Frankie and Benny’s parent company Restaurant Group cuts bosses’ pay to help offset losses from closures
- Non-executive directors at the firm will see their earnings reduced by 40%
- The Carluccio’s restaurant chain has been an early casualty of the coronavirus
- Shares in the company rose 4 per cent to 37p following the update
Bosses at The Restaurant Group, which owns Frankie & Benny’s and Wagamama, have agreed to reduce their salaries after the dining group was forced to close all its outlets across the UK due to the coronavirus.
Chief executive Andy Hornby will have his earnings slashed by 40 per cent for a period of three months while chief financial officer Kirk Davis will see his pay cut by 20 per cent.
Both men have also consented not to receive bonuses for the most 2019/20 financial year, which the company estimates would have meant Hornby collecting about £98,000 and Davis gaining around £109,000.
CEO Andy Hornby: ‘I would like to wholeheartedly thank all of my TRG colleagues for their extraordinary understanding and commitment during this period’
The CEO said Covid-19 was creating ‘unprecedented times for our business and our sector,’ adding: ‘Against this backdrop, we have taken decisive action to improve our liquidity, reduce our cost base and downsize our operations.
‘I would like to wholeheartedly thank all of my TRG colleagues for their extraordinary understanding and commitment during this period.’
Non-executive directors at the firm will see their earnings reduced by 40 per cent for at least three months. Chairman of the Remuneration Committee Mike Tye has also resigned, thereby reducing the number of non-executive directors from six to five.
Aside from wage cuts, staff have been furloughed, and the Santander bank has increased its revolving credit facility to Wagamama from £20million to £35million. TRG’s shares were up 4 per cent today to 37.1p folllowing the announcement.
The restaurant sector is predicted to be one of the most significant casualties of the coronavirus lockdown, with sites only allowed to remain open as takeaway places. Last week, Italian dining group Carluccio’s went into administration.
Research from the Centre for Economic and Business Research (CEBR) released today predicts that the accommodation and food service trade will lose around £172million per day during the lockdown.
Centre for Economic and Business Research (CEBR) research predicts the accommodation and food service trade will lose around £172million per day during the lockdown
TRG has already said that about three-quarters of its Chiquito restaurants and all of its Food & Fuel establishments will permanently shut after the Covid-19 pandemic. Chiquito had been severely affected in recent years by declining sales and profits.
According to the Institute for Fiscal Studies (IFS), the Covid-19 shutdown will hurt young people, women and low earners the most. Many of them work in industries that have mostly or completely, such as the restaurant sector.
The IFS said low wage earners were seven times more likely than high earners to work in an industry that is currently closed, while workers under the age of 25 were two and a half times as likely, and women were a third more likely than men.
Xiaowei Xu, a senior IFS research economist, wrote: ‘Fortunately, in the short run, many will have the cushion of the incomes of parents or other household members.
‘But for the longer term, there must be serious worries about the effect of this crisis on the young especially and on inequality more generally.’