Glasgow-based restaurant group Harlequin Leisure has fallen to a bottom-line loss after paying out almost £250,000 on upgrading its Ashoka Shak outlets.
The Glasgow business, run by Sanjay Majhu, actually increased its earnings before interest, depreciation and amortisation (EBITDA) before exceptional items from £355,671 to £518,499 in the 12 months to March 31, 2012.
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However, an exceptional dilapidation bill of £247,500 related to improvements at the restaurants plus almost £500,000 of EBITDA costs meant the group posted an after-tax loss of £231,478 in a further sign of the difficulties consumer-facing businesses are negotiating.
Harlequin had recorded a bottom-line profit of £53,840 the previous financial year.
While he admits trading conditions are tough, Mr Majhu is pressing ahead with the opening of the first Ashoka in Edinburgh next month.
He said: “The tapas concept in Las Ramblas and Green Chilli is a great concept.
“I don’t know if we will roll those out but in four weeks we are opening an Ashoka in Edinburgh for the first time.
“That will be around 75 covers on Hanover Street, so we are still investing and creating work.”
Accounts filed at Companies House show the Ashoka Shak arm – which operates the franchises for the restaurants – showed a pre-tax profit of £6750 which was down from £33,031.
Turnover fell from £366,984 to £257,251 due to rent reductions.
The Ashoka Restaurants (International) division, which runs restaurants, narrowed its losses from almost £142,000 to just short of £67,000.
However Mr Majhu said the group now only really operates the Ashoka Cook School, with the rest of the restaurants, including the tapas style Green Chilli Cafe and Las Ramblas, run by franchisees.
Mr Majhu, who also runs pharmacy group Apple Healthcare, said the Ashoka Cook School run by his wife, Jiggy, attracted more than 1500 people and has solid bookings for the next eight months. He is also keen to look at taking the cook school concept across to Edinburgh.
He said: “The success of the cook school has really helped solidify our brand. I think it showed we really care about our food and our restaurants.
“With that happening, I think we may have helped reintroduce some people back into our restaurants.”
While generally satisfied with how Harlequin is trading he admits the restaurant trade is facing a number of difficulties.
He said: “It is getting harder to get margin so we have to cut costs.
“Instead of having 10 drivers on a Saturday night maybe we have to have eight and work a little bit harder.
“The market is becoming voucher-led and that is a big problem for restaurants. I wouldn’t say we are increasing our market share but we are working to retain our customers but lots of customers are moving to wherever Groupon points them.”
Mr Majhu, who bought the Harlequin business from entrepreneur Charan Gill in 2005, reiterated his prediction that the company will be debt-free in 2014.