Tasty reports ongoing second-half challenges

(Sharecast News) - Casual dining operator Tasty reported ongoing challenges in its second half on Friday, particularly in the final quarter. The AIM-traded company, which owns the Dim T and Wildwood brands, said that while its restructuring plan approved last June was expected to restore profitability and secure its long-term future, estate closures had negatively impacted sales and required significant operational adjustments.

It said the casual dining sector was continuing to face substantial headwinds, including weakening consumer confidence, reduced discretionary spending, rising food and labour costs, and policy changes introduced in the UK government's October Budget.

The increase in employer National Insurance contributions and a reduction in the secondary threshold, set to take effect in April, were expected to add further pressure.

Tasty said it had implemented cost-saving measures to mitigate the challenges.

For the year, subject to audit, the company said it expected to report total sales of £36.6m from its restructured estate, compared to £46.9m for the full estate in 2023.

Adjusted EBITDA was projected at £3.8m, down from £4.4m in the prior year.

Year-end cash was anticipated to stand at £3.3m, reflecting restructuring and exceptional costs, compared to £4.2m in 2023.

Tasty said it planned to address the economic environment by introducing a new electronic point-of-sale system and a loyalty platform aimed at using its 1.5 million-strong customer database for targeted marketing.

Following the recent settlement of an insurance claim and with the group now debt-free, the board said it was confident in its ability to navigate current challenges, though it was continuing to take a cautious outlook given the prevailing market conditions.

At 0818 GMT, shares in Tasty were up 5.56% at 0.95p.

Reporting by Josh White for Sharecast.com.