The Restaurant Group reports like-for-likes down 3.9%, 33 underperforming sites identified for closure or sale: The Restaurant Group has reported sales up 3.4% to £358.7m (2015: £346.9m), with like-for-like sales down 3.9% in the 27 weeks to 3 July 2016. Ebitda was up by 0.5% to £59.6m (2014: £59.3m). Profit before tax fell by 3.7% to £36.6m (2015: £38m). The first phase of the operating strategy review has been completed. 33 underperforming sites across the business have been identified for closure or sale, with an associated £39.3m charge made in the first half. The company said Frankie & Benny’s performance has suffered due to insufficient focus on value, unsuccessful menu development and poor operational execution. It would be taking action by refining the proposition with greater focus on families (its core customers), testing and trialling new value offers, and adding back popular dishes to the menu. Seven new sites opened in the first half of the year (2015: 12). Between 24 and 28 new sites are expected to open in 2016 (2015: 44). The company said trading had improved slightly in recent weeks, with like-for-like sales for the 34 weeks to 21 August down 3.7%. Chairman Debbie Hewitt said: “With the review of operating strategy continuing, the board has decided to slow down our site roll-out plans until we can be sure that the group’s brand and location strategy is sufficiently robust. We have taken action to exit 33 underperforming sites immediately, as we do not believe that these sites are capable of generating adequate returns. We have also decided to impair the asset value of a further 29 sites. While overall turnover grew slightly by 3.4% to £358.7m (2015: £346.9m) due to the increased number of sites, like-for-like sales were down by 3.9%. The like-for-like sales performance reflected a challenging performance across our Leisure brands, partially offset by a good performance from our pubs and concessions businesses. The pubs business continues to build on the strength of its food offer, providing good value, high quality food in attractive locations. We continue to be selective about new sites and maintain a high level of individuality in the fit out to ensure that venues offer strong local relevance. The concessions business continues to benefit from strong airport passenger numbers and a team who create innovative new brands that stand out in their location. The next phase of our operating strategic review will focus on our remaining leisure brands: Chiquito, Coast to Coast, Joe’s Kitchen and Garfunkel’s. From some initial diagnostic work undertaken, it is evident that some of the issues identified in Frankie & Benny’s are also apparent in these brands. We will therefore be undertaking a thorough review of their propositions, pricing structure and menu architecture. While our pubs and concessions are performing well, we also intend to examine these businesses and evaluate what we can do better. This has been a challenging trading period for our leisure brands, albeit with a good performance from our pubs and concessions businesses. The board has moved quickly to undertake a review of the operating strategy and we now have clarity on the issues facing our leisure brands, particularly Frankie & Benny’s. The brand remains relevant and popular and we are confident that improved performance will be achieved by being more customer-focused and data-driven, and through better operational execution. A new executive team is in place to lead the implementation of this first phase of the review and to apply the learnings to our other brands. The company is profitable, highly cash generative and has a strong balance sheet, and given our confidence in the current trading forecast, we are declaring an interim dividend of 6.8 pence per share, unchanged from last year.”

Landlords start adding ‘Deliveroo clauses’ to turnover rent contracts for London restaurants: Landlords have started adding “Deliveroo clauses” to turnover rent contracts for London restaurants, in response to the app’s growing popularity in the capital. The clauses mean money made from meals sold through the app must be declared by operators signing up to turnover rents, a type of contract that has become increasingly prevalent in the leisure sector in recent years. Unlike other available takeaway apps such as Just Eat and Hungryhouse, Deliveroo targets higher-end restaurants that do not already have their own courier service. One London leisure agent confirmed the clauses were being introduced to deals as landlords sought to benefit from the London start-up’s success. It told Property Week: “It’s not something you would add to every lease; it’s quite a niche thing. But it makes sense because the turnover made from it can be huge. Some restaurants are now making up to 90% of their sales through Deliveroo.” The development mirrors ongoing negotiations in the retail sector, where the growth of online sales has been calling the established turnover rent model into question for years. Deliveroo revealed it had secured $275m (£200m) in its latest funding round at the start of this month, making the three-year-old company one of Europe’s best-funded startups. Meanwhile, Uber launched its rival food delivery service UberEats in London in July and is preparing to launch in other UK cities.