7th April 2015
Graham Spooner, investment research analyst at The Share Centre, explains why he has picked Restaurant Group, the owner of chains such as Frankie and Benny’s and Chiquitos, as his share of the week…
With a portfolio consisting of over 450 restaurants and pub restaurants, Restaurant Group is a leader in its sector and includes brands such as Frankie and Benny’s and Chiquitos.
The group’s final results reported a 7.4% rise in profit, and a 10% rise in revenue. Investors will appreciate that the dividend for the year increased by 10% to 15.4p. Restaurant Group’s central tactic of focussing on locations at airports and near to cinemas has helped its success, and new openings have accelerated in the last year.
Investors should note that the restaurant sector could benefit from more people eating out, as a result of an improving UK economy. The group reported that they had made a strong start to the new financial year. Expectations for a stronger film release schedule in cinemas will also hopefully boost the group’s number of diners even further.
With many positive aspects, including dividend growth and excellent cash flow generation from its strong portfolio of brands, we recommend Restaurant Group as a ‘buy’ for medium risk investors seeking a balanced portfolio.