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Restaurant Group to delay opening one in 10 sites

Frankie & Benny's site
Frankie & Benny's site

Frankie & Benny's owner The Restaurant Group has warned that one in 10 of its sites will not reopen this year as it faces up to the collapse in footfall caused by coronavirus.

The Restaurant Group (TRG) said around 40 of its 400 sites would remain closed in locations where footfall is anticipated to remain considerably weak this year, particularly in some airport locations.

Around a quarter of its sites are expected to be open by the end of July, rising to 60pc by the end of August, and to nine in 10 by September.

TRG said it had boosted its debt facilities by £10m by accessing the government-backed CLBILS scheme, while extending agreements with its current lenders and receiving a covenant waiver on some of its loans until next year. Its executive directors and board members will continue to take a 20pc pay cut while the company has workers on furlough.

Last month TRG secured a company voluntary agreement (CVA) with its landlords and creditors that allowed it to restructure its estate and close up to 125 sites. Frankie & Benny's and Garfunkels sites were most affected with no Wagamama restaurants expected to close.

What is a company voluntary arrangement (CVA)?
What is a company voluntary arrangement (CVA)?

TRG stands to benefit from the temporarily VAT cut to 5pc for the hospitality sector, announced this week by the Chancellor.

Analysts at Citi reckon that the VAT cut alone could be worth £20m to TRG over the next six months. However, they predicted that its restaurants would trade at 70pc capacity due to social distancing measures.

They added: "The willingness of the banks to further waive covenants is clearly a positive but we expect that a waiver will also be required for June 2021."

The company said: "The diversified portfolio of the group allows each division to adapt to the challenges of social distancing uniquely while keeping the customer at the heart of every decision."

Shares in TRG fell 5pc in morning trade to 50.74p.