Restaurant operator Comptoir Group says trading has remained difficult over the past two months, continuing the trend reported in April, and unexpectedly saw a decline in like for like sales and profit at certain mature restaurants.
Comptoir specifically highlighted upward pressure on costs, including incremental wage costs, higher food and drink costs and increases in rent and business rates.
In a statement made today, the Company said:
"While the business saw improved sales figures over the Easter weekend and half term holidays, unfortunately much of this benefit was subsequently lost in the final two weeks of the month. In May 2017 the Company also experienced an unexpected decline in like for like sales and profit at certain mature restaurants, particularly in retail-led locations and at its higher-spend restaurants, Levant and Kenza.
"In addition, although the group as a whole is seeing a progression in sales, a number of the restaurants opened in 2016 remain behind expectations in terms of their anticipated maturity trading curve.
"Like many of its peers in the sector, the Company is experiencing upward pressure on costs, including incremental wage costs and related taxes (apprenticeship levy), higher food and drink costs (driven by depreciation in sterling versus the Euro) and increases in rent and business rates. Together with the softening in consumer spending, these factors have had a significant impact on restaurant profitability and visibility over short-term trading trends. The Company has taken steps to limit the increase in central overheads
"The Directors believe the Comptoir brand continues to have a strong appeal to consumers and landlords and there remains considerable potential for expansion in the UK. The Company still expects to open 3 more restaurants before the end of 2017 - Comptoir Reading, Comptoir Oxford and Shawa Oxford - together with a first international franchise operation in the Netherlands with HMS Host.
"Lastly, the Directors confirm that they expect to raise £2.7m (gross) from the sale and leaseback of the freehold of its central processing unit (CPU) in North London. The net proceeds will be used to fund the remaining new openings for 2017 and strengthen the Group's working capital position."
At 2:08pm: (LON:COM) Comptoir Group Plc share price was -9p at 22.5p