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Tragus reports pre-tax loss of £36m despite small increase in sales as restaurant voucher promotions pulled in customers
The debt-laden owner of the Strada and Café Rouge chains almost doubled its losses last year as a restaurant voucher war took its toll.
Parent company Tragus made a pre-tax loss of £36m in the 53 weeks to 2 June 2013 despite a small increase in sales to £295m as promotions pulled in customers. That compared with the previous year's £18m loss. The restaurant chain, which is backed by private equity giant Blackstone, has a £325m debt pile.
In the wake of the recession, mid-market restaurants and pubs have been sucked in to tit-for-tat promotions to win a share of shrinking disposable incomes. Money-off deals are readily available on the internet with Strada currently offering 30% off food in some restaurants or a second main course for £1.25. Bella Italia, which is also owned by Tragus, is offering a second main course £2.50.
The company, which has 295 restaurants, said it had continued to invest both in new sites and refurbishing existing ones. "As a result of these investments and the group's increased focus on providing value offerings to its customers, group turnover increased by 3%," the company said in the directors' report.
Blackstone bought Tragus for £267m in 2006. The business refinanced in 2012 to avoid a potential breach of its banking covenants and at that time its owner pumped in £15m to reduce the debt burden. Tragus paid £2.2m to secure the new bank deal.
After the refinancing, longstanding chief executive Graham Turner left the business and was replaced with former Costa Coffee boss John Derkach. Despite the big annual loss the company still paid Blackstone a £414,000 fee.
