Restaurant Group earnings preview

Thursday, 25th May 2017 16:22 - by Rajan Dhall

This company owns all the nice restaurants at your local complex, Chiquito's, Garfunkle's and Frankie and Benny's to name a few but have they being doing enough to warrant some tasty returns! (sorry). 

For me the answer is no! prices have gone up and the quality of food has gone down, this is a recipe for disaster (sorry again). The share price has been tumbling and the company has been trying to recover from a string of profit warnings from last year.  UBS analyst's note “Without a market-leading value proposition, the F&B brand is in danger of sitting in no-man’s land with the price cuts made not enough to drive sufficient volume improvement from their core customer,” they have now downgraded the Co. to “sell”. Not only this the Co.  sacked Barry Nightingale, its chief financial officer after less than a year. 

Going into the price action now on the daily chart below we have seen volume mounting on the sell side, but prices have recently been supported at the 310p level. We must remember we are in the business of value and price is clearly under the long term value are on around 350p. I feel this all hinders on results tomorrow and Andy McCue who was appointed in September last year has been put in charge to turn the Co. around. Previously the Co. cited the rise in costs from the weakness in GBP as one of the reasons for its problems now that has dissipated somewhat have they lowered their prices enough to pull back to the 350p value area in not sure im convinced.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.