Propel Newsletter Archive Page

Tasty reports slowdown amid increased promotional activity: Wildwood operator Tasty has reported it is taking decisive action after a slowdown in consumer spending that has affected company sales and margins. Revenue was up 11.8% to £24.4m on the comparative period (H1 2016 – £21.8m) in the 26 weeks to 2 July but pre-tax profit dipped to £210,000 (2016: £1,615,000). The company opened four new sites in the period and now operating 65 restaurants. The company stated: “The group is currently trading from sixty-five restaurants after successfully opening four new sites in the 26 week period to 2 July 2017. The board believes that the sector as a whole has been suffering due to a slowdown in consumer spending since the beginning of 2017 and this is set to continue into 2018. This is not unique to the group or any particular area but appears to be a nationwide problem particularly evident in London and has impacted turnover and profit. As a result of the weak trading environment the group is facing pressure on sales and margins. The group is taking decisive action to improve its position. A number of sites have been identified as underperforming and turnaround measures have been implemented which are producing encouraging results. We are currently in the process of disposing of some sites and are marketing others which have not shown significant signs of improvement. We have carried out a major review of our menus taking into account customer feedback to ensure, the offering remains current and in line with our customers’ tastes and we are in the best position to maintain and increase our market share. We have reduced the number of dishes on the menu, along with improving the recipes of over a third of the items. The board has noted that the level of promotional activity in the sector has increased significantly in 2017. The group continues to match the activity of the competition with regard to promotions and is reviewing alternative strategies. The pace of the roll out has been scaled back in the current climate and The group will be reviewing its functions to ensure cost savings. Sales increased by 11.8% on the corresponding period to £24,375,000 (2016 – £21,794,000) with like for like sales declining. Headline operating profit, before pre-opening costs, non-trade items and interest, was £544,000 (2016 – £1,925,000) and pre-tax profit before pre-opening costs and non-trade items decreased to £210,000 (2016 – £1,615,000). The group has undertaken a comprehensive review of its estate during the period and has recognised an impairment charge of £9,492,000 in light of current trading conditions. After taking into account all non-trade adjustments the group has a stated loss after tax for the period of £9,302,000 (2016 – loss £2,637,000). During the period capital expenditure of £4,414,000 (2016 – £5,044,000) was incurred. Four sites have been opened in the period, with a further two sites due to open imminently and no further sites planned for 2017. The board has reviewed its property pipeline and is currently not committed to opening any sites in 2018. Overall, the net cash outflow for the period was £3,425,000 (2016 – inflow £334,000). As at 2 July 2017, the group had net borrowings of £5,421,000 (2016 – £7,445,000). The group has an available banking facility of £12,000,000 and it is the board’s intention to reduce net debt by the year end. The group recognises the challenging conditions ahead and is taking action to strengthen its position. The directors are confident that the group’s restaurants remain appealing to customers and the group will continue its growth in the future.”