TGI Fridays owner delays restaurant openings in cost-cutting drive
Hostmore said its earnings more than halved over the first half of the financial year.
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Your support makes all the difference.The owner of restaurant chain TGI Fridays has revealed a drop in earnings as it delays new restaurant openings to 2025 in a bid to save more money.
But Hostmore said it was already benefiting from inflation of food, drink, and utility costs beginning to ease.
The group said it had committed to not opening any new restaurants until at least 2025, which will result in savings of around £15 million.
It comes after it shut a loss-making TGI Fridays site, which rebranded to “Fridays” before returning to the TGI Fridays name earlier this year, at Manchester Piccadilly.
Hostmore added that it was weighing up opportunities to shed other restaurants that are losing it money and taking steps to improve the performance of 20 struggling sites.
The initiatives taken in the first half of 2023 have built a leaner and more focused organisation
The business said it was expecting to have made £5.8 million in cost savings across the financial year, higher than its £4 million target.
In May, it revealed that a small number of head office and supply chain workers would be affected by the cost-saving initiatives.
Hostmore reported a drop in earnings before interest, tax, depreciation and amortisation (EBITDA) to £6.6 million over the half-year to July, more than half the £17.8 million reported the same time last year.
It also saw adjusted like-for-like revenues dip by about 2%, but said people were spending more on average per visit and that sales of cocktails jumped over the period.
Warmer weather in June resulted in fewer visitors to its restaurants due to it having limited outdoor space and because families, which is its core demographic, were spending time outdoors and entertaining at home, the company said.
The casual dining sector has also been impacted by the rising cost of living, with some people having fewer meals out in efforts to cut back spending.
Hostmore said that it upped the prices of its food and drink during the period which helped offset inflationary pressures.
But cost inflation has begun to stabilise and the group said its financial outlook was significantly stronger.
Julie McEwan, Hostmore’s chief executive, said: “The initiatives taken in the first half of 2023 have built a leaner and more focused organisation.
“Notwithstanding the challenges facing the sector, the early success of our turnaround programme enables us to look to the future with confidence.”
Shares in Hostmore were up by more than 2% on Friday morning.