The company behind Frankie & Benny’s, Chiquito, Coast to Coast and Garfunkel’s is closing 33 restaurants after reporting falling sales and profits.
Restaurant Group blamed its poor performance on unpopular new menus, higher prices and poor customer service, and said it would listen more to its customers in the future.
It runs more than 500 restaurants across the UK and Frankie & Benny’s is its biggest brand. The company posted a 3.9% fall in like-for-like sales and a 4.4% fall in operating profits to £37.5m in the 27 weeks to 3 July. It took a one-off charge of nearly £60m for the 33 site closures and writedown of 29 other outlets.
The group has ousted its chief executive and chief financial officer in recent months and appointed two new non-executive directors to its board to chair the remuneration and audit committees, after suffering a damaging shareholder revolt over boardroom pay in May. Barry Nightingale was appointed as finance chief in June along with a new managing director for Frankie and Benny’s, and the former Paddy Power boss Andy McCue will join as chief executive in mid-September.
His predecessor, Danny Breithaupt, had blamed increased competition for Frankie and Benny’s worsening performance, but the new chair, Debbie Hewitt, who took over from Alan Jackson in March, admitted it was not the main factor.
“Disappointingly our issues have been the result of our own making,” she said. “It’s been a business that’s been run very instinctively … But customers will tell you ‘it’s too expensive, we are not as keen on the menu and service is inconsistent’.”
She said prices had been pushed up too high in the past three years and that fixed-price lunches and many popular dishes had been taken off when new menus were introduced without being trialled first. For example, chicken parmigiana made way for chicken saltimbocca, which proved less popular and is also more complex to make, resulting in longer waiting times.
Hewitt said the “issues are fixable” and pledged urgent action to appeal more to families, Frankie’s main customers, by testing new value offers and putting popular dishes back on the menu. About £6m is being ploughed into technology to update “antiquated” tills, ordering and operating systems, she said.
The drop in the value of the pound following the Brexit vote will push up the price of imported food next year, but the group cannot afford to pass this on to customers, she added.
The company has scaled back new restaurant openings to 24-28 this year, from 44 in 2015. It is happy with its focus on retail parks, away from the high street.
