(Alliance News) - Restaurant Group PLC on Tuesday said it had a good start to the first half of 2020 which was then marred by Covid-19 leading to losses widening, with the outlook uncertain.
The London-based restaurant chain posted a pretax loss in the first half to June 30 of GBP207.5 million, widening from GBP78.8 million a year prior.
Revenue was down to GBP227.2 million from GBP515.9 million a year before.
Restaurant chain Wagamama Group Ltd, part of Restaurant Group, posted a second quarter revenue of GBP8.5 million, plummeting 90% from GBP88.3 million year-on-year. In the first half, Wagamama's revenue dropped 48% to GBP90.8 million from GBP173.9 million a year prior.
The company said Wagamama has seen encouraging results into the third quarter, particularly benefitting from the 'Eat Out To Help Out' campaign.
Restaurant Group said: "The first half of 2020 began well but was then severely impacted by the effects of Covid-19 and the resulting compulsory closure of all group sites from March 20 to the end of the half year on June 28."
The company said that prior to the lockdown, the results for the first eight weeks of trading to the February 23 were very encouraging with the business delivering like-for-like sales growth of 4.5%.
"From the start of March, trading began to slow culminating in the full lockdown of the business. Following the closure of the restaurants, the management team took decisive action to reduce cash expenditure. All the restaurant teams and the vast majority of head office were furloughed leaving a small core team managing the business," Restaurant Group said.
Restaurant Group managed to reduce cash-burn by GBP3.5 million a month. This however was not enough and the company ended up closing the Chiquito Ltd and Food & Fuel Ltd businesses permanently to protect the rest of the businesses which "were highly likely to require significant cash to support" in the near future.
The company did not pay an interim dividend versus 2.1 pence paid a year prior.
Going forward, Chief Executive Andy Hornby said: "Whilst the sector outlook is uncertain, and we are mindful of recent restrictions across the UK, we are confident that the actions we have taken provide us with strong foundations to emerge as one of the long-term winners."
The company believes it has adequate resources to continue in operational existence for the next 12 months.
Restaurant Group shares were up 4.7% at 57.10 pence each in London on Tuesday morning.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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