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The Market

The macro environment we operate in remains challenging. Consumer confidence has remained low and this, compounded by inflation growing at a higher rate than wages, has resulted in a reduction in consumers' disposable income. In our market, despite these challenges, demand has been relatively resilient for now and turnover in the eating out market grew by 1.7% in the last calendar year with the frequency with which people eat out remaining flat.

However, increased supply over recent years has created a highly competitive environment, particularly in the food led sector. Although net supply has slowed in the past year the overall result of increased new entrants is that c.4,000 more restaurants were open at the end of 2017 than in 2013. The rate of growth in supply has been higher than growth in demand, making the acquisition of market share vital to growth. Due to the heightened competition for consumer occasions we have seen an increased level and depth of discounting in the market, putting further pressure on margins.

Quality of experience is ever more important in this competitive environment, with good quality food and drink no longer being enough. This environment sets the context for our ongoing brand development which aims to keep our brands front of mind for guests. We continue to monitor our prices carefully and challenge our thinking in this area through innovative workstreams. Where appropriate we are focused on enabling guests to premiumise their experience through enhanced product options and menus, thus growing the total spend on a given occasion. In addition, we are placing further emphasis on the overall guest experience which will encourage our customers to keep coming back to our brands, supported by investment in staff training which underpins the complete experience.

Cost inflation continues to impact the sector, hence the importance of maintaining our focus on efficiency and driving profitable sales growth. We believe that success requires trustworthy brands offering high quality experiences at the right price to generate sufficient sales growth to mitigate cost headwinds and grow profitability.

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Contact Us

A photograph of Tim Jones
Tim Jones Finance Director Helen Tallents PA to Finance Director +44 (0) 121 498 6560
A photograph of Denise Burton
Denise Burton Deputy Company Secretary +44 (0) 121 498 6514
Amy De Marsac Head of Investor Relations +44 (0) 121 498 6514