The group, whose market cap has halved to £746 million over the last six months, says like-for-like sales in the 17 weeks to 24 April fell by 2.7% and it doesn’t expect this to improve.
Full year like-for-like sales are forecast to drop by between 2.5% and 5%, which would translate into a profit before tax of between £74 million and £80 million. This is lower than the £86.8 million profit recorded last year and significantly behind analysts’ original predictions of £89 million.
Restaurant Group’s chief financial officer Stephen Critoph is leaving with immediate effect and a review of the current operating strategy has begun. It expects to open around 30 new sites this year, down from 44 in 2015.
Most analysts put its struggles down to a combination of fierce competition, over-supply, an over-priced menu and tired brands.
It’s a far cry from a year ago when the stock was a favourite among many analysts for its seemingly defensive qualities. The benefits of having restaurants on leisure parks and retail sites – which permit a limited number of operators – have clearly been over-exaggerated.