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UPDATE 2-Restaurant Group's sales growing, shares at life-high
February 27, 2013 / 10:51 AM / 5 years ago

UPDATE 2-Restaurant Group's sales growing, shares at life-high

* Comparable sales up 6.5 pct in 8 weeks to Feb. 24

* Company expects growth to continue for rest of 2013

* 2012 adjusted pretax profit up 7 pct to 64.6 mln stg

* 2012 revenue up 9 pct to 533 mln stg

* Shares touch life-high of 418.1 pence (Adds CEO comment on beer sales, details on discounting, dividend; updates share move)

By Richa Naidu

Feb 26 (Reuters) - Restaurant Group Plc, which runs the Frankie & Benny’s chain, said comparable sales were up 6.5 percent so far this year and it expected the growth to continue for the rest of 2013.

The company’s shares touched a life-high of 418.1 pence on the London Stock Exchange on Wednesday.

An increase in footfall and a rise in average spending drove sales growth in the eight weeks to Feb. 24, said the owner of popular British eatery Garfunkel‘s.

“The spend growth divides equally between people trading up a little bit, perhaps having a pudding or a coffee, and some price increases that we were able to put through last year,” Chief Executive Andrew Page told Reuters.

Comparable sales growth was better in February than in January, Page said.

Like other restaurants in the UK, Garfunkel’s and Italian-American-themed Frankie & Benny’s have been discounting to attract customers. The company has offered 5-pound breakfasts, 1-pound kids’ meals and 25 percent off on Monday food bills.

Pubs and casual dining chains have seen more patronage as thrifty Britons opt to eat at such outlets instead of high-end restaurants.

Page said he expected food costs to keep increasing, some of which the company may pass on to customers.

Restaurant Group sales would have to grow at 4 to 5 percent this year to keep profits unchanged, primarily due to food cost inflation, Panmure analyst Simon French said in a note.

However, Liberum Capital analyst Patrick Coffey said in a note that he expected a gradual slowdown in comparative sales to average at around 2 percent growth for the whole year.

Restaurant Group, which runs more than 400 restaurants and pubs in the UK, plans to add 28 to 35 outlets in 2013. It opened 28 restaurants last year.

Page said the company’s beer sales did not decline in 2012, but did not provide details. Drinks sales contribute between 30 and 35 percent to total pub restaurant sales.

Beer sales in the UK fell 4.7 percent in 2012 as cash-strapped consumers and rising taxes proved painful for the industry.

The company’s 2012 adjusted pretax profit rose 7 percent to 64.6 million pounds ($97.8 million). Revenue increased 9 percent to 533 million pounds with new restaurants and 4.5 percent without them.

Burger and red-meat sales were not affected by the recent horsemeat scandal in Europe, the owner of Mexican-styled eatery Chiquito said.

The company announced a final dividend of 7.3 pence.

The FTSE-250 company’s shares, which have jumped 33 percent in the last year excluding Wednesday’s gain, were up 4.9 percent at 417.12 pence at 1239 GMT. ($1 = 0.66 British pounds) (Editing by Joyjeet Das)

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