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The Restaurant Group rewarded by strong strategy, reckons UBS

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Strong strategic moves by The Restaurant Group (LON:RTN) amid consumer pressure has been reflected in a robust financial performance, reckons analyst Isabel Green at UBS, which rates the stock a "buy".

In a note, the research arm of the financial group said it was targeting a price of 340 pence for the shares.

The firm operates almost 400 restaurants and pubs and its main brand names are Frankie & Benny's, Chiquito and Garfunkel's. It also runs concessions in seven airports.

Green said that the firm saw robust like-for-like sales growth of three percent in the first half, adding that the two percent growth it was seeing so far in the second was "encouraging".

"We believe this reflects its strong strategic positioning with defensive out of town locations, and continued avoidance of heavy discounting sales tactics."

The analyst went on to say that The Restaurant Group's new site numbers continued to improve with 25-26 sites expected this year and full year earnings for 2012 expected to at least match this.

"Management has taken the opportunity to trim the tail of the estate, with nine closures announced. Six of these are strategic closures and three operational. There may be three - four additional closures in H2, which we see as prudent in the current environment," said Green.

Quick facts: Restaurant Group PLC

Price: 145.4 GBX

LSE:RTN
Market: LSE
Market Cap: £714.64 m
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