Restaurant Group shares rise 5pc despite fall in sales

Restaurant Group shares rise 5pc despite fall in sales

Shares in the Restaurant Group climbed over five percent in morning trading despite a fall in sales.

The owner of Frankie & Benny’s and Chiquito reported a fall in total sales by 2.1 percent to £326.1 million in the six months to July 1 from £333.1 million this time last year.

The Restaurant Group said that results did not meet analysts expectations due to adverse weather conditions. With the best from the east hitting early in the year, customers were kept from restaurants. Similarly, the heat wave and World Cup meant the UK spent more time in pubs rather than restaurants.

The group said they are confident in delivering an adjusted pre-tax profit outcome for the full year.

“The first half of 2018 has been very challenging with a perfect storm of events; extreme weather patterns, the World Cup and continued structural challenges,” said the broker, Liberum.

“Despite this, the group continues to transform as it invests heavily in digital and new concepts as it targets more favourable structural channels.”

“The reshaping of the business is taking hold,” analysts added, who issued a “buy” recommendation.

In order to bring down costs next year, the group said it is planning on close poor performing restaurants.

The group is also planning to expand its pubs and concession business. Having acquired Ribble Valley Inns Ltd and Food & Fuel Ltd, the company hopes to open at least 39 new sites in 2018. In 2019, the plan is to open between 10 and 15 units.

Several dining chains, including Carluccio’s, Jamie’s Italian, Prezzo and Byron have called in administrators or been forced to cut the number of ‎sites and jobs in 2018.

Shares in the group (LON: RTN) are trading up 5.89 percent at 291,40 (1311GMT).