TGI Fridays parent reports 2% increase in like-for-like revenue after building ‘a leaner and more focused organisation’: Hostmore, the parent company of TGI Fridays, has reported its like-for-like revenue between 2 July 2023 and 24 September 2023 is up 2% after building “a leaner and more focused organisation”. The group also said previously announced annualised cost reductions of £5.9 million now increased to £8.2m. It said cost reductions were benefiting FY 2023 by £5.8m, an increase from the previously announced £4.0m, with £4.3m of benefit in the second half of 2023 versus the second half of 2022. Hostmore said a refinancing process has commenced with existing and potential new lenders and is expected to be concluded by end of first quarter of 2024. It is on course to repay borrowings and commence shareholder distributions. It added successful operational and portfolio management of bottom 20 loss-making stores has reduced latest 12 months’ (to end of first half 2023) losses of £4.2m in 2022 to less than £1.5m at recent annualised rate. New openings deferred until at least 2025 is saving approximately £15m of cash expenditure. Cost inflation of purchased inputs, including food, drinks, and utilities, has now stabilising with a significant portion under long-term contracts or hedged at favourable prices, Hostmore said. The company stated: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation. In particular, the actions taken have reduced costs, as we have adopted a much tighter capital allocation policy and put in place a diversified array of organic growth measures. The effects of these initiatives are already coming through in our results. Our like-for-like revenue in the second half of 2023 to 24 September is already up 2% versus the second half of 2022. We continue to evaluate a number of measures relating to costs and productivity. During the first half of the year, trading conditions remained challenging across the leisure and hospitality industry, impacting our financial performance. We have however started to see early signs of progress from our strategic and operational initiatives as we have moved into the second half of the group’s financial year. While there remains much to progress, it is clear that TGI Fridays is a highly recognised brand with a rich heritage. We are broadening our guest appeal beyond our core families demographic, becoming a destination of choice for guests from all walks of life. As a group, we are focused on delivering an improved performance from our core TGI Fridays estate, divesting unprofitable sites where the opportunity arises, reducing costs, prioritising debt reduction and executing on controlled, measurable organic growth initiatives that support our objective of building a platform for future growth and shareholder returns.” For the 26 weeks to 2 July 2023, total revenue was down to £93.6m (2022 £98.5m). The company stated: “On a like-for-like basis, adjusted for the impact of the lower VAT rate in the equivalent period last year, our revenue performance was 2% lower than 2022, partly offset by higher average spend per head. The warm weather in June impacted footfall into our restaurants, given our estate’s limited outdoor space and with our core family market spending time outdoors and entertaining at home. We are examining ways to differentiate TGI Fridays’ offering with new initiatives, such as our ‘Raising the Bar’ project, to ensure that we diversify our appeal across a broader range of customers enabling us to improve sales volumes when the weather is warmer.” Ebitda FRS102 was negative £3.8m (2022: positive of £7.1m). Hostmore said the first half of 2023 was adversely impacted in comparison by the reduced VAT rate to 12.5% for the first quarter of 2022, grants issued by the government in the same period and rent concessions received from landlords. In addition, during the first half of 2023, Hostmore “experienced some comparative volume decline” while inflationary pressures continued to impact the group during the period. Chief executive Julie McEwan said: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation. As we move through the second half of our financial year, it is encouraging to see the effects of our strategic and operational actions coming through in our results. Leveraging our distinctive, trusted brand as the home of celebrations, our teams are passionate and committed about delivering an exceptional TGI Fridays guest experience. Notwithstanding the challenges facing the sector, the early success of our turnaround programme enables us to look to the future with confidence. The leadership team we have in place is focused on building a platform for future growth and shareholder returns, with the group well placed for the remainder of 2023 and in the years ahead.”