Tasty PLC (AIM:TAST), the owner of restaurant brands Dim t and Wildwood, slumped over 25% on Wednesday after it warned investors revenues and profitability are expected to be impacted by several headwinds over the near future.
Inflationary pressures have hit the group hard, with labour, food and utility costs all plaguing its financials. Underlying earnings fell close to 60% to £1.1 million and revenue only lifted 0.9% to £21.7 million in the half-year to 25 June 2023, the company's results statement revealed.
Weakening consumer demand due to rising interest rates and the cost-of-living is “expected to further impact revenue” in the second half of 2023, it cautioned.
Impairment charges of £4 million because of poorly performing sites meant the group posted a loss after tax of £6.2 million, widening from a £2.7 million loss the year prior, and with the group’s cash balance sinking from £8 million to £2.8 million, concerns are growing.
The hospitality group said its interim accounts were prepared on a going concern basis because its directors have a "reasonable expectation" that it “has sufficient resources to continue in existence for the foreseeable future”.
Retention of staff and cost control are now the key focus for the micro-cap firm as the board “remains cautiously confident of managing current challenges”.
Keith Lassman, chairman of Tasty, said: “The cost-of-living crisis and interest rates are at their worst for many years, directly reducing the discretionary spend of our customers.
“We continue to navigate through challenging times and although this is expected to continue through H2 2023 we are continuing to adapt the business to mitigate the cost increases and reduced trading performance.”
Tasty shares opened at around 1.6p and is down over 52% in the year-to-date.