Piccolino owner’s costs drive as profits dip

PICCOLINO and Restaurant Bar & Grill owner Individual Restaurant Company today reported a slide in profits and revealed plans to cut costs by £2m this year.

Manchester-based IRC, which is listed on AIM,  said it was trading well in a challenging market, and had refused to trim its margins by discounting.

 Chairman Robert Breare said: “The group anticipates that trading conditions in 2009 will at least be as challenging as those experienced in the latter months of 2008.

“Furthermore many operators have increased the level of discounting in the opening months of this year. However the group will continue with its strategy of avoiding the margin erosion resulting from such policies, concentrating instead on the quality of its people, food, customer service and restaurant cleanliness.”

Mr Breare said IRC was expected to see its food and beverage margins hit by suppliers increasing their prices due to the weakness of sterling against the euro, and that a drive to take £2m of costs out of the business had begun.

It was not all doom and gloom though as trading in the first 13 weeks of 2009 has been “slightly ahead” of expectations he added.

The fall in profits, from £2.5m to £1.8m was blamed on a £500,000 increase in depreciation. Pro-forma turnover for 2008 rose 16.7% to £52.5m due to the opening of six new restaurants in the year.

IRC now operates  23 Piccilinos and 11 Restaurant Bar & Grill sites nationwide. Leases on four new sites in Knutsford, Aberdeen, Dorking in Surrey and in The City of London have been signed.

Chief executive Steven Walker said he was pleased with “another period of progress” in terms of financial performance and expansion of the portfolio.

“This is a particularly creditable result in what was a challenging trading period for consumer-facing businesses as a whole.”

He said staff hours and some jobs had been cut as part of the cost cutting drive,but stressed IRC remained in the market for talented staff.

“We’re pleased with the performance – we’ve done better than I think we expected to do so far this year. We’re sticking to out guns in terms of pricing and focusing on deliveringquality food and service.”

He said a fresh pasta concept, which had been included in the launch of the new Piccolino in Hale,Greater Manchester, and been well-received by customers and would be expanded.

“The fresh pasta room drives home everything we are about – good food cooked from the finest ingredients.”