THE owner of the Filling Station and Frankie & Benny’s restaurant chains is expected to have endured a tough run-up to Christmas after a slate of Hollywood blockbusters failed to match the success of 2012’s James Bond film, Skyfall.
Half of the sites owned by The Restaurant Group (TRG) are located next to cinemas, making the FTSE 250 stock susceptible to changes in box office audience figures.
Like-for-like sales rose by 5 per cent in the opening half of last year but slowed to just 1.5 per cent in the 19 weeks to 10 November after cinema attendance fell by 9 per cent year-on-year.
Comparisons against Skyfall became even tougher as the month went on, with the number of people going to the cinema plunging by 22.5 per cent in November.
Douglas Jack, an analyst at Numis Securities, said: “Like-for-like comparisons are difficult – at circa 6 per cent – for the fourth quarter, largely due to Skyfall in 2012.”
Yet Jack thinks that TRG, which also operates the Chiquito and Garfunkel’s chains, should benefit from rising airline passenger numbers as about 15 per cent of its turnover comes from its 50-odd airport concessions.
Jack said: “We expect to hold our profit before tax forecast of £71.7 million – festive trading should have been reasonably strong across the sector.
“TRG should be capable of sustaining double-digit earnings growth over the medium term, whilst paying off almost all its debt.”
Canaccord Genuity analyst Wayne Brown thinks that Thursday’s pre-close trading update could act as a further catalyst for TRG’s share price.
“Despite the increasing capital investment behind growth, debt could be fully paid down in 12 months, suggesting an increase in cash returns to shareholders or an even higher rate of openings are plausible,” Brown added.
TRG is expected to have opened up to 35 sites last year, with the total predicted to reach 40 this year. The firm’s other brands include Brunning & Price and Coast to Coast.