Reaction: Frankie & Benny's owner The Restaurant Group to shut 35 branches as FY losses widen

Frankie & Benny's and Chiquito owner The Restaurant Group (TRG) has cautioned over job losses after revealing plans to shut around 35 of its loss-making casual dining locations in efforts to boost earnings.

The group, which also owns pan-Asian chain Wagamama, said the closures would help it shore up cash after reporting widening losses over 2022. Chief executive Andy Hornby said the move forms part of a "robust plan" to improve margins over the next three years.

He said: "Every year a number of leases come up for potential renewal, so the vast majority is where we are going to selectively – and we haven't fully decided yet, we are going to constantly review the way the sites are trading – exit a number of those, rather than renew the lease for another five or ten years. We will manage that on a localised basis, and the teams will be the first people to know. But we are not closing any sites that we think have got long-term profitable futures."

Up to three of the sites will be converted to Wagamama over the next two years, and the rest will be sold or the leases will be exited or left to expire. Mr Hornby said the business would try to offer deployments to staff across the affected sites wherever possible, although did not specify how many jobs would be affected. He added: "A significant number of these potential sites are in areas where we have other brands, so the job impact should be significantly less than you might think."

The group is set to reduce its leisure estate by about 30 per cent to shore up more cash. Picture: Naomi Baker/Getty Images.

The plans come after TRG has faced pressure from activist shareholders to improve shareholder returns, with shares in the business shrinking to less than a third of pre-pandemic levels. The company, which has about 18,000 staff, has already cut a raft of loss-making restaurants over the period, including closing the majority of its Chiquito restaurants at the start of the pandemic.

Knock-back

It has now revealed that its pre-tax losses widened last year to £86.8 million from £35.2m in 2021, as it faced a knock-back from cost inflation across food and drink, energy and wages. The group last year warned that its annual food costs were set to jump by as much as 10 per cent.

Meanwhile, sales from people dining in at Wagamama increased by nearly a tenth last year, offsetting a 17 per cent decline in takeaway sales. TRG also said it wants to open five to six Wagamama restaurants per annum for the next three years, and increase the number of restaurants from 156 today to around 200 in the long term.

Mr Hornby said that, while the rise in sales was partly driven by higher prices, the chain has also seen an increase in consumers visiting restaurants. "A year on from the last UK lockdown, we have seen that people are going out more,” he stated. "There may be some minor trends, like people ordering one less starter, or one less drink, but they are going out and enjoying going out."

Shore Capital analyst Greg Johnson branded the results “very much in line with expectations”, while Russ Mould, an investment director AJ Bell, suggested: “Rename the [group] Wagamama, clear out the rest, and you would have a streamlined and focused operation which might have more appeal to investors.”