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Tasty profits drop amid challenging market conditions
AIM-listed Tasty, the owner of restaurants Wildwood and Dim T, reported a drop in full-year gross profit on Tuesday even as revenue rose, amid challenging market conditions.
In the year to the end of December 2017, gross profit fell 64% to £1.9m, even as revenue increased 9.7% to £50.3m. Adjusted earnings before interest, tax, depreciation and amortisation fell to £3.5m from £7m the year before.
Tasty said it had performed in line with its revised expectations, but that 2017 had proven to be a challenging year across the sector.
The group disposed of three underperforming restaurants in the year and opened six new Wildwood restaurants. It does not plan to open any new restaurants this year, with management focused on restructuring the existing portfolio.
Tasty said it had identified a number of weaknesses in its operational structure and has started to implement an 18-month plan to address these issues.
"The board does not expect market conditions to improve in 2018 and believes that a further deterioration is likely. Underlying input costs will continue to rise and consumer spending will face increased pressures.
"The group's next round of operational improvements are targeting improvements in the areas of sales, food and labour margins, however it will be some time before the full benefit of these changes is felt and financial performance in 2018 is very unlikely to see any improvement on 2017."
At 1010 GMT, the shares were up 1.9% to 12.74p.