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Restaurant Group shares sink on profit warning

Frankie & Benny's and Garfunkel's owner says weaker demand has hit like-for-like sales by 2.7% in 2016

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Restaurant Group does not expect underlying like-for-like sales trends to improve in the short term

Shares in Restaurant Group PLC (LON:RTN) plunged after the Frankie & Benny's and Garfunkel's owner warned on profits and said its finance chief had quit.

The stock sank nearly 23% to 288.5p as the company reported a worsening in trading since early March and forecast a fall in annual sales of between 2.5% and 5%.

That would mean full-year pre-tax profit would be between £74mln and £80mln, rather than the figure of at least £80mln expected by analysts.

Restaurant Group reported a double-digit profit increase at its final results on March 9, but warned that weaker trading at the end of last year had continued into 2016.

It said then that consumer demand had softened, like-for-like sales had fallen 1.5% in the first 10 weeks of 2016 and increases would be difficult to achieve.

In Friday's update, it said trading had deteriorated further since the results announcement, with like-for-like sales in the 17 weeks to April 24 down 2.7%.

It said it did not expect any improvement in underlying like-for-like trends in the short term.

The group said finance chief Stephen Critoph, who has been with the company for 11 years, will leave immediately and it had begun a search for a replacement.

"The board thanks Stephen for his contribution," it said.

Restaurant Group also owns Mexican food chain Chiquito, Coast to Coast, Brunning & Price, Joe's Kitchen and a string of pub, airport and railway station restaurant concessions.

Chief executive Danny Breithaupt said: "In spite of the current like-for-like challenges, overall returns remain strong, the business continues to be cash-generative and there is a strong core business to build on."

Quick facts: Restaurant Group PLC

Price: 155 GBX

LSE:RTN
Market: LSE
Market Cap: £761.82 m
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