Casual Dining Group (CDG), the operator of c300 sites under brands including Café Rouge, Bella Italia and Las Iguanas, has reported a 4.7% increase in like-for-like sales for the five weeks to 8 January, with sales during the period up 10.8%.
The Steve Richards-led company said that its record festive performance was driven by “innovative Christmas menus and a digital-first approach to pre-bookings”. Web traffic increased by 37% across all brands with online bookings increasing 31% versus the previous year.
For the year to 26 May, the company said that revenue climbed 29% to £299m, up 29% due to new site openings and sales growth from existing sites, as well as the acquisition of Las Iguanas. Continuing LTM (last twelve month) sales stood at £303m whilst EBITDA climbed 40% to £34m. MCA understands that all the group’s three core brands are in good sales growth.
During the year, the company secured a £185m long-term financing agreement with KKR, Pemberton and Barclays Bank; stable platform for investment in its existing estate, Middle East franchise rollout and acquisitions.
Over the year, it opened 26 new sites and invested in the conversion of 15 sites to alternative brands. It also refurbished 50 existing sites. Richards said that synergy benefits from its acquisitions were on-track.
The company flagged up a challenging outlook for the 2017 fiscal year as expansion continues, with sector headwinds such as regulatory cost inflation and currency impact.
It said it would focus on continued sales growth, the realisation of further cost saving initiatives, additional new site openings and brand conversions in current financial year.
There will also be an increased focus on international expansion in the Middle East, with three franchise openings in Saudi Arabia lined up for the first half.
The company confirmed it had development agreements in place for 55 additional sites in the Middle East over the next six years across its three core brands.
Richards said: “All brands saw strong growth over the festive period, driven by our innovative Christmas menus and advanced party bookings derived from our expanding digital platform and active social media engagement. Our restaurant teams have worked hard and smart over the period taking share and improving margin in what is a very difficult market.
Over the last year we have made strong progress against a challenging backdrop. We’ve invested across our brands and have now largely completed our refurbishment programme. We will continue to seek further opportunities as we look to grow the group.”
Martin Robinson, chairman, said: “The wider operating environment is undeniably tough and there are a range of cost pressures facing the whole consumer industry, which we are working hard to mitigate. We’re confident that through our continued investment, strong brands, outstanding team of employees and active engagement with consumers, Casual Dining Group is well positioned to navigate this difficult environment.”
In conversation with CDG’s Steve Richards
On the back of CDG’s update, MCA talked to chief executive Steve Richards about how the group plans to maintain its growth momentum; mitigating against the “wall of costs” the sector is facing; its international plans, including possible future openings in the Far East; plans for La Tasca; rebalancing its expansion plans led by Las Iguanas; and a greater focus on growing its concessions and transport hub estate.
On its international expansion, Richards said: “By April, we will have opened in Saudi Arabia a Café Rouge, a Bella Italia and a Las Iguanas, all operating under franchise. The Café Rouge and Las Iguanas sites are in shopping malls in Jeddah and the Bella is in a shopping mall in Riyadh. In terms of the split on openings under the different brands going forward, that will be up to the franchisee. We are also in early talks regarding opportunities in the Far East, such as Singapore, but the Middle East remains our immediate focus.”
In terms of expansion in the group’s current financial year and focusing on concessions, he said: “We will have done 15 equity sites this year and that is the kind of steady level we will be looking at opening going forward. The group will continue to balance its estate going forward, with most of the new openings set to be under the Las Iguanas brand and concessions. We are really going for airports and concession sites at present. We are on site with a Bella at Luton Airport with an Oriel to follow, whilst our Las Iguanas site in Center Parcs is flying. We have a couple of transport hubs we are opening in as well.”
On La Tasca, Richards said that there were“a couple more disposals and reformats to do there”. He said: “In a couple of sites that perform well the fascia will stay and we will play around with it over the next year or so and if we think we have something we will start doing them again. But we will continue to convert the others, for example the one in Manchester will be a Belgo and the one in Victoria will be a Las Iguanas.
Asked how CDG would maintain its growth levels and momentum going forward. Richards said that the company remained acquisitive for the right opportunity. “We are very open about our ambition to grow the business and will look at any opportunity that makes sense for us, that could be brands we can help grow or help refresh.”
On the issues facing the wider market in terms of maintaining sales growth, Richards said: “We think like-for-like sales are hard to come by within the market. What has really helped us is that we got some good menus on board, but also the pre-booked sales we have generated and all the work coming through our digital channels, the uplift from here has been significant.
“We are not closing any sites. We are reappraising and re-evaluating some of the plans we had, and looking to mitigate the wall of cost that is coming into the sector and do anything we can to protect the customer, the offer and our staff. Whatever costs we have to take out, and we are all in the same boat on this in terms of the costs impacting the sector, our starting point is too protect the customer and our service levels. You could look at these numbers and say they are doing alright, but the challenge for the next 18 months is maintaining your place in the market whilst having to deal with a wall of costs, which are regulatory driven, in an uncertain time. We believe we are in a good position to do that.”
