March 8 (Reuters) - Britain's Restaurant Group, the owner of the Frankie & Benny's chain, said it would seek to offer better value and improved service to win back customers after reporting lower annual profit in 2016.
"It is clear that we had added an unsustainable premium to pricing in our leisure businesses and that changes to our menus had been insufficiently tested with our customers," said Restaurant Group, which runs chains such as Chiquito and Coast to Coast.
Adjusted pretax profit for 2016 fell 11.2 percent to 77.1 million pounds ($93.9 million) on total revenue which was up 3.7 percent to 710.7 million pounds. Like-for-like sales fell 3.9 percent.
The company, which operates more than 500 restaurants and pubs in Britain, has put the brake on expansion plans until it is sure that its brand and location strategy is 'sufficiently robust', it said on Wednesday.
It has also identified cost saving of 10 million pounds to be delivered by 2019.
N+1 Singer analysts said that the strategic review was frank about failings and importantly, outlined a clear plan for each part of the business. The brokerage has 'hold' rating on the stock.
The company maintained its full year dividend at 17.4 pence per share. Its shares were up more than 6 percent at 349 pence at 0840 GMT.
"Having completed the strategic reviews of our brands, we are now pursuing a new and focused plan to turn around and grow the business," said Andy McCue, who became chief executive last September.
"However, there is much to change in our leisure businesses to provide customers with better value and an improved experience while, at the same time, ensuring we continue to grow our pubs and concessions businesses," he added.
Restaurant Group reiterated its warning of a rise in costs due to government initiatives such as the apprenticeship levy, proposed increases in business rates and higher energy taxes.
The company also pointed to a rise in buying costs due to a weak pound and commodity inflation. ($1 = 0.8210 pounds) (Reporting by Rahul B in Bengaluru; editing by Keith Weir)