a result of the new openings as well as wage cost inflation.
The group raised its total dividend for 2014 to 15.4 pence, up 10% on the 2013 payout.
Restaurant Group opened 40 new restaurant sites in 2014. Since 2009, the group has been accelerating the rate of expansion, and has plans to open between 42 and 50 new sites in 2015.
"We will continue to roll out Frankie & Benny's at the 15-18 mark, but all the other businesses will really start to pick up the slack. We should do at least 10 Chiquito openings this year and in the Coast to Coast business, we are hoping to open around 10 of those over the year," said Breithaupt.
The group currently operates 80 Chiquito restaurants, which Breithaupt said he sees growing to over 150 over the next few years.
"Coast to Coast at the end of this year will be 20 strong, and we see that as being a 100 restaurant brand," he said.
"Chiquito and Coast have got tremendous opportunity, because Frankie's has been there done that and got the t-shirt," Breithaupt added.
The group has spent time refreshing the Chiquito brand, with new menus and refurbishments, and Breithaupt said the brand is currently its strongest performer in terms of improvement.
"And then you have Coast," said Breithaupt, "A new brand which we have nurtured over the last three to four years, and it is now ready for a bit of a growth explosion."
Breithaupt said he doesn't feel that the group is under-represented in any region of the UK, but said it avoids too many site openings in Central London, due to higher costs and not such attractive returns.
The group continues to use its free cash flow to expand the business, rather than taking on more debt. Breithaupt said the group already has 30 new restaurant site openings in the pipeline for 2016, and 20 for 2017. He said he plans to capitalise on the improving UK economy be opening new space.
Restaurant Group said trading in the new year got off to a strong start, with total sales up 9.5% and like-for-like sales up 2.5% for the eight weeks to February 22.
The company's shares were trading 1.3% higher at738.25 pence Friday afternoon.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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