The owner of Franca Manca, Fulham Shore, has announced it completed a £2.25m equity raise and has also entered into a new £10.75m debt facility and agreed new terms for its existing £15m banking facilities.
The group, which also owns the Real Greek Restaurants brand, said the funds have improved the group’s balance sheet and positions it on “sound financial footing” to operate throughout the current pandemic.
In a trading update, Fulham Shore also revealed the majority of Franco Manca restaurants (49 of 51) and The Real Greek restaurants (14 of 18) have now re-opened, serving customers through a combination of dine-in, takeaway, click and collect and delivery – with early signs in both businesses deemed as “promising”.
It added that due to social distancing requirements, the board estimates that its re-opened restaurants can operate at approximately 60 to 70%of their previous dine-in capacity – with the reduction in capacity to “some extent” having been compensated by an increase in delivery and takeaway sales.
It also revealed it has implemented “effective cost saving measures” including rent reductions, deferrals and waivers negotiated with many landlords.
Looking ahead the company stated: “Members of the Fulham Shore board have been in the restaurant business for many years and have seen the effects of the 1979/81, 1989/93, 2001/03 and 2007/08 downturns in the sector. All were driven by poor economic conditions and various social disruptions. The current situation started with an oversupply of restaurants in the UK, followed by the Covid-19 pandemic.
“In all of the previous downturns referred to above there were many casualties in the restaurant sector. In the board’s opinion, many of these businesses were those with poor products, overpriced menus and stretched balance sheets, sometimes combined with owners inexperienced in how to run restaurants, control costs and look after cash.”
It concluded: “In the aftermath of all the above downturns, many good restaurant businesses survived and came out stronger. With the company’s two highly attractive restaurant businesses, prudent management approach and reduced debt levels prior to Covid-19, the directors believe that the company is firmly in the ‘survive and prosper’ group.”