My Sold Shares

30 May 2023
By Maynard Paton

FY 2022 results summary for Tasty (TAST):

• A woeful H2 performance delivered a full-year £2m loss following a trio of Christmas-trading “impediments” combined with “unprecedented inflationary costs“.

• Rising staff wages, stagnant revenue per employee, a return to pre-pandemic rents and a debatable depreciation policy do not suggest TAST’s cost structure will improve any time soon.

• Comparisons with Restaurant Group and Fulham Shore suggest TAST’s menus are in fact inherently flawed and confirm a radical business overhaul was needed during the pandemic. 

• The departure of an experienced industry manager after only a year as a TAST executive may well indicate the main Wildwood restaurant format is broken.

• TAST now looks a lost cause with a de-listing a possibility. I continue to hold with vague hopes of a recovery, although formal blog coverage has ceased.

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30 May 2023
By Maynard Paton

H1 2022 results summary for Tasty (TAST):

• The absence of pandemic restrictions ensured H1 sales returned to pre-Covid levels, with sales per restaurant of £797k encouragingly at their best H1 level since H1 2016.

• A “steep rise in inflation in relation to wages, utilities and input supplier costs” limited underlying profit to just £0.2m and will “inevitably impact” the H2 performance.

• Pandemic-prompted rent reductions seem to have run their course, with annual lease costs appearing to return to £5m and total lease obligations staying at £52m.

• Management curtailing plans to open 5-6 new restaurants was disappointing but understandable given the “prevailing economic uncertainties“.

• Can TAST ever achieve a worthwhile margin from revenue now running at almost £45m? No evidence has emerged that TAST’s restaurant formats can easily pass on, reduce or absorb much higher costs. I continue to hold.

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04 August 2022
By Maynard Paton

Results summary for Tasty (TAST):

• The absence of pandemic restrictions ensured a bumper H2 performance that TAST acknowledged may not be repeatable during the current year.

• Higher wages, rising utility costs, “prevailing economic uncertainties” plus a June update that did not refer to H1 trading could be other signs of FY 2022 not being that profitable.

• Rent reductions of 27% now appear to be temporary, and explain why total lease obligations remain in excess of £50m.

• Repaying an emergency loan, appointing a new executive alongside plans to open 5-6 new restaurants confirm management’s mindset has moved from ‘survival’ to ‘recovery’.

• Although the £8m market cap could be remarkably cheap if TAST ever sustains a modest margin on decent sales, other shares could offer more dependable returns. I continue to hold.

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28 January 2022
By Maynard Paton

Results summary for Tasty (TAST):

• A predictably poor performance due to the pandemic, albeit with revenue up 33% on the even worse H1 2020 following greater takeaway and delivery sales.

• Favourable changes to both the ‘going concern’ small-print and CVA commentary suggest the risk of failure has diminished.

• But underlying net cash of £4m does not leave enormous room for error given an estimated underlying cash outflow of £1m for this H1.

• IFRS 16 total lease obligations remaining at £55m looks odd given annual rents may have been reduced by 27%.

• A post-results update citing “extremely encouraging” trading plus plans to re-open the remaining closed restaurants provide hope of a recovery. I continue to hold.

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07 May 2021
By Maynard Paton

Results summary for Tasty (TAST):

• A predictably awful performance, with total sales down 46% and sales at operating restaurants down by approximately 30%.

• H2 was not as bad as H1, witnessing improved cash flow and much lower write-offs.

• A loan from Barclays may indicate TAST’s future is “assured“, but effective net cash of £0.25m is not a huge safety buffer.

• Indoor dining should resume within two weeks, which ought to enhance cash flow and alleviate overdue obligations. 

• A new option scheme that pays out in full if the shares reach 16p gives some indication of the possible recovery upside from the recent 7p. I continue to hold.

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09 December 2020
By Maynard Paton

Results summary for Tasty (TAST):

• Revenue down 59% led to a £10m operating loss after the pandemic guaranteed an awful performance.

• Cash of £3.2m and six-month cash burn of £1.6m implies TAST will run out of money by June 2021.

• Immediate survival hopes seem dependent on landlord negotiations, CVA hints, a loan from Barclays, UK vaccinations and Christmas burgers delivered to your door.

• One pandemic positive: management has been forced/allowed to instigate much-needed changes to an underperforming restaurant estate.

• The £4m market cap could be a bargain, assuming government restrictions are lifted, rents are reset, competition is reduced and a recovery one day takes place. I continue to hold.

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01 July 2020
By Maynard Paton

Results summary for Tasty (TAST):

• Largely redundant annual figures that revealed revenue down 6% and another operating loss.

• TAST’s 56 restaurants were shut in March and my estimates suggest the group could survive without sales until November.

• The second half seemed encouraging after Christmas bookings were helped by a turkey-themed festive menu.

• A £2m property disposal bolstered cash and cleared debt but significant liabilities remain.

• The £2.8m market cap could be a bargain, but radical management action is now essential to keep the business afloat. I continue to hold.

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07 November 2019
By Maynard Paton

Results summary for Tasty (TAST):

• Woeful figures showed weaker revenue and greater losses — with the excuses this time including Brexit rather than unfavourable weather and the World Cup.

• A £3m equity placing has shored up the balance sheet, while an absence of further write-offs and utilised provisions lends support to turnaround hopes. 

• This year’s Christmas performance is crucial, with TAST going all out to capture festive-party bookings. Management’s outlook remarks seemed encouraging.

• Poor Christmas trade causing further cash flow traumas could leave TAST no option but to de-list.  

• The market cap is £4.1m for sales of £45m from 57 restaurants. I continue to bravely/stupidly hold.

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