Retrenchment at Frankie & Benny's

One of the UK's largest restaurant operators has decided to close down a substantial number of under-performing locations.

The Guardian reports here on the impending closure of 33 restaurants by The Restaurant Group.

The Restaurant Group operates over 500 restaurants across the UK. Its main trading brands are Frankie & Benny's, Chiquito and Coast to Coast, and the Company also operates pub restaurants and a concessions business which trades principally at UK airports.

According to the official announcement concerning the closure programme:

"We intend to exit 33 underperforming sites immediately as we do not believe that these sites are capable of generating adequate returns. These include 14 Frankie & Benny's sites, 11 Chiquito sites and eight other sites. We have made an exceptional charge of £39.3m in the period including an impairment of fixed assets, provision for onerous leases and other associated costs as a result of this decision."

Of course any business operating a portfolio of around 500 locations is going to be engaged in a continuous process of opening and closing outlets.

Perhaps what is more interesting is the admission that the underlying poor performance of the restaurant brands involved is due to:

"... unpopular new menus, higher prices and poor customer service"

That doesn't sound like a location issue. That suggests more deep-seated management issues in the business. A national restaurant chain with unpopular menus and poor customer service is going to struggle wherever it chooses to locate.

Perhaps it is no surprise that the Restaurant Group has now appointed a new senior management team, who will be looking to fix these fundamental issues of competitiveness.