TASTY: Formal Blog Coverage Ceased After Woeful £2m FY 2022 Loss Exposes Flawed Cost Structure And Suggests Wildwood Format Is Now Broken

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.

Read more

TASTY: H1 2022 Shows Encouraging £797k Sales Per Restaurant But Higher Costs Reduce Profit To Breakeven And Curtail Plans For 5-6 New Outlets

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.

Read more

My Portfolio: Year In Review 2022

01 January 2023
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,680-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2022 as well as provide a few remarks about valuation. 

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. Any upsets I will suffer during 2023 will most likely be caused by the shares I already own rather than any new shares I will buy.

I undertook the same annual review at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022.

My portfolio lost 23.3% during 2022. This other post explains that performance in more detail and clarifies how my portfolio begins 2023.

Read more

TASTY: £8m Market Cap Could Still Be Remarkably Cheap After FY 2021 Reiterated 5-6 New Restaurants Despite ‘Prevailing Economic Uncertainties’

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.

Read more

TASTY: Re-Opening Closed Restaurants, Rents Cut By 27% And ‘Extremely Encouraging’ Trading Support Hope Of A Recovery Following Pandemic-Disrupted H1 2021

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.

Read more

TASTY: Awful FY 2020 Performance Reveals Improved H2 Cash Flow As Barclays Loan, Imminent Indoor Dining And 16p Options Target Support Pandemic Recovery Hopes

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.

Read more

TASTY: Survival Rests On Landlords, Barclays, Vaccinations And Christmas Burgers After H1 Covid Cash Burn Implies June 2021 Receivership

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.

Read more

Tasty: Radical Management Action Urgently Required As Estimated Pandemic Cash Burn Could Leave Company Broke By November

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.

Read more

Tasty: Woeful H1 Results Leave Shareholders Relying On Bumper Christmas Bookings To Avert Terminal Cash Trauma

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.

Read more

Tasty: Equity Placing On The Way As Results Offer Glimmers Of Hope Amid Further Losses And Significant Debt

22 March 2019
By Maynard Paton

Results verdict on Tasty (TAST):

  • Miserable figures blighted by debts and losses that confirmed — albeit within the small-print — that an equity placing is on the way.
  • The shares are now a gamble based on how much shareholders are asked to raise and at what price.
  • Second-half trading offered hope through greater cash generation alongside improved sales per restaurant and per employee.
  • Restaurants continue to be sold for cash although current trading was described as “slow”.
  • Market cap now £4.2m for sales of £47m and 58 restaurants. I continue to hold.

Read more

Tasty: Hapless Restaurant Chain Reveals Dismal H1 Loss Although Some Outlets Are Apparently ‘Outperforming Expectations’

25 September 2018
By Maynard Paton

Update on Tasty (TAST).

Event: Interim results for the 26 weeks to 1 July 2018 published 21 September 2018.

Summary: The hapless restaurant chain delivered a rather dismal — but not completely disastrous — set of first-half figures. “Unfavourable” weather was partly blamed for underlying sales falling approximately 4%, which in turn led to an operating loss. The numbers also carried a further substantial write-down while net debt jumped following adverse cash movements. But recovery hopes still remain — costs have been cut, menus have been re-jigged and some sites are even “outperforming expectations”. I continue to hold.

Read more

Tasty: Phew! Not Heading For Bankruptcy Just Yet As £4m Property Proceeds And £1m Underlying Profit Compare To £8m Market Cap

13 March 2018
By Maynard Paton

Update on Tasty (TAST).

Event: Preliminary results for the 52 weeks to 31 December 2017 published 13 March 2018

Summary: Phew! I had thought TAST’s plunging share price was signalling these results would be accompanied by an emergency equity placing. As it turns out, the beleaguered restaurant chain continues to report a profit and has surprised me by raising £4m — equivalent to half of its market cap — from two property transactions. Furthermore, management now has a proper turnaround plan in place, the second half showed a few glimmers of hope while the upside could be considerable if a recovery ever occurs. I have bought more shares, both before and after these results.

Read more

Tasty: Grim H1 Results Reveal Huge £9.3m Write-Off, But Recovery Hopes Remain As Management Finally Shows Greater Turnaround Urgency

12 September 2017
By Maynard Paton

Quick update on Tasty (TAST).

Event: Interim results for the 26 weeks to 02 July 2017 published 12 September 2017

Summary: These results were always going to be somewhat grim, and news of a £9.3m write-off suggests about a third of TAST’s restaurant estate has now suffered trading problems during the last 18 months. At least the board is currently showing greater urgency with its turnaround plan and I would like to think these figures mark the low point for the group’s finances. I continue to believe the long-term upside could be considerable if a successful recovery one day prompts further restaurant expansion. I continue to hold. 

Read more

Tasty: Annual Results Dish Up Unsavoury Profit Warning And 33% Share-Price Sickener

28 March 2017
By Maynard Paton

Quick update on Tasty (TAST).

Event: Preliminary results for the 53 weeks to 01 January 2017 published 28 March 2017

Summary: Oh dear — I did not expect these annual results to include a profit warning for 2017. The share price has dropped by a third and I’m no longer so sure the long-term potential here is as great as I had assumed. That said, the restaurant group’s 2016 figures were not too bad while the lowered rate of expansion looks far more achievable based on current cash flow. Everything now rests on the experienced managers to resolve the problems — which I think they can. I continue to hold.

Read more

My Portfolio: Year In Review 2016

01 January 2017
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now raring to do battle with the market for another twelve months!

This first Blog post of 2017 provides a ‘year-in-review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2016, as well as provide a few remarks about valuation.

As I mentioned this time last year, I find writing such reviews extremely useful — not least because it encourages me to double-check my investment logic to ensure I am still invested for all the right reasons!

Read more