Tasty makes £9.5m write-down as tough conditions hit sales and margins
Restaurant group Tasty, which operates the Wildwood and Dim T brands, has recognised an impairment charge of £9.5m in its accounts for the first half of 2017, amid tougher trading conditions.
The firm said its sales and margins were under pressure and that it had scaled back the pace of its roll out in the face of a "weak trading environment".
The news came as the 65-strong group of restaurants unveiled its interim results for the 26 weeks to 2 July 2017.
Revenue for the first half of 2017 was up 11.8% to £24.4m on the same period the year before, although like-for-like sales declined. The group opened four restaurants over the period.
Despite a headline operating profit before pre-opening costs, non-trade items and interest of £544,000, pre-tax profit fell to £210,000 from £1.6m in the same period a year before.
The group has also undertaken a review of its estate and recognised an impairment charge of £9.5m in light of current trading conditions, taking the group to a stated loss after tax for the period of £9.3m.
In his chairman's statement, Keith Lassman said that the board believed that "the sector as a whole has been suffering due to a slowdown in consumer spending since the beginning of 2017 and this is set to continue into 2018. This is not unique to the group or any particular area but appears to be a nationwide problem particularly evident in London and has impacted turnover and profit."
Tasty is the latest in a number of restaurant and pub groups to warn of tougher trading conditions.
Last week, Fulham Shore, operator of Franco Manca and the Real Greek, cautioned investors that its performance was likely to be below market expectations and blamed a slowdown in the London suburbs.
Meanwhile, Greene King reported a 0.9% drop in like-for-like sales for the 18 weeks to 3 September, citing the ill effects of poor weather over the summer.
Despite the gloomier outlook of some operators, however, spending figures from Visa and Barclaycard suggest that there is still spending growth in the hospitality sector.
Earlier this month, Barclaycard pointed to sustained momentum in restaurant spending growth, which was up at 12.4% for August, although it did note a slowdown in spending growth on pubs, which was down into single digits but still at 9.2% for the month.
Visa UK's Consumer Spending Index recorded spending growth on hotels, restaurants and bars of 2.5% in August 2017 but warned that overall household expenditure was still on track for its weakest calendar year of growth since 2013.
Tasty scales down openings for 2017 after loss in 2016 >>
Staycations boost hotel, restaurant and bar spending in August >>
Pub spending softens but restaurants hold firm as consumers balance the books >>
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