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Restaurant shares up as it closes Frankie & Benny’s sites

Frankie & Benny's has suffered because of "unsuccessful menu development and poor operational execution," the firm said.

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The sites earmarked for closure are 14 Frankie & Benny's sites, 11 Chiquito sites and eight others.

 

Restaurant Group plc (LON:RTN) shares lifted as the market cheered the new strategy from the Frankie & Benny’s owner, which will see it streamline operations and close 33 underperforming sites.

The sites earmarked are 14 Frankie & Benny's sites, 11 Chiquito sites and eight others.

The poor performance at themed Frankie & Benny's had suffered because of "unsuccessful menu development and poor operational execution," the firm said.

In its interims for the 27 weeks to July 3, the chain said it was booking a £39.3mln one-off charge for the closures.

This month, the firm hurriedly whisked its old chief executive Danny Breithaupt out of the door , setting the table for Andy McCue, deciding a new leader was needed to implement the initial actions outlined in the review.

Shares have plunged 37% since the turn of the year.

But the firm today reiterated its guidance for the 52 weeks and the interim dividend was maintained at 6.8p per share, underscoring the firm's confidence in looking ahead and on recent trading.

The pre-tax profit was 3.7% lower at £36.6mln on revenues which were 3.4% higher at £358.7mln.

Chairman Debbie Hewitt told investors: "This has been a challenging trading period for our Leisure brands, albeit with a good performance from our pubs and concessions businesses.

"The board has moved quickly to undertake a review of the operating strategy and we now have clarity on the issues facing our Leisure brands, particularly Frankie & Benny's.

"The brand remains relevant and popular and we are confident that improved performance will be achieved by being more customer-focussed and data-driven, and through better operational execution."

The group added: "Whilst the performance in the first half of 2016 was disappointing, the company is profitable, highly cash generative and retains a strong balance sheet.

"The board has confidence that it has identified the issues impacting performance and is taking the correct actions to improve performance and create value for shareholders."

Shares gained over 6% in early deals to stand at 433.5p.

Quick facts: Restaurant Group PLC

Price: 140.5 GBX

LSE:RTN
Market: LSE
Market Cap: £690.55 m
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