Slowing like-for-like sales growth at Restaurant Group (RTN) sends shares in the Frankie & Benny’s owner down 4.9% to 684.5p.
The £1.4 billion cap’s like-for-like sales grew by just 2% in the 19 weeks to 10 May compared with a rise of 4% the prior year.
This was still ahead of the restaurant Peach Tracker, which was up 1.2%, yet reflects a slowing in inbound tourism to London. Restaurants in airports and those co-located with cinemas outperformed.
The group opened nine new restaurants versus 15 in the first half of 2014, but it is still on track to open between 42 and 50 restaurants this year compared with 40 last year. ‘The quality and visibility of our new site pipeline over the next three years remains excellent,’ says chairman Alan Jackson.
Numis analyst Douglas Jack says Restaurant Group will be a beneficiary of rising consumer disposable income and a strong cinema film slate in the second half and in 2016. He forecasts a 10.5% rise in profit before tax to £86.3 million for the full year with earnings growth of 11%.
Numis’ target price is 860p, implying 25.6% upside.