- Shares jump on optimism that change can inspire turnaround
- Breithaupt to leave, replaced by former head of Paddy Power
Restaurant Group Plc ousted Chief Executive Officer Danny Breithaupt, bringing in the former head of bookmaker Paddy Power Plc to replace him after a year of turmoil at the U.K. owner of Frankie & Benny’s eateries.
Breithaupt will leave immediately, only two years after being appointed to the top job, the London-based company said Friday. His successor, Andy McCue, will start Sept. 19.
Restaurant Group shares rose as much as 11 percent in London trading on optimism that the change can inspire a turnaround. McCue, who led Paddy Power for two years prior to its merger with Betfair, “has significant experience in the U.K. leisure space and his appointment should be taken well,” Berenberg analysts said in a note.
After more than a decade of consistent revenue and earnings growth, Restaurant Group is stumbling amid increased competition from rival casual dining chains and a drop in visitors to U.K. retail parks, where many of its outlets are located. In April, the company forecast another hit to profits amid deteriorating sales and said Chief Financial Officer Stephen Critoph had left after 11 years.
The shares gained 10 percent to 415.8 pence as of 9:17 a.m. in London. Until Friday, they had plunged 45 percent in the past year, compared with a 4.7 percent gain in the FTSE All-Share Index. The company has a market value of 834.4 million pounds ($1.08 billion).
“We see this as a positive catalyst in dealing with the pent-up problems of the past and expect the news to be well received,” Anna Barnfather, an analyst at Panmure Gordon, said in a note.
The ousting of Breithaupt follows the completion of the first phase of a strategy review that started in April. The board decided a new leader is needed “to implement the initial actions and then prioritize the next phase of the review,” the company said. Breithaupt worked at Restaurant Group for 15 years.
Restaurant Group said business is in line with its previous guidance. The company will report first-half earnings and provide a strategy update on Aug. 26.