Frankie & Benny’s owner, the Restaurant Group, which changed chief executive a few weeks ago following a period of substantial underperformance, is launching an overhaul of its operations that will see it scrap a slew of outlets.
The company, whose share price has almost halved over the last two years, will axe 33 underperforming outlets, a move that has landed it with a £59.1m impairment charge.
This, combined with a 3.9 per cent slide in like-for-like sales in the 27 weeks to July 3, dumped the company into the red during the first half.
The Restaurant Group, which also owns the Mexican-themed chain Chiquito, racked up a pre-tax loss of £22.5m, compared with a profit of £38m in the same period last year.
The company said its strategy review revealed that Frankie & Benny’s “weak performance” has been less a result of competition and more a consequence of problems of its own making.
It said it has driven customers away by removing “many popular dishes from the menus”, forcing through “above market increases in food and beverage pricing” and lumping diners with “inconsistent and unsatisfactory service experience”.
The company said:
Frankie & Benny’s performance has suffered due to insufficient focus on value, unsuccessful menu development and poor operational executionWe have lost value-conscious customers, a result of significant price increases and the removal of popular value offersIn 2015, we began to introduce more “authentic” menus without sufficient testing of the concept. This led to the removal of many popular dishes from the menus and led to a further decline in covers.
It hopes to remedy these failings by:
- Refining the proposition with greater focus on families (our core customers)
- Testing and trialling new value offers
- Adding back popular dishes to the menu
Earlier this month the company said former chief executive Danny Breithaupt was stepping down with immediate effect as, after a review, it had “decided that a new leader is needed”. The shares promptly surged to have their best day in five years. Mr Breithaupt’s two-year tenure coincided with a 44 per cent fall in the share price.
Debbie Hewitt, chairman said today:
This has been a challenging trading period for our Leisure brands, albeit with a good performance from our pubs and concessions businesses. The Board has moved quickly to undertake a review of the operating strategy and we now have clarity on the issues facing our Leisure brands, particularly Frankie & Benny’s. The brand remains relevant and popular and we are confident that improved performance will be achieved by being more customer-focussed and data-driven, and through better operational execution.A new executive team is in place to lead the implementation of this first phase of the review and to apply the learnings to our other brands.