Chiquito and Frankie & Benny’s owner to close 35 loss-making restaurants

The Restaurant Group, which owns Chiquito and Frankie & Benny’s at Broughton Retail Park, has announced plans to shut around 35 of its loss-making locations in a move to boost earnings. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The closures will involve the exit of leases or their non-renewal, the sale of seven freehold properties, as well as up to 20 other sites. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The group has around 116 sites in the UK, and the estate is expected to reduce to between 75 and 85 sites by 2024, locations of the closures have not been announced. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Although the company has not given an exact number, it has cautioned over potential job losses as part of the restructuring plan. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The Restaurant Group has already cut a number of loss-making restaurants, including the majority of its Chiquito sites, to boost its finances following the pandemic. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

However, pre-tax losses for the group widened from £35.2m in 2021 to £86.8m in 2022 as the company faced a knock-back from cost inflation across food and drink, energy, and wages. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Andy Hornby, TRG’s CEO, told PA the move was part of a “robust plan” to improve the group’s margins over the next three years. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He added that the company would try to offer deployments to staff across affected sites wherever possible. Hornby stated, “We are not closing any sites that we think have got long-term profitable futures.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Activist shareholders have been putting pressure on the company to improve shareholder returns, with shares in the business shrinking to less than a third of pre-pandemic levels. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Russ Mould, Investment Director at AJ Bell, said: “The company is really suffering from rising costs across the board – on energy, ingredients, and staffing.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“It’s not alone, and the company is still generating sales growth which is important, but that’s unlikely to be enough for some of its detractors.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“Oasis Management and Irenic Capital Management are among the institutions pressing the company to make changes – including, reportedly, selling off its pub and travel concessions arms.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“The Restaurant Group is already announcing plans to close more sites in its leisure division – the Frankie & Benny’s and Chiquito chains which offer generic Italian and Mexican food to a captive audience of shoppers and cinema-goers.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

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