TGI Friday’s largest franchisee Hostmore PLC (LSE:MORE) saw its shares plummet 13.5% on Friday after it revealed it was unable to rely on sales growth to help shrink its losses during the 2023 financial year.
Sales in 2023 slumped 3% year-on-year from £195.7 million to £190.7 million, indicating that the weakened demand had hindered the group’s aim of achieving profitability.
Management therefore launched a cost-cutting strategy to help combat the slump, undergoing limitations such as the delay of opening of new stores, which on its own saved £15 million in capital expenditure.
Through enacting the cost efficiencies, the restaurant group was able to post an improved pre-tax loss of £25.5 million compared to 2022’s £108.3 million.
Hostmore chair Stephen Welker said: "2023 was a transitional year for Hostmore during which we successfully implemented a turnaround of the business.
"The turnaround reduced costs, deferred cash outlays for new store openings, and improved the operations of our existing stores, while introducing a revised capital allocation policy.”
Last month, Hostmore announced it would be merging with the core TGI Fridays business in a £177 million deal.
The proposed all-share acquisition of TGI Fridays Inc would see Hostmore’s current shareholders owning some 36% of the enlarged company, whilst TGI Fridays shareholders will hold 64%