Posted on April - 22 - 2010
Individual Restaurant Company heads south for expansion
The owner of the Restaurant Bar and Grill and Piccolino’s chain of restaurants says it will restart expansion particularly in more buoyant south-east England towards the end of this year, after successfully renegotiating its banking facilities to leave it with £6.1m of headroom.
The Manchester-based Individual Restaurant Company, which also owns the Zinc Bar in Manchester and the Bank restaurants in Birmingham and London, has not opened a new restaurant to take it beyond its current tally of 32 for two years.
But with trading in the first eight weeks of this year ahead of 2009, chief executive Steven Walker said the company might now start looking at new openings – particularly in the M25 corridor and inner London.
The group, which currently employs 1,500 people, turned in a full-year profit before non-trading costs for 2009 of £1.3m, down from £1.8m in 2008. Group revenues increased by 1.7 per cent to £53.3m.
Mr Walker said he was more enthused by the restaurants’ underlying earnings figure, which came in at £8.8m, down £700,000 on the year before, and the group’s, which was down £300,000 at £5m.
The group has also successfully renegotiated its loan with long-standing backer Lloyds Banking Group to January 2013. Mr Walker said the company would remain cautious about just how many new restaurants would be opened this year, particularly as performance in the north was still “patchy”.
“You have to remember that we started in 2004 with just four restaurants, and by 2008 were up to 32 already,” he said.
“But we are not now going to thrash out new restaurants. We may have £6m in headroom, but an opening in London could cost north of £2m, so you could spend all of that on just two or three sites.”
Nevertheless, he said when the company does start expanding again, he sees no need to impose an upper limit on just how many restaurants it would be operating, largely because each restaurant is sufficiently different and independently managed to stop people realising they are part of a chain.
“The opportunity is so vast we could and already do have restaurants side by side,” he said.
“In London you could almost have them on every doorstep.”
He also defended his group’s decision not to start offering mass discounts.
“We don’t believe in thrashing these out to get your revenue up,” he said, “because you tend to damage your bottom line without seeing a follow-through in revenue. And do you want to be the person sitting in Manchester Piccolino’s next to someone waving a 50 per cent off voucher about when you haven’t got one? It’s not what we are about.”
Shares in the company ticked up 0.25p, or 1.92 per cent, to 13.25p.
Altium Securities said that although the decision not to discount had affected IRC’s “top line”, it would be retaining its buy recommendation for the company, largely because of the new loan facilities and the fact that margins had been protected.
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