One of the most successful companies in the quoted leisure sector has shocked the City with news that its lauded chief executive officer is stepping down. Andrew Page will cease running Frankie & Benny's-owner Restaurant Group (RTN) from August after nearly nine years at the top. The shares initially fell 2% at today's market open but are now flat at 626p.
The boss has certainly created shareholder value. Shares in the FTSE 250 constituent have risen by 266% in value since he became CEO in January 2006 and that's excluding generous dividends. If you look back to the start of his involvement, the shares have risen 10-fold since he joined in June 2001.
Page will remain as advisor to chairman Alan Jackson, yet we don't see that as a long-term position, more likely reassurance while the new CEO gets to grips with the business. The replacement certainly has big shoes to fill. Page has taken a simple concept that is easily copied – namely a mass-market restaurant – and created a multi-brand business with large barriers to entry.
One of the key attractions we've regularly flagged in Shares is the company's strategic locations. It predominantly operates in retail and leisure parks where there's restrictions on the number of eateries allowed to set up shop. Its brand strength and determination not to succumb to 'two-for-one' offers that have diluted rivals' pricing models (as customers got dependent on the vouchers, so withdrawing them could risk losing business) has helped Restaurant Group stay ahead of the pack.
Page joined as finance director in June 2001. He became group managing director in December 2003. Prior to working for the leisure group, he was senior vice president at InterContinental Hotels (IHG).
Under its previous identity of City Centre Restaurants, the business tried to buy pizza chain ASK for £168 million and create one of the UK's largest independent restaurant companies. Nearly half of the target's shareholders had agreed to the deal before private equity groups TDR Capital and Capricorn Ventures muscled in with a higher offer equal to £1.3 million per restaurant share.
Speaking to Shares in 2009, Page called the ASK takeover failure a 'watershed moment'. It promped the group to rethink its strategy. This saw the sale of Caffe Uno and Est Est Est and the closure of the failed Asian Fusion chain Wok Wok to focus on restaurants at leisure and retail parks where it is virtually impossible for a competitor to open up next door.
The business now boasts a wide range of successful brands including Coast to Coast, Chiquitos and Garfunkel's. Its estate includes concessions at the UK's major airports.
Analysts forecast the group will make £80 million pre-tax profit this year, rising to £89.8 million in 2015.