The restaurants may be full in Italy, if you believe Silvio Berlusconi, but they seem to be doing ok in the UK as well.
At least that is the experience of Restaurant Group, which owns the Garfunkel's and Frankie & Benny's chains. The group said total sales for the 44 weeks to last weekend had risen by 6.5%, with like for like sales up 2.75% despite the tough economic climate. It has opened 16 new restaurants this year, on the way to its target of between 24 and 26 for the full twelve months. Between 25 and 30 will be opened in 2012.
It said November had started well, and it was on track to meet its full year expectations. It said its strong brands and value for money offerings should see it through the current difficult trading conditions, which it expects to continue into 2012. It recently concluded a refinancing with a new five year, £140m facility on the same covenant terms as previously.
The news has lifted the company's shares 6p to 288p. In a buy note Collins Stewart analyst Wayne Brown said:
Against a backdrop of weak consumer sentiment, Restaurant group has delivered a resilient performance with like for likes improving from 0.5% over the first 18 weeks to 2.75% year to date. This is encouraging as the group needs 2%-3% total sales growth in the full year to offset inflationary costs.
The group is about to enter a period where comparatives ease considerably due to last year's snow impact which cost the group around £6m of sales and £3m-4m of profits.
Evolution Securities moved its recommendation from neutral to add, while James Dawson at Charles Stanley was also positive:
Restaurant Group remains a solid play on the casual dining market and the refinancing of the debt facility with minimal drama suggests a similar view is adopted by its bankers. The value for money offering is the key point for ensuring continued footfall for this business, as is continuing to find new sites for expansion.
