therestaurantgroupplc
annualreport2007
growingbrandsnationwide therestaurantgroupplcoperates
330restaurantsandpubrestaurants
predominantlyinleisurelocations
andairportsitsprimaryofferings
arefrankiebenny’schiquito
garfunkel’sblubeckersand
brunningprice
frankiebenny’s
20
newsites
20newunitsopened
during2007
ebitdaandoperating
profitgrewmorethan20
continuedstrongreturns
fromnewunits
strongpipelinewith
15–20toopenin2008
chiquito
8
newrestaurantsopenedin2007
anotherexcellentyear
almost30ebitdagrowth
5–10newrestaurants
toopenin2008
garfunkel’s
29th
year
refurbishmentprogramme
deliveringstrongsalesgrowth
continuestodeliverexcellent
profitsandreturns
blubeckers
6
newpubrestaurantsopened
solidperformance
pipelinebuildingwith5–10
newunitstoopenin2008
brunningprice
14
newrestaurants
acquiredin2007
experiencedtalentedand
successfulteam
trgconcessions
13
operatingprofit
verypleasingperformance
increasedrevenueprofits
andmargins
foursitesopeningin
heathrowterminal5 scotland
31
north east
27
north west
46
wales
13
south west
17
midlands
41
east
24
south east
85
london
inside the m25
43
southeast –85
29frankiebenny’s
08chiquito
18blubeckers edwinns
28trgconcessions
02brunningprice
midlands–41
31frankiebenny’s
07chiquito
03trgconcessions
east – 24
12frankiebenny’s
01chiquito
03blubeckers edwinns
08trgconcessions
northwest –46
23frankiebenny’s
11chiquito
05trgconcessions
07brunningprice
scotland – 31
16frankiebenny’s
05chiquito
09garfunkel’s
01trgconcessions
northeast – 27
18frankiebenny’s
07chiquito
02trgconcessions
london inside them25–43
11frankiebenny’s
06chiquito
07blubeckers edwinns
16garfunkel’s
03trgconcessions
southwest –17
10frankiebenny’s
06chiquito
01garfunkel’s
wales–13
06frankiebenny’s
02chiquito
05brunningprice
our locations
operatingand financial review
an unbeatablecombination
ofclassicamericanand
traditionalitaliandishes
one of theuk’s most popular
family restaurantbrands
frankiebenny’s trades
successfully in leisure retailand
airport locations nationwide
frankiebenny’s brings
together thebest ofclassic
americanitalian stylecuisine
alongside favourites including
chargrilledburgers steaks
pizzaandpastaarehouse
specialities suchaschicken
parmigianaandbbq ribs
insidefrankiebenny’s has
theatmosphereofa favourite
familyrun restaurantfrom the
clear view of the open kitchen
to thebottle linedbar it takes
youback to 1950’s newyork
takea seat inacosy boothand
lookat the family snapshots
showing life in thelowereast
side of thebigapplemusic is
classic 50’s american swing
withits uniqueblend of sizzling
mexicanandtexmex food
refreshing margaritasand
friendly servicechiquito
delivers a fiesta forall the family
now withover 50uk outlets
chiquitooffersa sunny spicy
extravaganzaall served ina fun
and livelyatmospherethereare
burritoschilli nachos wraps
and meatballs –and the famous
sizzling fajitas smoking ona red
hot skilletor youcan enjoy the
texasbbq ribs juicyburgers or
steaksthekids’ menu offers a
wide range of less spicydishes
specially selected tobe tasty
and nutritious
thebar showcases signature
margaritasclassic tequilasand
cocktailsalongside refreshing
icecoldbeers and soft drinks
stylishinteriors and lively
latinamericanmusicadd
to theatmosphere whether
you visit fora family party
a lazy lunchanexciting
evening or fiesta occasion
our business 
ataglance a year of significant landmarks
150
frankiebenny’sstafford
weare delighted tohave opened our
150thfrankiebenny’s restaurant
50
chiquitothanet
the 50thchiquito was opened
during the year inthanet
25
blubeckersbarnet
blubeckers andedwinns’ 25th site
was opened during the year
50
barmcrmanchesterairport
our 50thconcessions unit
was opened during the year
after trading successfully
in theuk’s most competitive
locations foralmost 30 years
garfunkel’s provides the
reassuranceofa familiar face
wellknownfor its quality of
service great menuchoice
andaffordable prices
the menu features favourite
dishes fromaround the globe
includinga range of steaks
burgers pastachicken grills
omelettesand the famous 
saladbar
whether you wantcoffee
anda pastrybreakfast lunch
a light snackafternoon tea
dinner or just a relaxing drink
while you watch the world go
by you willalways receivea
warm welcomeatgarfunkel’s
blubeckers mixes thebest 
of the past with thebest 
of the present tocreatea
welcoming pub restaurant
youcan enjoy every day in
almost 30 locations in the
southeast ofengland
openall day youcan pop
in fora pint of realaleanda
cottage pieat thebar or have
a glass ofchiantiand steak
in our comfortable restaurant
areasthere’s friendly engaging
servicefrom the moment you
arrive ensuring thatall your
needsare takencare of
our chefs use thebest 
quality ingredients toprepare
a menu thatcombines
traditionalfavourites with
world influencesseasonal
and local specials regularly
featurebut our signature
burgerand ribs haven’t
changed since we opened
our doors for the first time
over 25 years ago
brunningpriceisa family
of 14 “proper pubs”located
inwales thenorthwest and
southofenglandthe founders
of thebusiness have run
informalplaces for people
who like to meet talk eat
and drink ina relaxed friendly
atmosphere since 1981
mostly set inbeautiful rural
locations eachpub hasa
‘local’ feelinall our pubs we
offer imaginative homecooking
a variety ofcaskconditioned
beers good wineandclassic
malt whiskiesall servedby
friendly staff in relaxed
comfortableclassic interiors
that feature open fires old
furnitureblackboardsanda
curious mix ofbooksand
pictures
in 1997 2004and 2007
brunningprice was voted
pubgroupof theyearby the
goodpubguide
trg’sconcessions division has
anestablished reputation for its
ability todevelop partnerships
and delivercatering solutions
operatingapproximately
50 outlets in theuk’sbusiest
airports other transport
locationsand shoppingcentres
wehaveover 15 years of
experienceofdelivering
hospitality to the travelling
publicweprovidecatering
solutions drawing from our
diversebrand portfolio that
covera wide range of
categories including table
servicecounter service
sandwich shops pubsandbars
using existingtrgbrands
creating entirely newconcepts
and establishing partnerships
tofranchise with thirdparties
within these specialisedareas
wearea market leader in this
excitingand growing sector adjusted ebitda £m
2004 2005 2006 2007
433
500
556
678
ebitda increased by 22 
during 2007
22
adjusted profit before tax £m
2004 2005 2006 2007
244
295
350
435
following a 19 increase 
in 2006 this is a very
satisfactory result
24
adjusted eps p
2004 2005 2006 2007
784
908
1150
1464
adjusted earnings per share 
increased by 27 on 2006 
which in turn was up 27 
on 2005
27
dividend per share p
2004 2005 2006 2007
420
475
600
725
the directors propose a final dividend 
of 599p per share in respect of 2007 
making the full year dividend 725p 
per share 
21
01
therestaurant groupplc
annualreport 2007
55growthinlikeforlike sales 
revenue up17 to £367m
bothdivisionsleisureandconcessionscontinued togrow
revenues andoperatingprofi t
operations strongly cashgenerative£74mofcas h
generatedduring theperiod
rollout continues
 36 new sites openedin theperiod–all selffunded
 3035new sites targetedfor 200 8
 potentialfor over 250 frankiebenny’s currently 159
brunningpriceacquiredfor £32minoctober 2007and
trading well
operatingand
financial review
highlights
01 highlights
02 chairman’s statement
04chief executive officer’s 
review of operations
08group finance director’s review
10 directors
12 report of the directors
23directors’ remuneration report
30report of the independent auditors
32accounting policies 
for the consolidated accounts
36consolidated income statement
37consolidated statement 
of changes in equity
38consolidated balance sheet
39consolidated cashflow statement
40 notes to the accounts
61report of the independent auditors
– company accounts
62company financial statements 
– under uk gaap
65 groupfinancial record
66 shareholder information
results markedas adjustedare stated excluding non
trading items refer tonote 2statutory profit before tax
increasedby 98 to £428mand statutory eps roseby
105 to149p 02
therestaurantgroupplc
annual report 2007
2007 was another year of excellent progress for the restaurant group with substantial
increases in both revenue and profits againstamoredifficultbackground for consumer
facing businesses the group grew likeforlikesales by 55 following on from growth
of 5 for the previous yearour strong and resilient market positioning combined with
affordable offerings enabled the group to producearecordset of results with adjusted
earnings per sharegrowth of 27 we sold morethan 30 million meals including around
four andahalf million children’smeals during 2007 an increase of three million total meals
on the previous year and also created approximately 1000 full and part time new jobs
2007 was the second full year of trading in the group’srefocused form youwill recall that
we took the decision to direct our focus away from the increasingly crowded high street
marketplace and positioned trg’sbusiness firmly in the out of town segments of the
eating out market this strategy has served us well as it affords us some protection in
amorechallenging economicenvironment
buildingonastrong performance for the first half of the year the group made further
progress during the second half to produce an excellent set of full year results revenue
increased by 17 to £367m adjusted profit beforetax increased by 24 to £435m
2006 £350m and adjusted earnings per shareincreased by 27 to 1464p 2006
1150pfollowing on froma27 increase in adjusted earnings per sharein2006 this
isavery strong performance and asaresult the boardisrecommendingafinal dividend
of 599p per share2006 495p givingatotal dividend for the year of 725p 2006 600p
per share an increase of 21 subject to approval at the annual general meeting the
final dividend will be payable on9july 2008 to shareholders on the register on 13 june 2008
and the shares will be marked exdividend on 11 june 2008
both of our divisions leisureand concessions performed superbly during 2007
with growth in likeforlike sales revenue profit and margins we openedatotal of
36 new restaurants and pub restaurants during the year and we aredelighted with
their performance our expansion plans areunchanged and we aretargetingafurther
3035 new openings for 2008 in october 2007 we acquired the brunningprice
pub restaurant business which added 14 high quality pub restaurants to this growing
part of our leisuredivision we welcome the brunningprice team to trg and we
aredelighted with the performance of the business since its acquisition
our leisuredivision which incorporates frankiebenny’s chiquito garfunkel’sand pub
restaurants enjoyed another successful year withastrong increase in likeforlike sales
growth an improvement in adjusted operating profit margin anda21 increase in adjusted
operating profit during the year we opened 34 new restaurants and pub restaurants within
this division–these areperforming well and areset to deliver strong returns
operatingand financial review
chairman’ s
statement
“ourstrongbusinessmodel
andresilientmarketpositioning
combinedwithaffordableofferings
enabledthegrouptoproduce
arecordsetofresults”
alan jackson
chairman
results marked as adjusted arestated excluding nontrading items refer to note 2 03
therestaurantgroupplc
annual report 2007
brunningprice cross foxes
the concessions division also performed strongly with good growth in likeforlike sales
an improvement in adjusted operating profit margin anda13 increase in adjusted
operating profit we opened two new sites within this division in 2007 and both ar e
performing well
groupwide this is another excellent set of results and is testament to the hardwork
and dedication of our directors senior management team and all staff we arefortunate
to haveahigh quality and stable team at trg and on behalf of the boardiwould like to
thank them all for their valued contribution over the past year
since our last year end we have welcomed two new nonexecutive directorstothe board
davidrichardson who was previously finance directorofwhitbread plc and tony hughes
who was until recentlyadirector at mitchellsbutlers plc have joined our board andrew
thomas retired from the boardinfebruary 2008 andiwould like to thank him for his
contribution over the past seven years
2008 has started well with likeforlike sales for the first nine weeks 4 ahead of last
year and total revenueup21 this is very encouraging and whilst recognising that
we faceachallenging economicbackdropibelieve that it augurs well for another year
of progress
alanjackson
chairman
5march 2008
frankiebenny’s stafford
55
likeforlikesalesgrowth
following5in2006
21
increaseintheproposed
fullyeardividend 04
therestaurantgroupplc
annual report 2007
introduction
2007 was another year of good progress for the restaurant group “trg” building on
the strong performance of the previous yearboth divisions performed well and all of our
key performance metrics improved revenue ebitda profits and margins all grew and
this serves to highlight both the benefits of our strategy of focusing on the out of town
marketplace and also the efficacy of our model it is particularly encouraging that trg
was able to achieve these results againstamorechallenging economic backdrop and this
demonstrates both the defensive and resilient characteristics of our market positioning
and the strength of our operations and brands asaresult the group achievedarecor d
level of adjusted earnings per shareat1464p representing growth of 27 on the previous
yearconsidering that the “bar” had been raised significantlyin2006 when earnings
per sharegrewby27 these results representavery satisfactory performance
trgrationale
our coreobjective continues to be growth in shareholder value and our strategy to
achieve this has been and will continue to be to buildabusiness capable of delivering
longterm sustainable and growing cashflowsiampleased to report that again we
have successfullyconverted our profits into cash atavery healthy rate strong growth in
earnings per sharehas translated into strong growth in cashflow per share our model
enablesthe group to continue its growth inapredominantly organic and highly value
accretive wayfunded through internally generated funds wherewedeem it appropriate
we arealso able to supplement this organic growth via targeted acquisitions as we did
during 2007 with the acquisition of the brunningprice pub restaurant business our
touchstones arecashflow and returnoninvestment and whether we areassessinga new
site or an acquisition our focus is on ensuring that the investment is value accretive
trg’sprimary focus is on edge of town out of town rural semirural and airport
locations these locations have significant barriers to entryoffer good growth prospects
and enableustogenerate consistentlyhigh returns on investment we occupy leading
marketpositions in each of these segments and we arewell placed to continue to grow
our business in these areas looking forward we haveastrong pipeline of new sites for
the next three years
group results
results marked as adjusted arestated excluding nontrading items refer to note 2
all of our key performance metrics improved during 2007 with growth in both of our
divisions
 building on the 5 increase in likeforlike sales in 2006 we grew this metric by 55
in 2007approximately70 of this increase represented “covers” growth with mor e
people using our restaurants and in 2007 we sold morethan 30 million meals
 revenue increased by 17 to £367m
 adjusted ebitda increased by 22 to £678m and adjusted operating profit increased
by 23 to £482m and
 margins improved at both divisional and group levels with our group adjusted operating
profit marginincreasing by 60 basis points to 131–avery satisfactory result
particularly againstatough hurdle of 140 and 90 basis point improvements in 2006
and 2005 respectively
again the increase in profit was the product of three principal components–likeforlike
profit increases from the existing estate profitable contribution from new openings and
further cost savings resulting from operational efficiencies and purchasing initiativesthis
combination representsahealthy background to our continued profitable development
operatingand financial review
chiefexecutive
officer’sreview
ofoperations
“theteamdeliveredanother
impressiveperformancein2007
withearningsup27and36new
restaurantssuccessfullyopened
andtradingwell”
andrew page
chief executive officer
17
increaseinrevenue 05
therestaurantgroupplc
annual report 2007
total revenue
£2852m
operatingprofit
£616m
operatingmargin
216
frankiebenny’s159units
frankiebenny’sperformed superblywith both ebitda and operating profit increasing
by morethan 20 and good growth in margins during the year we opened 20 new
restaurantsofwhich 10 wereonnoncinema sites the results from the new openings
have been excellent and they areset to deliver very strong returns this year we ar e
aiming to openasimilar number of new restaurants and having been busy in recent years
buildingahigh quality pipeline of new sites we lookforwardtocontinued strong returns
chiquito53units
chiquito enjoyed another excellent year with growth in ebitdaand operating profit
of almost30 and operating profit margin up 90 basis points againstabackground
of very high growth in profits and margins in both 2006 and 2005 this represents an
outstanding performance last year we challenged the chiquito team to build on their
terrific performance in 2006 and they did not let us downiamconfident that they will be
just as keen to repeat that feat in 2008 during the year we opened eight new restaurants
and we aredelighted with their performance we expect to open 58 new chiquito
restaurantsin2008 as noted in my report last year we areparticularly pleased with the
performance of our restaurants which arecolocated with frankiebenny’sand we ar e
continuing with our plans to pursue these dual rollout opportunities
garfunkel’s26units
garfunkel’sperformed well during 2007 and notwithstanding that we lost 19 weeks of
trade during the first half whilst restaurants wereclosed for refurbishment the business
delivered approximatelythe same level of profit as for 2006 the refurbishments wer e
completed by the end of the first half and during the second half profits and margins
increased significantly garfunkel’sisnow in its 29th year and continues to deliver
excellent profits and returns
pubrestaurants42units
this business now comprises blubeckers and following its acquisition in october 2007
the brunningprice pub restaurant business blubeckers performed solidly during 2007
and has good potentialduring 2006 we embarked uponamoreambitious rollout
programme for blubeckers and this continued in 2007last year we opened six new
blubeckers pub restaurants and in the summer we strengthened the blubeckers team
by introducing senior management withastrong track recordwithin trg of operational
management and also good experience of executing successful rollouts the impact
of this has been very positive
following the acquisition of brunningprice “bp” we addedafurther 14 new pub
restaurantstoour portfolio we aredelighted with the performance of the bp pub
restaurantssince the acquisition and we intend to grow the businessthe bp pub
restaurantshaveamorerelaxed feel compared with blubeckers although bp’spubs
arenot branded they all shareasimilar typeoffit out and operating style the quality
of food is high–bp won the good pub guide’s pub group of the year awardfor the
thirdtime in 2007–and they attractaregular and loyal customer base we aredelighted
to have retained all of the operational management team at brunningprice it is an
experienced talented and successful team and we look forwardtoworking with the
team to further develop and grow our pub restaurant business
during 2008 we areexpecting to openatotal of 510 new pub restaurants and longer
term the pub restaurantbusiness has the potential to becomeasignificant part of
the group
frankiebenny’sand chiquito blackbur n
brunningprice cornmill
leisur e
21
growth in revenue in our
leisuredivision 06
therestaurantgroupplc
annual report 2007
total revenue
£812m
operatingprofit
£125m
operatingmargin
154
our concessions division enjoyed another year of good progress producingastrong
increase in operating profit and an improvement in margin againstamorechallenging
operating background both logisticallyand costwise this is an outstanding performance
we opened two new units during 2007 and these aregenerating strong returns we
expectasmallnet increase in the number of concessions units during 2008 in what will
beayear of significant change given the developments at heathrow airport in late march
we will open four new sites at the new terminal5and later in the year when terminal 2
closes we will close our restaurant there during 2008 we areexpecting some significant
swings in trading patterns at heathrow as passengers migrate from the existing terminals
into the new t5 going forward we areconfident that these new developments place our
concessions business inavery strong position
noncor e
during the year losses from noncoreactivities decreased by £055m and we will continue
to take steps to reduce these noncorelosses
corporateactivity
in october 2007 we acquired brunningprice limited for £32m in cash the business
comprises of 14 trading pub restaurants and one development site bp is based
predominantly in the north west and hasalong history of profitable growth we have
retained bp’soperational management team will continue to operate the pub restaurants
in the existing highlysuccessful style and we will gradually add new pubs to the bp
business together bp and blubeckers provideavery attractive opportunity to grow
our pub restaurant business
marketdynamicsandeconomicbackdrop
we areconfident that prospects for the eating out market remain positive socio
economic factors such as an ageing population morefemales in work and levels of
disposableincomes significantly higher than in previous generations augur well for our
industrylifestyle changes arealso positive with an increasing propensity to spend
on leisureactivitieseating out particularly at our popular price points £10£16 spend
per headhas becomeahabitual part of most people’slives and is something many ar e
reluctant to give up during 2007 the smoking ban came into effect in england and
wales following the ban in scotland the previous yearoverall we believe that trg has
benefited from this as morefamilies and those with an aversion to smoking have visited
our restaurants
during most of 2007 and into 2008 much has been said and written aboutthe
deteriorating economic backdrop and pressures on the consumera series of successive
interest rate rises starting in 2006 and continuing through into 2007 saw base rates rise
by 125 basis points in effect increasing the cost of borrowing almost 30 the cost
of servicing an already high level of personal debt thereforerose for much of the uk
population compounding this we saw inflation rise by varying amounts depending upon
which particular index one chose to use and the burden of taxation increase together
this combination has served to make life moredifficult for the uk consumer and looking
forwardinto 2008 we anticipateacontinuation of these tighter conditions
whilst we would not suggest that trg is completely impervious to these economic
factors we arevery encouraged that our business has demonstratedaconsiderable
level of resilience in the face ofaslowing uk economy andatighter consumer market
we believethat this is the result ofanumber of factors including our popular price point
and value for moneyour focus on areas with higher barriers to entry and thus lower
supplyside risk the strength of our brands consumers’ reluctance to forego eating out
and very importantly the skill and application of the trg team restaurants which have
opened within the last few years have performed very well delivering strong returns and
we intend to continue to openasimilar number of new restaurants each year for the
foreseeable future
operatingand financial review
chiefexecutive
officer’sreview
ofoperations
continued
concessions50units
shakeahula gatwick airport
22
increaseinebitda
brunningprice pantyrochain wrexham 07
therestaurantgroupplc
annual report 2007
we believe that interest rates and employment levels aretwo key drivers of consumer
spend which can potentially impact our marketplace we have recently seen two
reductions in base rates to the current level of 525 and we note that employment levels
are and areprojected to remain high whilst it is suggested that thereisscope for further
monetary relaxation during 2008 we believethat in the light of current levels of inflation as
measured by the cpi it may take some time beforethe base rate drops back below 5
we arealso mindful of the risks of further taxation pressures asaresult of the level of the
budget deficit furthermore gdp growth is forecast to slow in 2008 toabelow trend level
but looking further ahead thereisthe prospect ofapickup back towards trend in 2009
asaresult we have factoredaless favourable macroeconomic backdrop into our
planning for 2008 than we have experienced over the last five years
despite this we believe that trg is wellplaced to weather these tighter conditions recent
trading has been solid and we continue to see excellent results from our new openings
cost pressures have been an issue for some time we identified the risk of inflationary
cost pressures with respect to our input costs two years ago and during 2006 wherew e
wereable to we took steps to remove or minimise that risk through taking out longer term
typically three years fixed or capped price contractsthis approach served us well during
2007 and we will continue to benefitfromthis in 2008 and 2009 howeverweare still
exposed in some areas wherecurrently cost pressures arebeing felt mainly fresh meats
and dairymilk products in these areas we would normallyfix prices for 612 months
but at present we are in most cases eschewing fixes of morethan three months as our
purchasing team anticipateareasonable possibility of prices softening later in the year
we have also kept our menu content under regular review so as to try to mitigate the
impact of cost inflation through careful menu engineering in the light of the current tighter
consumer market and we believe the importance of value for our customers we arelikely
to hold offincreasing menu prices in the short term but we will be carefully reviewing this
during the second quarter with the prospect of some increases later in the year
futureprospects
2007 was another year of good progress for the group with both divisions achieving
growth the current year has started well with likeforlike sales growth during the first nine
weeks at 4 of which covers growth represents 70 and total revenue for the same
period up 21 a 16 increase excluding bp at this stage last yearlikeforlike sales
growth was 5 of which covers growth represented 75 and total revenue was 16
ahead whilst we areencouraged by this we recognise both the ongoing impact of
acontinuation ofatighter consumer marketplace and alsothe fact that our comparative
likeforlike hurdlesat83 and 73 in quarters two and three aredemanding
we have madeasolid start to the year and providing thereisnotasignificant further
deterioration in the uk economyweare confident of continuing our progress in 2008
andrewpage
chiefexecutiveofficer
5march 2008
30m
customers served
chiquito southampton
frankiebenny’s portsmouth
27
earningsper sharegrowth in 2007 08
therestaurant groupplc
annualreport 2007
operatingand financial review
groupfinanc e
director’s review
results
as described in thechairman’s statement thegrouphas hadanother excellent year total
group revenueincreasedby 165 to £3667mrevenueof the principal tradingbrands
increasedby 187 to £3664m
adjustedgroupebitda was £678m up 219compared to the prior yearafter adding
backpreopeningcosts and theifrs noncash shareoptionchargeadjustedgroup
ebitda in the year was £721madjustedgroupoperating profit grew by 230 to
£482min terms of margins wemade further good progressadjustedgroupebitda
at 185 showedanimprovement of 80 basis points on the previous year whileadjusted
groupoperating profit marginat 131 was 60 basis points aheadof 2006
totalinterest costs in the year of £40m were 222higher than the previous year 
this reflects the higher levels ofaverage net debt during 2007 following payment of the
£35m specialdividend inmarch 2006 and the £32macquisition ofbrunningpricein
october 2007
totaladjusted profit before tax excludingliving ventures was £442manincreaseof
231 on the prior yearafter taking intoaccount trg’s shareof the losses ofliving
ventures totalgroupprofit before tax and nontrading items was £435manincrease
of 242on the prior year 
capitalexpenditur e
during 2007 thegroupinvesteda totalof £474m 2006 £408m incapitaladditions
this consisted of the following
 £378m invested in 36 new sites 20 frankiebenny’s eight chiquito six blubeckers
and twoconcession outletsthis includes twofreehold developments and the
heathrow terminal5fit out costs
 £96mon refurbishment and maintenanceexpenditure
as wehavehighlighted previously the groupis very focused on ensuring that our
investments generateexcellent returns on investment inorder toensure that this is
achieved we adopt a rigorous approach to capitalinvestment appraisal all new site
proposals are subject to this process whichincludes detailed financialevaluations and
demographicanalysisas well as local competitor and market analysis all significant
projects are subject to approval by the group board and we conduct post completion
reviews on a regular basis these confirm that we are continuing to achieve the excellent
expected levels of financial returnon a very consistent basis
cashflow 
set out below is a summary cashflow statement for 2007this demonstrates once
again the very strongcashgenerationcharacteristics oftrgand the very transparen t
conversion of reported operating profit intocashcashflow generated from operations a t
£738m showedanincreaseof16on the prior yearafter interest tax and maintenance
capex freecashflow of £506mgrew by 19 compared to 2006 this level of free cash
flow means that onceagain thegroup’s expanding development programmeas wellas
a significantly increasedlevel of ordinary dividend was entirely financed out of internally
generatedcashflow
£ million 2007 2006
adjusted operating profit 482392
workingcapital noncashadjustments 6077
depreciation 196 165
cashflow from operations738 634
interest paid 34 28
tax paid 10297
maintenancecapex 9685
freecashflow 506 424
new buildcapex 378 323
ordinary dividends paid 12295
underlying net cashflow0606
disposals and integration includinglivingroom 86 20
acquisition ofbrunningprice329 –
cashproceeds from issueof shares 11 11
specialdividend –348
purchaseof shares for employeebenefit trust 72–
financingcosts offset against bank debt07 –
change in net debt 291 351
net debt at start of the year 475 124
net debt at end of the year 766475
“thegroupis 
very focused
onensuring tha t
our investments
generateexcellen t
returns on
investment”
stephencritoph
group finance director  09
therestaurant groupplc
annualreport 2007
other points tonoteon thecashflow areas follows
 totalordinary cashdividend payments to shareholders at £122mincreasedby 28
compared to 2006
disposals include £78m in respect of thelivingroom disposalannounced injune
with thebalance relating to various property disposals
thegroupinvesteda totalof £329m includingcostsacquiring thebrunningprice
businessas announced inoctober 
thegroupinvested £72macquiring shares for the employeebenefit trustthis was 
in two tranches 15m shares acquired on the 29june 2007 for a totalconsideration of
£50m 1m shares acquired on 27 november 2007 for a totalconsideration of £22m
thegroupended the year withnet debt of £766mcompared to £4 75mat the start of the year 
nontrading items 
the full year results includea net nontradingcharge of £07mbefore taxationthis
consists of the following items
a provision of £17magainst thecarrying valueof thegroup’s investment inliving
ventures as previously announcedand detailed in theinterimresults for 2007 
acredit of £10m recognised in respect of outstanding loannoteinterest received
fromliving ventures at the time of the sale of thelivingroombusiness injune 2007 
as alsopreviously announcedand detailed in theinterimresults
a net charge of £02min respect of the revaluation of the interest rates swapat the year end
a net credit of £02m relating to various property disposalitems
financing
indecember 2007 thegroupcompleted new financingarrangementsthis consists of
a new committed £120mfacility for five years untildecember 2012inall respects this 
is on terms at least as goodas the previous facilities
thegroupalsohas interest ratehedging instruments in place tofix interest costs on
a significant proportion of the overall net debt position £30mis fixedat a rateof4695
untiljanuary 2009a further £25m is fixedat 492 untiljanuary 2011
the groupis thereforein a strong financialposition with substantialhead room against
covenants andavailable facilities which will enable us tomaintain the new site
development programme
balance sheet and key financial ratios 
totalgroupnet assets increased in the year from £652m to £772mthe detail of
this movement is set out in theconsolidated statement ofchanges in equitythe main
movements areanincreaseof £29m representing the retained profits for the year
less dividend payments of £122manda £72mcharge to reserves in respect of the
acquisition of shares for the employeebenefit trust
the key financial ratios during the year wereas follows
covenan t 2007 2006
ebit interest cover 121x 120x
ebitda interest cover 4x 170x 171x
fixedchargecover 24x 23x
balance sheet gearing 99 73
net debt  ebitda 3x 113x 085x
compared tobankingcovenants under the new facility arrangement wehave substantial
head room
in terms of financialgearing given that thegroup’sbusiness is primarily leasebased the
key ratio wefocus on is fixedchargecoverfor the year this was 24 timesbroadly in line
with the level in the previous year 
taxation
the total taxation for the year on ordinary activities is £136mas follows
2007 2006
non non
trading trading total trading trading total
corporation tax 125 03 128 98 1385
deferred tax 23 15 08 25 0227
total 148 12136 123 11 112
the underlying normalised tax rateon tradingactivities excluding unrelievedassociate
losses was 335 2006 341the reduction in the rateofcorporation tax from 30
to 28announced in the 2007 budget only comes in toeffect fromapril 2008and has
thereforehadnoimpact on thecurrent year underlyingcharge
the nontradingcredit of £12marises primarily as a result of revaluing the year end
deferred tax balanceat the new rateof 28 in line withaccounting guidance
stephencritoph
groupfinancedirector
5march 2008
£4 74m
invested incapitaladditions
19
increaseinfreecashflow
1 21x
ebit interest cover
results markedas adjustedare stated excluding
nontrading items refer tonote 2 10
therestaurantgroupplc
annual report 2007
1alanjackson
nonexecutive chairman
aged 64 he joined the restaurant group plc as executive chairman in march 2001
and becamenonexecutive chairman from january 2006 he hasawealth of experience
in the leisuresectorfor 18 years from 1973 to 1991 he occupied various positions
withinwhitbread principally managing director of beefeater steakhouses and also the
whitbread restaurantdivisionwherehewas responsible for the creation and development
of beefeatertravel inns and tgi friday brands after the beer orders in 1991 he founded
his own business which became inn business group plc in 1995 and was subsequently
acquired by punch in 1999 he chairedoriental restaurant group plc until its sale to
noble house in 2000 currentlyalan is nonexecutive chairman of luminar plc and
charleswells limited and he isanonexecutive director of playtech plc
2andrewpage
chief executive officer
aged 49 he joined the restaurant group plc as finance director in june 2001
in december 2003 he was appointed group managing director and in january 2006
became chief executive officerhis career has spanned both international and domestic
businesses prior to joining the restaurant group plc he heldanumber of senior
positions in the leisureand hospitality industry including senior vice president with
intercontinental hotelsand finance director of hanover international plc prior to that
andrew spent six years asacorporate financier with kleinwort benson having trained
and qualified asachartered accountant with kpmg
3stephencritoph
group finance director
aged 47 he was appointed as finance director of the restaurant group plc in
september 2004 previouslyhehas held several senior finance positions in compass
group plc and granada group plc including corporate development director of compass
roadside and finance director of travelodge and little chef he trained and qualified
asachartered accountant with deloittetouche
4kevinbacon
executive directorleisuredivision
aged 48 he joined the restaurant group plc in 1996 as an area manager for frankie
benny’s becoming operations manager in 1998 operations director in 2000 and
managing director in 2002 in june 2003 he was appointed to the boardofthe
restaurant group plc prior to joining the restaurant group plc he had retail experience
with granada motorway services ltd forte roadside restaurants ltd and currys ltd
dixons plc
5trishcorzine
executive director trg concessions
aged 50 she joined the restaurant group plc in 1993 as area manager for garfunkel’ s
which included the group’sairport operations in 1997 she was appointed brand
director of garfunkel’sand airports and in 1999 was promoted to operations director –
concessions in march 2003 she was appointed managing director–concessions and
in october 2003 was appointed to the board prior to joining the restaurant group plc
trish worked for häagendazs then managed the atacama restaurant group
directors
1
2
3
4
5 11
therestaurantgroupplc
annual report 2007
6johnjackson
nonexecutive
aged 61 he was appointedanonexecutive director of the company in october 1996
he is ceo of jamie oliver holdings limited chairman of virgin vieathome victory
corporation limited and various other virgin companies he is also senior nonexecutive
director of wilkinson hardwarestores limited andanonexecutivedirector of luminar
plc he was formerlychief executive of semara plc managing director of body shop
international plc and chairman and managing director of chesebrough ponds limited
7davidrichardson
nonexecutive
aged 56 he was appointed asanonexecutive director of the company in february
2007hewas finance director of whitbread plc from 2001 to 2005 he is currently
anonexecutive director of serco group plc dairy crest group plc tomkins plc and
forth ports plc
8tonyhughes
nonexecutive
aged 59 he was appointed asanonexecutive director of the company in january
2008 he was managing director of the restaurants division of mitchellsbutlers plc
previously bass plc and six continents plc from 1995 to 2007 and served on the
boardofmitchellsbutlers plc from 2003 to 2007prior to joining bass he held
senior management roles at bqja devenish and whitbread
9robertmorgan
company secretary
aged 36 he joined the restaurant group in 2002 in the finance department and was
appointed as companysecretary in september 2004 previouslyheworked in the finance
function of cocacola hbc sa having qualified asachartered accountant with kpmg
6
7
8
9 12
the restaurantgroup plc
annual report 2007
the directors present their annual reportand the group accounts for the year ended 30 december 2007
results and dividends
the results forthe year ended 30 december 2007 arepresented under international financial reporting standards“ifrss” the
report and accountsare drawn up ona52week reporting basis endingon30december 2007 the results for the year areset out
in the groupconsolidated income statement on page 36 this showsagroup profit after taxation of £292m 2006£144m an interim
dividend of 126p per sharewas paid on 18 october 2007 the directors proposeafinal dividend of 599p per sharetobepaid on
9july 2008 bringing the ordinary dividend payable in respect of 2007 to 725p 2006 600p
principal activity
the principal activity of the group is the operation of restaurants and pub restaurantsfurther information relating to the business
includingareview of the year’sperformance and planned developments is given in the chief executive officer’sreviewonpages4to7 
directors
full details of the directors of the company aregiven on pages 10 and 11 the directors who held office during 2007 wereasfollows 
alan jackson
andrew page
stephen critoph
kevin bacon
trish corzine
john jackson
andrew thomas retired on6february 2008
david richardson from1february2007
tony hughes was appointedasa nonexecutive director of the companywith effect from1january 2008 andrew thomas retired
from the boardon6february 2008
in respect of 2007 each of thenonexecutive directors excluding the chairman is considered by the boardtobeindependent
alan jackson transitioned from executive chairman to nonexecutive chairman on1january 2006 and following his tenureasan
executive directorisnot considered to be an independent nonexecutive director 
no director hasaservice contract withthe company requiring morethan twelvemonths notice in accordance with the articles
of association the directorsretiring by rotation areandrew page and stephen critoph who being eligible offer themselves for
reelectionatthe annual general meeting
tony hughes offers himself for election at the annualgeneralmeeting of the company being the first opportunity for shareholders
to approve his appointment john jacksonhas beenanonexecutive directorofthe company for morethan nine years andin
accordance with corporate governance best practice also offers himself for reelection the boardconsiders john jackson to remain
independent and recommendshis reelection as an independent nonexecutive director
during the year the audit committee comprised the following nonexecutive directors
john jackson chairman
andrew thomas
david richardson from1february2007
during the year the remuneration committee comprised the following nonexecutive directors
andrew thomas chairman
john jackson
david richardson from1february2007
during the year the nominations committee comprised the following directors
john jackson chairman
alan jackson
andrew page
andrew thomas
david richardson from1february2007
following his appointment asanonexecutive directortony hughes has been appointed asamember of the remuneration audit
and nominations committees andrew thomas retired from the boardand the audit remuneration and nomination committees
on6february 2008
the directors’ remuneration report which includes detailsofdirectors’ remuneration and interests in the company’sshares and options
together with information on service contracts is set out on pages 23 to 29
report of the directors of
the restaurant group plc directors’ shareholdings
the interests of the directorsinthe shares of the company all being beneficially owned wereasfollows
at at at
5march 30 december 31 december
2008 2007 2006
executive directors
andrew page 270166 270166 183950
stephen critoph 43250 43250 26250
kevin bacon 125133 125133 95566
trish corzine 100423 100423 74400
nonexecutivedirectors
alan jackson 400191 400191 350198
john jackson 80000 80000 49166
andrew thomas na 52388 48888
david richardson 13000 13000 na
tony hughes – na na
details of the directors’ shareoptionsare disclosed in the directors’ remuneration report on pages 28 and 29 the closing midmarket
price of the ordinary shares on 30 december 2007 was 183p and the range during the year was 175
1
⁄ 4pto373
3
⁄ 4p
sharecapital structure
the company has one class of shares ordinary shares of 28
1
⁄ 8p the authorised sharecapital is 284444444 ordinary shares of 28
1
⁄ 8p
as at 30 december 2007 the allottedcalled up and fully paid number of shares in issue was 196605258 shares thereare no
preference shares or special rights pertaining to any of the shares in issue
following the 2007 annual general meeting the directors have had the authority to allot shares up to an aggregate nominal amount of
£18983936 which represented approximately one thirdofthe ordinary sharecapital of the company at the time the authority was given
by shareholders this authority expires at the annual general meeting to be held on7may 2008 and it will be proposed to extend this
authority updated for the current number of shares in issue at the forthcoming meeting the directors have no present intention of
exercising this authority 
in addition following the 2007 annual general meetingthe directorshave the authority to make market purchases of shares in the
restaurant group plc on behalfofthe company up to 19600683 ordinary shares which represented 10 of the company’sissued
ordinary sharecapital the minimum price that may be paid for such shares is 28
1
⁄ 8pper share the maximum price is the higherof5
above the average middle market quotation for the ordinary shares for the five business days preceding the date of purchase and the
higher of the price of the last independent trade and the highestcurrent independentbid on the london stock exchange daily official
list at the time the purchase is carried out this authority expires at the forthcoming annual general meeting and it will be proposed to
extend this authority updated for the current number of shares in issue at the forthcoming meeting the directors have no present
intention of exercising this authority 
the group has entered into various contracts including leases during the course of ordinary businesswhich may be terminated in the
event ofachange of controlofthe restaurant group plc
substantial shareholdings
at 26 february2008 the company had been notified of the following interests of 3 or moreinthe issued ordinary sharecapital
of the company
number of ofissued
shares sharecapital
legalgeneral investment management11257984 573
fc asset management 10233442 520
mginvestment management 8708601 443
newsmith asset management8541321 434
jp morgan asset mgmt 8066211 410
rathbone unit trust management 7630742 388
old mutual asset managers 7493821 381
artemis investment managers 6000000 305
williamblair capital partners 5951897 303
13
the restaurant group plc
annual report 2007 14
the restaurantgroup plc
annual report 2007
corporate governance
the company is committed to high standards of corporate governance the boardisaccountabletothe company’sshareholders for
good corporate governance this statement describes how the principles of corporate governance areapplied to the company and the
company’s compliance with the best practiceprovisions of the combined code on corporate governance and the guidance on audit
committees together “the code” the company has been in full compliance throughout the year with the provisions set out in the
code except for provisions concerning the number of directors consideredtobeindependent and the independence of the chairman
the board
the board’srole is to provide entrepreneurial leadership of the company and group withinaframework of prudent and effective
controls which enable risk to be assessed and managed the boardreviews thegroup’s strategic objectives and looks to ensure
that the necessary financialand human resourcesare in place to achieve these objectives and to reviewmanagementperformance
against these objectives the boardalso sets the company’svalues and standards and manages the business inamanner to meet
its obligations to shareholders and other stakeholders the boardcurrently comprises the nonexecutive chairman the chief executive
officerthe group finance directorthe executive director of the leisuredivision the executive director of the concessions division
and three nonexecutive directorstheir biographies appear on pages 10 and 11 and these demonstratearange of experience and
sufficient calibretobringindependent judgement on issues of strategyperformanceresources andstandards of conduct which is vital
for the success of the group
john jackson acts as senior independent nonexecutive director and is available to shareholders if they have reasons for concern
on which contact through the normal channels is inappropriate or has failed to resolve an issue
the roles of chairmanand chiefexecutive officer areclearly definedthe chairmanisresponsible for the leadership of the board
and the chief executive officer is responsible for the strategic direction and operational management of the groupthe boardmeets
onaregular basis andthereisa formal schedule of matters specifically reservedfor its decision this includes approval of the annual
budget and the three year business plan approval of the interim and year end report and accounts review and approval of significant
capital expenditureincluding development of new sites significant disposals of assets and acquisitions or disposals of businesses
operational management areresponsible for the daytoday runningofthe group and reportonaregularbasis on that performance
to the board the boardisresponsible for reviewing challenging and approving the strategic direction of the group and monitoring
operational performance
the boardisresponsibletoshareholders for the proper management of the group and has access to the necessaryinformation to
enable it to discharge its duties all directors aresubject to election by shareholders at the first opportunity after their appointment
except wherethey areappointedbyshareholders and to reelection thereafter at intervals of notmorethan three years
thereissignificant involvement from the nonexecutive directors this involves an ongoing dialoguewith the executivedirectors
including constructive challenge of performance and the group’sstrategythe nonexecutive directors areprovided with sufficient
information to allow them to monitorassess and challenge the executive management of the group comprehensive boardpapers
including financial information arecirculated to all directors prior to boardmeetings and onaweekly basis they receive uptodate
trading information the nonexecutive directorshave the opportunity to meet without the executive directors present and this includes
discussions of targets set and achieved by management
all directorshave access to the advice and services of the companysecretary andaprocedurehas been agreed for the directors
in the furtherance of their duties to take independent professional advice if necessaryatthe expense of the companyonjoining the
boardthereisaprocessfor directors to receive training as to their role and its requirements and for nonexecutive directors to gain
an understanding of the whole business nonexecutive directors areactively encouragedtomeet with operational management and
to visit the group’soperations in order to enhance their understandingofthe group’sbusiness its brands employees and processes 
during 2007 therewerenine boardmeetings with full attendance by boardmembers
executive directors areincluded in the annual performance evaluation of all senior employeeswithin the group thisinvolves a
comprehensive review of performance against objectives and covers areas for futuredevelopment through appraisal documentation
and meetings the nonexecutive directors also meet in the absence of the chairman to appraise the chairman’sperformance in the
light of his fee review 
the company acknowledges the importance of developing the skills of the directors to run an effective board to assist in this
directors aregiven the opportunity to attendrelevant coursesand seminarsand to acquireskills and experience which may enhance
their contribution to the ongoing progress of the group the boardand committees of the boardhave been subject toaformal
performance appraisal throughaninternal questionnaire and the performance of all members of the boardisconsidered as part
of the annual remuneration review process
report of the directors of
the restaurant group plc
continued communications with shareholders
communications with shareholders aregiven high prioritythechairman’s statementchiefexecutiveofficer’s review andgroup
financedirector’s review on pages 2 to9includea detailed review of thebusiness and thechiefexecutiveofficer’s review on
pages 4 to 7 includes a review of planned futuredevelopmentsthereis a regular dialogue withinstitutionalinvestors including
presentations after thecompany’s preliminary announcement of the year end resultsandat the half year 
feedbackfrom major institutional shareholders is provided to theboardona regular basis and whereappropriate theboard will take
steps toaddress their concerns and recommendationstheboard uses theannualgeneralmeeting tocommunicate withprivate
and institutionalinvestors and welcomes their participationthechairmanaims toensure that thechairmen of theaudit committee
remunerationcommitteeandnominations committeeareavailableat theannualgeneralmeeting toanswer questionsand for all
directors toattend
remunerationcommittee
theremunerationcommitteeconsists of three nonexecutivedirectorsthere was 100attendanceof the tworemuneration
committee meetings during 2007the role of this committeeand details of how thecompany complies with the principles of the
codeare set out in thedirectors’ remuneration report on pages 23 to 29
nominations committee
thenominations committeeconsists of the nonexecutivedirectors the nonexecutivechairmanand thechiefexecutiveofficerit me t
twiceduring 2007 withfullattendancethereare written terms of referencefor thenominations committeeit makes recommendations
to theboardfor theappointment or replacement ofadditionaldirectorsit is also responsible for succession planning for thegroup
it was not felt necessary toemploy anexternal searchconsultant in the recruitment of tony hughes given his profileand experience
in the puband restaurant industryhowever this does not imply that thecompany would not useexternal searchconsultants for futur e
appointments to theboard
audit committee
theaudit committeeconsists of three nonexecutivedirectorsduring the year thecommittee was chairedby johnjackson who
is a qualifiedaccountantit meets ona regular basis under its terms of referenceand meets with thegroupfinancedirector and the
externalauditors to review the financial statements and externalfinancialannouncements madeby thecompanyit has responsibility 
for reviewingand monitoring the externalauditors’ independenceand objectivityand reviews supplies ofall nonaudit services provided
by the externalauditors toensure that their independenceand objectivity arenot compromiseddavidrichardson who is achartered
accountantbrings considerable knowledge to theaudit committee withhis experienceas financedirector ofaftse 100 company 
theaudit committee met three times during 2007 withfullattendanceat eachmeeting
during the year bdostoy haywardllp resignedas auditors and theaudit committee inconjunction with senior managementcarried
out a tender process for thegroupauditfollowing this processdeloittetouchellp wereappointedas auditors of thecompany
andgroupthere werenomatters raisedby bdostoy haywardllp in their letter of resignation which were required tobebrought 
to theattention of shareholdersshareholders of thecompany have the opportunity to reappoint deloittetouchellpat theannual
generalmeeting tobeheld on 7may 2008
following the retirement from theboardofandrew thomasjohnjackson has taken over thechairmanship of theremuneration
committeeanddavidrichardson will take over thechairmanship of theaudit committee following theannualgeneralmeeting
therestaurant groupplc – strategy
therestaurant group’s key objectiveis togrow shareholder valueand the strategy deployed toachieve this is tobuildabusiness
capable of generating longterm sustainableand growingcashflowsinpursuit of this wehavebuilt abusiness whichis focused on
the growingcasualeatingout marketwehave targeted segments of this market whichoffer distinct barriers toentry and where we
canbeconfident of delivering good growthinprofits andcashflows and where thereis good potentialfor high returns on investment
this has led thegroup tofocus our activities in twoareas –leisureandconcessionsthis emphasis was underlinedby the divesting
of our high street businesses caffeunoandest est estduring 2005thegroupoperates in the expandingcasualdining marketand
our offerings continue toprovide good valuefor money incomfortable surroundings and excellent servicefrom our dedicated teams
thegroup’s strategy is set todeliver further organic growth through the rollout of our brands –frankiebenny’s andchiquitoand our
pubrestaurant businesswehavea plentifulpipeline of sites for developmentcoupled witha strong focus oncontinuing todeliver like
forlike sales growthfrom our existing restaurantsour concessions business operates ina dynamicandcomplicated market whereour
management teams havemarketleading expertiseanda track recordofinnovationand improving sales performance
15
therestaurant groupplc
annualreport 2007 16
the restaurantgroup plc
annual report 2007
the restaurant group plc–risk factors
the boardofdirectors regularly identifymonitor and manage potential risks and uncertainties to the group the list below sets out what
the directors consider to be the current principal risksand uncertainties this list is not presumedtobeexhaustive and is by its very
nature subject to change
•adverse economic conditions andadecline in consumer confidence and spend in the uk
•increased supply of new restaurant concepts into the market
•increase in prices of key raw materials wages and overheads including utilities
•impact of terrorism in key locations including airports
•increased regulation of the food and beverage industry leading to higher costs
•possible health pandemic that may cause customers to stay away or prevent restaurants being adequately staffed
•failuretoprovide customers with brandstandardvalue for money offerings and service levels
•major failureofkey supplierstodeliver products intorestaurants
•damage to our brands’ images due to failures in environmental health in the restaurants or from contamination of products
•the lossofkey personnel or failuretomanage successionplanning 
•breakdown in internal controls through fraud or error 
the restaurant group plc–key performanceindicators
the boardofdirectors and executive management receiveawide rangeofmanagementinformation delivered inatimely manner 
listed below arethe principal measures of progress that arereviewed onaregular basis to monitor the development of the group
likeforlike sales
this measureprovides an indicator of the underlying performance of our existing restaurants and highlights successful development of
our offerings to best match changing consumer demandsover timeduring 2007 the group likeforlike salesincreased by 55 which
followeda5increase in 2006 anda3increase in 2005
new sites opened
the expansion of our brands isakey driver of group’sprofitabilityasnoted in the group finance director’sreviewpotential new sites
aresubjecttoarigorous appraisal process beforethey arepresented to the boardfor approval this process ensures we maintain the
quality of openings as well as the quantity of sites opened during 2007 the group opened 36 new sites and plans to open 3035 new
restaurantsduring 2008
ebitda
the ability of the group to finance its rollout programme is aided by strong cash flows from the existing business the group defines
ebitda as operating profit beforedepreciation amortisation and nontrading items ebitda serves asauseful proxy for cash flows
generated by operations and is closely monitored during 2007 the group generated£678m ebitda an increase of 22 on the
2006 level of £556m 
operating profit margin
the boardand management closely monitor profit margins as an indicator of operating efficiency within restaurants and across the
group during 2007 the group adjustedoperating margin improved by 60 basis points to 131
in addition the group closely scrutinises the returns on investedcapital from new site openings and the average ebitdagenerated
by restaurants
internal control
the boardisresponsiblefor the group’ssystem of internal control and for reviewing its effectivenessinaccordancewith guidance for
directors “internal control guidance for directors on the combinedcode” the “turnbull guidance” the boardhas ensured that there
is an ongoing process for reviewing the effectiveness of the systemofinternal control including identifying evaluating and managing the
significant risks faced by the group this process which is regularly reviewed by the board is carried out in conjunction with business
planning and is documented inarisk register that has been progressively enhanced during the financial year and up to the date of
approval of the annual report and accounts
whilst acknowledging its overall responsibility for the system of internal control the boardisawarethat the system is designed to
manage rather than eliminate the risk of failuretoachieve business objectives and can only provide reasonable but not absolute
assurance against material misstatement or loss
report of the directors of
the restaurantgroup plc
continued the group has well established procedures which have been developed over many years which meet the requirementsofthe turnbull
guidanceakey control procedureisthe daytoday involvement of executive members of the boardinall aspects of the business and
their attendance at regular management meetings at whichperformance against planand business prospects arereviewed the group
has establishedamonthly executive management meeting wherethe four executive directorssenior operational managersand head of
functional departments review group performance and issues affecting the group
additionallythe boardseeks to continually strengthen the internal control system wherethis is consistent with improving the relationship
between risk and reward the group’sassociate companyliving ventures limited now restructured as pimco2637 limited does not
fall under the same internal controls as the groupthe internal controls within the associateare discussed with management of that
companyduring shareholdermeetings and areconsidered to be appropriatefor an entity of its size
other key features and the processes for reviewing effectiveness of the internal control system aredescribed below
•terms of reference for the boardand its subcommittees includingaschedule of matters reserved for the boardand an agreed
annual programme of fixed agenda items for boardapproval
•anestablishedorganisationalstructurewith clear lines of responsibility and rigorous reporting requirements operational performance
and operational matters areconsidered at monthly meetings of the executive directors with senior management financial
performance is monitored and action taken through weekly reporting to the executive directors and monthly reporting to the
boardagainstannual budgets approved by the board
•capital investmentisregulatedbyabudgetary processand authorisation levels with appraisals and postinvestment reviews
•comprehensive policy manualssetting out agreed standards and control proceduresthese includehuman resources related
policies information technologyand health and safety 
•aninternal audit functionheaded by an experienced internal auditorhas access to all areas of the company and group’sbusiness
and reports into the board
statement of directors’ responsibilities in relation to the accounts
the directorsare responsible for keeping proper accounting records which disclosewith reasonable accuracy at any time the financial
positionofthe companyfor safeguarding the company’sassets for taking reasonable steps for the prevention and detection of fraud
and other irregularities and for the preparation ofareport of the directorsand directors’remuneration report which comply with the
requirements of the companiesact 1985
financial statements arepublished on the group’swebsite in accordance with legislation in the united kingdom governingthe
preparation and dissemination of financial statements which may vary from legislation in other jurisdictions the maintenanceand
integrity of the group’swebsite is the responsibility of the directors the directors’responsibility also extends to the ongoing integrity
of the financialstatements contained therein
the directorsare responsible for preparing the annual report and the financial statements in accordance with the companies act 1985
the directorsare required to preparefinancial statementsfor the group in accordance with international financial reporting standards
“ifrss” as adopted by the europeanunion and article4ofthe ias regulationsand have chosen to preparefinancialstatements for
the companyinaccordancewith uk gaap 
group financial statements
company law requires the directors to prepare such financial statements in accordancewith ifrsasadopted by the eu the
companies act 1985 and article4ofthe ias regulation
ias1“presentation of financial statements” requires that financialstatementspresent fairly for each financial year the group’ s
financialpositionfinancial performance and cash flows this requires the faithfulrepresentation of the effects of transactions other
events and conditions in accordance with the definitions and recognition criteria for assets liabilities income and expenses set out
in the international accounting standards board’s‘framework for the preparation and presentation of financial statements’
in virtually all circumstancesafair presentation will be achieved by compliance with all applicable international financial reporting
standardsafair presentation also requires the directorsto
•consistently selectand apply appropriate accounting policies
•present information including accounting policies inamanner that provides relevantreliable comparableand understandable
information and
•provide additional disclosures when compliance with the specific requirements in ifrsisinsufficient to enable users to understand
the impact of particular transactions other events and conditions on the entity’sfinancialposition and financial performance 
17
the restaurant group plc
annual report 2007 18
the restaurantgroup plc
annual report 2007
parent company financial statements
company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state
of affairs of the company and of the profit or loss of the company for that period in preparing these financial statements the directors
are required to
• select suitable accounting policies and then apply them consistently
• make judgements and estimates that are reasonable and prudent and
• state whether applicable accounting standards have been followed subject to any material departures disclosed and explained
in the financial statements
information provided to auditors
all of the current directors have taken all the steps that they ought reasonably to have taken to make themselves aware of any
material information needed by the company’s auditors for the purpose of their audit and to establish that the auditors are aware
of that information the directors are not aware of any relevant material information of which the auditors are unaware
going concern
based on the group’s plans for 2008 and after making enquiries the directors have a reasonable expectation that the group has
adequate resources to continue operations for the foreseeable future for this reason they continue to adopt the going concern basis
in preparing the financial statements
corporate responsibility
the restaurant group plc “trg” acknowledges that it has a significant role to play with regard to the community and wider
environment in which it operates this statement sets out the principal areas of focus and activity that the group has undertaken
to date and what the group is looking at for future development in managing its impact on customers employees communities
and the wider environment
this is split into five sections
• our market – the area of business that our strategy is focused on
• our environment – the impact of trg on the wider environment and how we are seeking to reduce this
• our people – the group’s policies and actions towards our 8500 and more employees
• our communities – how trg interacts with those communities from which our customers and employees are drawn from
• our shareholders – those that have invested capital in the development of the restaurant group plc and to whom the directors
and management of the group are reporting to
our market
the restaurant group has a clearly defined strategic aim – to grow shareholder value by operating in the expanding casual dining
market focusing on those areas of this market which can offer barriers to entry high returns on investment and strong and growing
cash flows the general trend of a growing dining out market in the uk continues but in recent years there has been an increased focus
from customers and regulatory authorities on healthy dining issues including dietary habits drinking and smoking
healthy eating
healthy eating is a personal responsibility but trg acknowledges that as a provider of food and drink we have a role to play in providing
appropriate options from which individuals may choose when they eat out trg strongly believes that it should provide its guests with
choice whilst we do not wish to be prescriptive we aim to provide a healthy choice at each menu point alongside more indulgent options
for many people dining out is a treat and therefore the normal restrictions which may be applied to healthy eating on a daytoday basis
are waived in favour of enjoyment and experience for example whilst completing the weekly shop a consumer may choose chocolate
fudge cake for their weekend dessert as opposed to a piece of fruit during the week
during 2007 trg worked extensively on its children’s menus to provide a selection of healthy meals alongside the more “traditional”
dishes which by virtue of their makeup contain a higher number of calories healthy dishes are clearly marked on the children’s menus
in chiquito  garfunkel’s and all of our brands offer vegetables or salad with every child’s meal we believe that a balanced diet is as
important as regular exercise and appropriate rest and relaxation in promoting physical and mental well being
healthy dining is of particular concern when it affects young people and our chiquito garfunkel’s and filling station brands have
children’s dishes which have no added sugar colours or preservatives and are low in salt these brands also offer a free salad with
every main dish on our children’s menu in frankie  benny’s all children can receive at no additional cost a portion of vegetables or
salad with any main course and can replace fries with jacket potatoes we also serve a wide range of alternatives to the traditional fried 
potato chip such as mashed potato rice and jacket potatoes
report of the directors of
the restaurantgroup plc
continued hydrogenated fats
in light of uk government and consumer focus with regardtoconsumptionofproducts containing high levels of fat particularly
saturated fats and artificial hydrogenated transfats which have been linked to potential risks to cardiovascular health during 2007
in conjunction with our external food safety consultants we conductedadetailedreview of our suppliers and our menu ingredients
•wehave worked closely with all of our supplierstoidentify the types and levels of fats and oils in our ingredients to facilitate
aprogramme of removalreplacement or reductionwhilst maintaining our required quality standards
•the vast majority of our ingredients 99are now free from hydrogenated fats and oils
•since august 2007 we have prohibited the supply of new ingredients containing added hydrogenated fats and oils
•wecontinuetowork closelywith all of our suppliers to identify and progress opportunities for reducing overall levels of saturatedfat
wherever possible and to provide healthier choices
whilst some transfats occur naturally and arefound in small amounts in meat and dairy products concerns have been raised about artificial transfats formed duringafood
manufacturing process called hydrogenation that turns oils into solidsemisolid fats these hydrogenated fatsoils can be found in products such as biscuits cakes margarine
processed foods and cooking oils
genetically modified foods
for many years the grouphas hadapolicy of not sourcing genetically modified foods and new suppliers arerequired to confirm
that they will not provide the restaurant group with such products 
drink aware
all our restaurants operate an “areyou 21” policywhereby we will ask for proof of identification to anyone who appears to be under21
we also do not permit the sale of alcohol to under 18’s even if the alcohol is for consumption withameal all of our restaurants offer a
wide range of nonalcoholic drinks including fruit juices carbonates minerals and nonalcoholic cocktails
smoking
from1july 2007 we havecompliedfully with the legislation throughout the united kingdomwhich has banned smoking in public areas
our environment
the restaurant group takes its commitment to the environment very seriouslyweare developinganumber of initiatives to reduce
our impact on the wider environment which link in with improving our cost base our initial focus is ensuring we have reliable and
measurabledata to monitor our impact hence we have been upgrading our facilities to measureconsumption of gas electricity and
waterthis will allow us to analyse inefficient use of these resources and then take steps to improve our usage this will reduce our
impact on the environment and also save costs we aretaking steps to recycle morepackaging and waste within the groupweare
working with suppliers to increase volumes of glass recycling and paper recycling–itissurprising how few suppliers areable to offer
assistance in this area–but we continuetowork with them to achieve this
we haveanumber of initiatives and trials across the groupwhich have been instigated over the past couple of years we have been
monitoring their progress during the 2007 and look forwardtoincreasing these schemes for example
•during 2007 we have trialled glass recycling schemes in ten restaurants and arenow evaluating rolling this out across our restaurant
businessinthe leisuredivision during 2008 we arealso currently working with our waste contractors to developasystem whereby
we can economically recycle our cardboardwaste
•within frankiebenny’swehave undertakenascheme to replace as many as possible of our light bulbs with lower wattage more
energy efficient devices
•for the past 18 months we have been installing refrigeration units that have new energy efficientcontroller technologywhich can save
up to 15 on energy usage and costs on refrigeration equipment
•during 2007 in cooperation with our principalfood distributorwehave successfully trialled the use of reusable “ecotrays”for the
delivery of fresh produce this delivery mechanism has now been rolled out to 75 of our restaurants in early 2008 and it is planned
to increase this during the year 
•all new units complywith the latest environmental regulations 
•our new head office at marshalsea road has recycling facilities for waste paper throughout the building
19
the restaurant group plc
annual report 2007 20
the restaurantgroup plc
annual report 2007
our people
it is often said thatacompany’smost important assetisits people at trg we endeavour to build great teams in which individuals
can develop their skillscontribute toasuccessful business and enjoy their time at work 
we employ over 8500 people and this number is expanding rapidly–the rollout of our great brandsmeans thereare plenty of
opportunities for individuals to develop with the group inavariety of rewarding and challenging roles
our staffhandbook clearlysets out that the group offers equal employment rights regardless of age colourgendersexual orientation
disability or religionthis is reinforced across our teams from the recruitment process onwards
we have clear and fair terms of employment within the groupall staffare provided withacontract of employment or service agreement
and thereare fully documentedprocedures in place for disciplinary issues and grievances raised by employees the group has
adefined termination policyshould this be required
the group devotes considerable resource to training our teams training commences on the first day of joining any of our brands
and we have recently invested inanew hr system to enable continual monitoring of the development of individuals through their time
with trg employees take part in performance reviews on at least an annual basis with training and development opportunities or
requirements identified
with an expanding portfolio of sitesandasizeable group already in place communications with all our teams areofvital importance
all restaurants receive regular communicationpacks with updatesofwhat is happeningwithintheir brands we also have processes
in place for monthly meetings within restaurants to cascade information throughoutthe group most importantlyour moresenior
managersspendaconsiderable amount of time visiting the restaurants and discussing matters with the teams
the health and safety of our customersand employees is of paramount importance the group has extensive procedures to ensurewe
mitigate risks to our guests and teams as far as possible we have very clear procedures and standardsinplace and to enforcethese
we employexternal auditorsand carry out benchmarking of our restaurants we have also significantly increased the level of training in
health and safety matters across the group in recent years to further enhance the clean safe environment for our customers and staff
our communities
the restaurant group hasahistoryofinvolvement in the local communities around our restaurants andpub restaurants whilst the
group hasabroad nationwide portfolio of sites it is vital that each site has its roots in its local communitywhether it isablubeckers
or brunningprice pub oftenabuilding of local historical importance that has been carefully developed maintaining many of its original
features and characteristicsand so offering the warmth ofa“local” inasmall rural communityorabusy frankiebenny’sona large
leisurescheme we aim to ensureour restaurants areinvolved in their communities
each year our brands choose various charities to support during 2005 frankiebenny’scelebrated its 10th anniversary by
supporting the bbc’schildren in need charityand through the effortsofour staffand customers over £150000 was raised for
this worthwhile cause
in 2006 frankiebenny’s supported great ormond street hospital as the nominated charitythe charity of the yearfor 2007 was the
nspcc and therehave beenanumber of fund raising initiatives carried on at our restaurants to support thisduring 2007our teams in
frankiebenny’s have been actively encouragedtoget involvedinlocal projects and we areinvolved withanumber of schools through
sponsorship of sports teams up and down the country 
chiquito also nominatesadifferentcharity each year to support throughamajor fund raising event across the brand on 5th of may 
“cinco de mayo” cinco de mayo isanationalfiesta in mexico so it is very appropriate that chiquito celebratesthis date with special
events at the restaurants in 2007 £15000 was raised on this one night alone during 2008 chiquito is proud to be working with
childline to help raise funds and the profile of this worthwhilecause and thereareanumberofpromotions in place during the year 
including the cinco de mayo celebrations
blubeckers support charities locallytheme nights and events areheld on an adhoc basis to raise funds for local causes thousands
of pounds worth of vouchersare donated to charitableevents every yeartobeused as raffle prizes and auction lots
report of the directors of
the restaurantgroup plc
continued our shareholders
the group has hadaclear strategy since 2001–todeliver value for shareholders by focusing on sectors within the eating out market
that offer high barriers to entrywherewecan generate sustainable and growing cash flows and which offer high returns on investment
this hasled the group to focus investmentinto the leisuredivision and our concessions division which operates principally on airports
in 2005 the group disposed of its highstreet focussed brands est est est and caffe uno garfunkel’sincentral londonbath and
edinburghcontinues to perform well for the group
the chairman’sstatement chief executive’s review of operations and group finance director’sreviewprovide further detail on the
group’sstrategyperformance during 2007 and prospects for the group
donations
no donations for political purposes have been directly made by the company during the yearcharitable events fund raising and
sponsorship areorganised by restaurants for organisations in their locality as described above
creditor payment policy
the company’spolicy is to agree the terms of payments with its suppliers as and whenatrading relationship is established the
company ensures that the terms of payment areclear and its policy is to abide by the agreed terms provided the supplier meets
its obligations at 30 december 2007 the company had no trade creditorsthe group had an average of 56 days 200652days
purchases outstanding in trade creditors
capital risk management
the group manages its capital to ensurethat it will be able to continue asagoing concernwhile looking to maximise returns to
shareholders the capital structureofthe group consists of equity comprising issued sharecapital reserves and retained earnings
debt finance leases and cash and cash equivalents the group monitors its capital structureonaregular basis through cash flow
projections and consideration of the cost of financing its capital 
in december2007 the group completedarefinancing exercise and further detail on this is set out in the group finance director’ s
reviewaspart of this the group has externally imposed capital requirements the group hasa£120m revolving facility anda£10m
overdraft facilityunder the terms of the £120m revolving facility the group is required to comply with its financing covenants whereby
net interest charges must be covered by at least four times by ebitda and net debt must not exceed three times ebitda these
covenants aretested twiceannually and aremonitored onaregular basis 
under the terms of the previous facility the group was required to comply with its financingcovenants whereby net interest charges
must be covered by at least four times by profit beforeinterest and tax and net debt must not exceed 25 times ebitda during 2007
the groupremained within its external limits throughout the year 
financial risk management
the boardofthe restaurant group plc regularly reviews the financialrequirements of the group and the risks associated therewith
the group does not use complex financial instruments and wherefinancial instruments areused it is for reducing interest rate risk the
group does not use derivativefinancial instruments for trading purposes group operations areprimarilyfinanced from retained earnings
and bank borrowings including an overdraft facility
in additiontothe primaryfinancial instruments the group also has other financial instruments such as debtors prepayments trade
creditors and accruals that arise directly from the group’soperations further information is provided in note 26 to the accounts
effectivefrom16january 2006 the group entered intoathree year interest rate swap for an initial notional amount of £25m rising to
£50m from 18 april 2006 until 16 january2008 when it reduced to £30m until 16 january2009 at which date it terminates the fixed
rate for the duration of the three years is 4695
effectivefrom18january 2008 the group entered intoafurther three year interest rate swap foranotional amount of £25m from
18 january 2008 to 18 january 2011 atafixed rate of 492
after the impact of the interest rate swap the average rate of interest charged during the year on the group’sdebt was 602
2006 567 and the average year end rate was 640 2006541 on 2007results net interestwas covered 121 times
2006 120 times by profit beforetax interest and nontrading items based on year end debt and profits for 2007a1rise in
interest rates would reduce profits beforetax and nontrading items by 07 2006 01 and interest cover would reduce to
113 times 2006120 times 
at 30 december 2007 the group had gross borrowings attracting interest including overdraft of £790m 2006 £482m and cash
balancesof£17m 2006 £07m
21
the restaurant group plc
annual report 2007 22
the restaurantgroup plc
annual report 2007
annualgeneral meeting
aseparatecircular is included with the mailing of the annual report to shareholders setting out the resolutions to be voted on at
the annual general meeting whichistotake place at 11am on7may 2008 at the offices of dresdner kleinwort investment bank
30 gresham street london ec2p 2xy 
the boardbelieves that the proposed resolutions to be put to the shareholders at the annual general meeting areinthe best interests
of shareholders and accordinglyrecommends that shareholders vote in favour of the resolutions as thedirectors intend to do in
respect of theirown beneficial shareholdings in the company 
auditors
during the year bdo stoy haywardllp resigned as auditors and deloittetouchellp wereappointedintheir place deloitte
touche llp have expressed their willingness to continue as auditors andaresolution will be proposed at the annual general meeting
for their reappointment
by order of theboard
robert morgan
company secretary
5march 2008
report of the directors of
the restaurantgroup plc
continued introduction
this reporthas been prepared in accordancewith schedule7aofthe companies act 1985 the report also meets the relevan t
requirements of the listing rules of the financialservices authority and describes how the boardhas applied the principlesofgood
governance relating to directors’ remuneration as required by the regulationsaresolution to approvethe report will be proposed
at the annual general meeting of the company at which the financial statements aresubject to approval
the regulations requirethe auditors to reporttothe company’smembers on the part of the directors’ remuneration report subject
to audit and to state whether in their opinion that part of the report has been properly prepared in accordance with schedule 7a of the
companies act 1985 as amended by the regulations the report has thereforebeen divided into separate sections for audited and
unauditedinformation
unaudited information
remuneration committee
the company has establishedaremuneration committee “the committee” which is constituted in accordance with the recommendations
of the combined code the members of the committee during the year werejohn jackson andrew thomasand david richardson
from1february 2007 who wereall independent nonexecutive directors during the year the committee was chaired by andrew
thomas and following his retirementfromthe boardon6february 2008 is chaired by john jackson with effect from1january 2008
tony hugheshas been appointedtothe remuneration committee
none of the committee has any personalfinancial interest in the company otherthan as shareholders the committee makes
recommendations to the board no director playsapart in any discussion about his own remuneration in determining the other
executive directors’ remuneration for the year the committee consulted alan jackson chairman about its proposals
new bridge street consultants llp appointed independent adviserswho provided no other services to the group during the year
provided advice to the committeeencompassing all elementsofthe remuneration packages
remuneration policy
executive remuneration packages aredesigned to attractmotivate and retain directors of the high calibreneeded to progress and
developthe group and to rewardthem for enhancingvalue to shareholdersthe performance measurement of the executive directors
and the determination of their annual remuneration package areundertaken by the committee in addition the committeedetermines
the remuneration for the chairmanthe remuneration of the other nonexecutive directors is determined by the board thereare four
main elements of the remuneration package for executivedirectors 
•basic annual salary including directors’ fees and benefits
•annual bonus payments which cannot exceed 100 of basic salary for executivedirectors
•longterm incentive plan awards and
•pension arrangements
the company’spolicy is thatasubstantialproportion of the remuneration of the executive directors should be performance related
as describedbelowexecutive directors may earnannual incentivepaymentsofupto100 of their basic salary together with the
benefits of the participation in the longterm incentiveplan
executive directors areentitled to accept appointments outsidethe company or group thereisnorequirement for directors to remit
fees earned from appointments outsideofthe company or group to the restaurantgroup plc
basic salary
an executive director’sbasic salary is determined by the committee prior to the beginningofeach year and when an individual
changes position or responsibilityindecidingappropriatelevels the committee considers the group asawhole and by reference
to remuneration levels at other companiesinthe leisureand hospitality sectorsbasic salaries werereviewed in december 2006 with
increases taking effect from1january 2007 they wereagain reviewed in december 2007 with increases from1january2008
in additiontobasic salarythe executive directors receive pensioncontributions and certain benefitsinkind principallyacar or car
allowance and health and life insurance 
changes to the basic salary in 2007 represented increasesofbetween 25 and 40these significant adjustments wereconsidered
necessary to ensurethat the managementteam wereretained in circumstances whereseveral members of the team had been
approached by other organisations offering very attractive packages potentially significantly higher than the current packages in part
this increase also recognised the increased complexity of the businessand performance of the company and individual executives
directors’ remunerationreport
23
the restaurant group plc
annual report 2007 24
the restaurantgroup plc
annual report 2007
annual bonus payments
the annual bonus is basedonthe achievement of stretching profit beforetax targets and personal objectivesperformance targets
areset annually as part of the budgeting process and performance is reviewed against those targets at the end of the financial year 
the maximum performance related bonus that can be paid in respect of performancein2008 is 100 of basic annual salary and for
significant bonuses to be paid performance must be outstanding for any bonus payment made in excess of 75 of salary thereisa
reinvestment commitment for the director into shares in the restaurant group plc and these shares form part of the matching element
described in the longterm incentive plan detailed below 
longterm incentives
the company operates the 2005 longtermincentive plan “ltip” or “plan”and the 2003 save as youearn“saye” scheme under
which awards may be granted to executive directors
longterm incentive plan
the 2005 ltip is the primarylongterm incentive scheme of the companyunder the terms of the ltipindividualsmay receive an
awardofconditional free shares “conditional awards” withaface value at grant of up to 100 of salary per annum vesting at least
three years after grant subject to performance conditions and continued employment
in addition the plan has the flexibility to grant conditional awards onamatching basis prorata to the number of shares purchased
via the annual bonus “matching awards” matching awards may be grantedover shares worth up to 375 of base salary per
annum the aggregate value of annual awards conditional and matchingiscapped at 1375 of base salaryunder the plan
the remuneration committee has the discretion to increase this cap to 200 of salary if the committeedecides thereare exceptional
circumstances in relation to retention and recruitment of employees the remuneration committee has determined that exceptional
circumstances do currently exist in relation to the retention of certain key employees and directors and may exercise its discretion to
make awards of up to 200 of salary in 2008
the committee considers that earnings per share“eps”and total shareholder return “tsr”are the most appropriate measures
of performance with eps targets rewarding significant and sustained earnings growth and tsr providingabalance to the financial
performance and retainingashareprice discipline in the remuneration package
for the conditional awards to executive directorstobemade in 2008 two separate performance conditions apply to proportions
of the award these have been reviewed to ensuretheir continued appropriateness
•the performance conditionattached to 50 of the conditional awards requires average annual eps growth from1january 2008
to 31 december 2010 of between rpi plus 4 to rpi plus 10 pa for between 30 and 100 of this part of the awardtovest
ie between 15 and 50 of the total award
•the performance conditionattached to the other 50 of the conditional awards is based on tsr performance measured against the
constituents of the ftse travelleisureindex overasingle threeyear period from1march 2008 to1march 2011 this awardwill
vest between 30 for median performance increasing onastraightline basis to 100 for upper quartile performance of this award
to vest ie between 15 for median and 50 for upper quartile performance of the total award
•awards will vest onastraight line basis between minimum and maximum thresholds
•for matching awards therewill bea031 match for average eps growth of rpi plus 4 pa rising onastraightline basis to the
full 11 match for average eps growth of rpi plus 10 pa
performance against the tsr and eps targets will be independentlycalculated and reviewed by the committee following the
approval of the ltipshareholding guidelines for executive directors have been introduced linked to the outturnofthe plan at the
time conditional and matching awards vest under the plan or any other executive plan established in the future thereisa requirement
to retain no fewer than 50 of the shares net of taxes vestingunder an ltip awarduntilashareholding withamarket value equal to
100 of base salary is achieved
saye scheme
the company also operatesasayeshareoption scheme the 2003 saye scheme for eligible employees under which options may
be granted atadiscount of up to 20 of market value eligible employees arefull time employeesand executivedirectors who have
worked for the groupfor at least one yearunder the termsofthe scheme the eligibleemployees areable to purchase sharesunder
athreeyear savingscontract awards under the saye scheme weremade in 2004 and 2006 to eligible employees and directors and
it is planned to makeafurther awardtoeligible employees and directorsduring 2008
directors’ remuneration report
continued pensionarrangements
executive directors have individualpension arrangementsinthe form of personal pension plans the company makesacontribution
atarate of up to 20 of basic salary towards funding each executive director’spensionplan to the extent that this funding exceeds
the relevant current hmrc limit thesurplus may be paid asasalary supplement thereare no unfundedpension promises or similar
arrangement for directors
performance graph
as requiredbythe regulations the graph below compares the company’stsr performance with the ftse 350 travel and leisure
shareindex for each of the past five years
the ftse 350 travel and leisureshareindex has been selected for this comparison becauseitisthe index most relevant to gauging
the company’srelative performance
this graph shows the value by1march 2008 of £100 invested in the restaurant group plc on1march 2003 compared with the value
of £100 investedinthe ftse allshareindex and the ftse 350 travel and leisure shareindex
directors’ contracts
it is the company’spolicy that executive directors should have contracts with an indefinite term providing foramaximum of one
year’snoticehoweveritmay be necessary occasionally to offer longer initial notice periods to new directorsall executive directors
have contractswhich aresubjecttoone year’snotice by either partyinthe event of early termination including followingachange of
control in the company the directors’ contracts provide for compensation in line with their contractual notice period
the details of the executive directors’ contracts aresummarised in the tablebelow
date of contract notice period
andrew page 28 august 2002 1year
stephen critoph 7july 20041 year
kevin bacon 17 march 2003 1year
trish corzine 31 march 2003 1year
25
the restaurant group plc
annual report 2007
the restaurant group plc
ftse allshareindex
ftse 350 travel and leisureshareindex
2003 2004 2005 2006 2007 2008
0
100
200
300
400
500
600
700
800 26
the restaurantgroup plc
annual report 2007
nonexecutive directors
the service contracts of the nonexecutivedirectors wereeach set for an initial threeyear period thereafter renewable forperiods of
three years they arerequired to submit themselves for reelection every three years and the boardbelieves this to be appropriate in the
company’scircumstances david richardson was elected and john jackson reelected in 2007
in accordance with best practicejohn jackson is standing for reelectionatthe annual general meeting to be held on7may 2008
as he has served on the boardfor morethan nine years the nonexecutive directors’ appointments weremade as follows
date of appointment as
nonexecutive director notice period
alan jackson 9november 2005 1year
john jackson 1october 1996 nil
david richardson 1february 2007 nil
tony hughes 1january 2008 nil
alan jackson was previously executive chairman of thecompanyand was appointed in march 2001from1january 2006 he has held the position of nonexecutivechairman
all nonexecutive directors have specific terms of engagement and their remuneration is determined by the boardbased onareview of
fees paid to nonexecutive directors of similar companies and reflects the time commitment and responsibilities of each role the basic
fee paid to the nonexecutivedirectors excluding alan jackson in the year was £45000 prorated by tenureofservice
auditedinformation
aggregated directors’ remuneration
the total amounts for directors’remuneration wereasfollows
2007 2006
executive nonexecutive total total
£’000 £’000 £’000 £’000
emoluments 2306 441 2747 1810
money purchase pension contributions 226 –226 284
total 2532441 2973 2094
a emoluments
i executive
2007 2006
basic bonus benefits
salary bonus waived in kind total total
£’000 £’000 £’000 £’000 £’000 £’000
andrew page 475 475 36 26 940 506
stephen critoph 225 225 –15465 333
kevin bacon 240 240 –13493 345
trish corzine 210 210 24 12 408 232
1150 1150 60 66 2306 1416
the annual bonuses wereatthe maximum level of 100 of salary reflecting the excellent profit performance of the group and
achievementinfull of the personal objectives set out at the start of the year 
of the bonus amounts disclosed above andrew page and trish corzineelected to waive £35625 and £23625 of their bonus
respectively and they received additional pension contributions from the group equivalent to the amount which areincluded in
the pensioncontribution table overleaf
directors’ remuneration report
continued ii nonexecutive
2007 2006
benefits
fees in kind total total
£’000 £’000 £’000 £’000
alan jackson 275 35 310 277
john jackson 45 –45 40
andrew thomas 45 –45 40
david richardson 41 –41 –
robertivell ––– 37
406 35 441 394
b pension schemes
the executive directors aremembers of money purchase schemes whereanexecutive director’s entitlement toacontribution exceeds
the allowable limit set by the hmrcasalary supplement may be payable up to but not exceeding the level of entitlement contributions
paid by the groupinrespect of the executive directors wereasfollows
2007 2006
pension salary pension salary
contribution supplement total contribution supplement total
£’000 £’000 £’000 £’000 £’000 £’000
andrew page 127 6133 141 28 169
stephen critoph 23 –23 17 –17
kevin bacon 24 –24 19 –19
trish corzine 46 –46 79 –79
220 6226 256 28 284
as noted above in respect of the financial year ended 30 december 2007 andrew page and trish corzineelected to waive part of their
bonus and received additionalpension contributions grossed up by 6 from the group of £37763 and £250432006 £121635 and
£63600 respectivelywhich areincluded in the pension contribution table
27
the restaurant group plc
annual report 2007 28
the restaurantgroup plc
annual report 2007
directors’ shareoptions
aggregate emoluments disclosed above do not include any amounts for the value of options to acquireordinaryshares in the company
granted to or held by the directors the company operatesanumber of shareoptionschemes which executive directors may
participate in following the placing of 19430000 shares on 14 january 2004 an applicationtorestate the number and price of share
options granted under the 1998 and 2003 schemes to directors and employees was approved by the hmrc this restatement was
calculated to ensurethe effective number and price attributed to the optionswas as beforethe placing with no incremental benefit
to the option holdersthe information provided below is stated assuming the restatement occurred on1january 2004
at at date from
1january 30 december exercise which expiry
name of directorscheme 2007 granted exercisedlapsed 2007 price exercisable date
alan jackson note 1 400000 –200000 –200000 450p 562004 562011
2003 178114 –– –178114 674p472006 472013
2003 200000 –– –200000 977p41020074102014
2003 saye 11993 –11993– –790p 1122007 162008
2003 250000 –– –250000 1344p 442008442015
ltip 1 137755 –– –137755 –publication of 6months
2008 results after vesting
ltip 2 103316 –– –103316 –publication of 6months
2008 results after vesting
andrew page 2003 716223 –716223 –– 674p 472006 472013
2003 200000 –– –200000 977p41020074102014
2003 saye 11993 –11993– –790p 1122007 162008
2003 250000 –– –250000 1344p 442008442015
ltip 1 180272 –– –180272 –publication of 6months
2008 results after vesting
ltip 2 67602 –– –67602 –publication of 6months
2008 results after vesting
ltip 3 –145929– –145929 –publication of 6months
2009 results after vesting
ltip 4 –23110 –– 23110 –publication of 6months
2009 results after vesting
stephen critoph 2003 250000 –– –250000 977p 4102007 4102014
2003 50000 –– –50000 1344p 442008 442015
ltip 1 112244 –– –112244 –publication of 6months
2008 results after vesting
ltip 2 37167 –– –37167 –publication of 6months
2008 results after vesting
2006 saye 5843– –– 5843 1600p 162009 1122009
ltip 3 –69124 –– 69124 –publication of 6months
2009 results after vesting
ltip 4 –20737 –– 20737 –publication of 6months
2009 results after vesting
kevin bacon 2003 100000 –– –100000 977p 4102007 4102014
2003 saye 11993 –11993– –790p 1122007 162008
2003 140000 –– –140000 1344p 442008442015
ltip 1 119047 –– –119047 –publication of 6months
2008 results after vesting
ltip 2 39942 –– –39942 –publication of 6months
2008 results after vesting
ltip 3 –73732 –– 73732 –publication of 6months
2009 results after vesting
ltip 4 –21313 –– 21313 –publication of 6months
2009 results after vesting
trish corzine 2003 100000 –– –100000 977p 4102007 4102014
2003 saye 11993 –11993– –790p 1122007 162008
2003 100000 –– –100000 1344p 442008 442015
ltip 1 102040 –– –102040 –publication of 6months
2008 results after vesting
ltip 2 34237 –– –34237 –publication of 6months
2008 results after vesting
ltip 3 –64516 –– 64516 –publication of 6months
2009 results after vesting
ltip 4 –18433 –– 18433 –publication of 6months
2009 results after vesting
directors’ remuneration report
continued the group plans to make awards under the ltip scheme following the publication of preliminary results in march 2008
2003–under the 2003 mirror scheme the performancecriteria that must be met requires the company’seps to grow at an annual rate
of the retail price index plus 25 over the threeyearperiod prior to exercise of the optionnofurther awards may be made under the
2003 scheme following the adoption of the ltip 
ltip 1–these areconditional shares awarded under the ltip scheme they arefreeshares awarded to the directors should the performance criteria be met the vesting criteria
aredependent on eps growth of the 2008 results compared with the 2005 results and tsr performance
ltip 2–these arematching shares awarded under the ltip scheme they arefreeshares and areconditional on the directors acquiring and retainingacertain number of shares
by7may 2006 for the respective director to be entitled to the matching shares available under the scheme and the performance criteria be met the vesting criteria aredependent
on earnings per sharegrowth of the 2008 results compared with the 2005 results
ltip 3–these areconditional shares awarded under the ltip scheme they arefreeshares awarded to the directors should the performance criteria be met the vesting criteria are
dependent on eps growth of the 2009 results compared with the 2006 results and tsr performance
ltip 4–these arematching shares awarded under the ltip scheme they arefreeshares and areconditional on the directors acquiring and retainingacertain number of shares
by 30 june 2007 for the respective director to be entitled to the matching shares available under the scheme and the performance criteria be met the vesting criteria aredependent
on earnings per sharegrowth of the 2009 results compared with the 2006 results
those options awarded under ltip 3 and ltip 4 weregranted on8march 2007
note 1 alan jackson was granted an option over 2400000 ordinary shares on5june 2001 at an exercise price of 45p per share
this option was divided into three tranches of 800000 shares each of which may only be exercised if certain performance criteria are
met the company’sshareprice must meetaspecified targetwhich is 75p in the case of the first tranche 105p in the case of the
second tranche and 135p in the case of the thirdtranche in addition the remuneration committee must be satisfied that therehas
beenasustained improvement in the underlying performance of the group beforeany tranche of the option can be exercised for the
second and thirdtranches half of each tranche of the optionmay be exercised after three years and half after four years in each case
following the date of the grant each tranche of the option will lapse six years following the date of the grant if the target shareprice has
not by then been met if howeverthe target sharepricerelating to any tranche of theoptionismet within this period that tranche will
remain exercisable until ten years following the date of grant ifachange of control of the company occurs alan jackson is entitled to
exercise the option in full
the company’sshareprice has met the criteria of the three tranches and the remuneration committeeissatisfied that therehas been
asustained improvement in the underlying performanceofthe group alan jackson has exercised all of those options available to him
under the first and second tranches and has exercised half of the thirdtranche
during 2007 certain directors exercised shareoptionsthat had vested details of the exercises arenoted below
2007 2006
gain on gain on
number market price exercise exercise
of options exercise at date beforetax beforetax
name of director scheme exercised price of exercise £000 £000
alan jackson 200000 450p 3690p 648 640
saye 11993 790p 1990p 14 –
andrew page 2003 25000 674p 3360p 67 –
2003 691223674p 35115p 1961 –
saye 11993 790p 1990p 14 –
kevin bacon saye 11993 790p 1990p 14 709
trish corzine saye 11993 790p 1990p 14 334
alan jackson exercised 200000 of the final tranche of options detailed in note 1 above during 2007
approval
this report was approved by the boardofdirectors on5march 2008 and signed on its behalf by
john jackson
chairman of the remuneration committee
29
the restaurant group plc
annual report 2007 30
the restaurantgroup plc
annual report 2007
we have audited the group financial statements of the restaurant group plc for the 52 weeks ended 30 december 2007 which
comprise the consolidated income statement the consolidated statementofchanges in equitythe consolidatedbalance sheet
the consolidated cash flow statement and the related notes1to29 these group financialstatements have been prepared under
the accounting policiesset out therein we have also audited the information in the directors’ remuneration report that is described
as having been audited
we have reportedseparately on the parentcompany financialstatementsofthe restaurant group plc for the 52 weeks ended
30 december 2007
this report is made solely to the company’smembers asabodyinaccordance with section 235 of the companies act 1985 our audit
work has been undertaken so that we might state to the company’smembers those matters we arerequiredtostate to them in an
auditors’ report and for no other purpose to the fullest extent permitted by lawwedonot accept or assume responsibility to anyone
other than the company and the company’smembers asabodyfor our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the directors’ remuneration reportand the group financial statements
in accordance with applicable law and international financialreportingstandards “ifrss” as adopted by the european union are
set out in the statement of directors’ responsibilities
our responsibility is to audit the group financialstatements in accordance with relevant legal and regulatory requirements and
international standards on auditing uk and ireland
we reporttoyou our opinionastowhether the group financial statements giveatrue and fairviewwhether the group financial
statements have been properly prepared in accordance with the companies act 1985 and article4ofthe ias regulation and whether
the part of the directors’ remunerationreport described as having been audited has been properly prepared in accordance with the
companies act 1985 we also report to you whether in our opinion the information given in the report of the directors is consistent
with the group financial statements
in addition we reporttoyou if in our opinion we have not received all the information and explanations we requirefor our audit
or if information specified by law regarding directors’ remuneration and other transactions is not disclosed 
we reviewwhether the corporategovernancestatementreflectsthe company’s compliance with the nine provisions of the 2006
combined code specified for our review by the listing rules of the financial services authorityand we reportifitdoes notweare
not requiredtoconsider whether the board’sstatements on internal control cover all risks and controls or form an opinion on the
effectiveness of the group’scorporategovernance procedures or its risk and control procedures
we read theother information contained in the annual report as described in the contents section and considerwhether it is
consistent with the audited group financialstatements we consider the implicationsfor our reportifwebecome awareofany
apparent misstatements or material inconsistencies with the group financial statements our responsibilities do not extend to any
further information outsidethe annual report
basis of audit opinion
we conducted our audit in accordance with internationalstandards on auditing uk and ireland issued by the auditing practices
board an audit includes examination onatest basis of evidencerelevant to theamounts and disclosures in the group financial
statements and the part of the directors’ remuneration reporttobeauditeditalso includes an assessment of the significant estimates
and judgments made by the directors in the preparation of the group financial statements and of whether the accounting policies
areappropriate to the group’scircumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order
to provide us with sufficient evidencetogive reasonable assurance that the group financialstatements and the part of the directors’
remunerationreport to be audited arefreefrommaterial misstatement whether caused by fraud or other irregularity or errorinforming
our opinion we also evaluated the overall adequacy of the presentation of information in the group financial statements and the part
of the directors’ remuneration report to be audited 
independent auditors’ report
to the members of
the restaurant group plc 31
the restaurant group plc
annual report 2007
opinion
in our opinion
•the group financial statements giveatrue and fair viewinaccordance with ifrss as adopted by the european union of the state
of the group’saffairs as at 30 december 2007 and of its profit for the 52 weeks then ended
•the group financial statements have been properly prepared in accordance with the companies act 1985 and article4ofthe
ias regulation
•the part of the directors’ remuneration reportdescribed as having been audited has been properlyprepared in accordance with
the companies act 1985 and
•the information given in the report of the directors is consistent with the group financial statements 
deloittetouche llp
charteredaccountants and registeredauditors
london
5march 2008 32
the restaurantgroup plc
annual report 2007
accounting policies for
the consolidated accounts
significant accounting policies
the restaurant group plc the “company” isacompanyincorporated and registered in scotland the consolidated financial statements
of the company for the year ended 30 december 2007 comprise the company and its subsidiaries together referred to as the “group”
and the group’sinterest in its associate
a statement of compliance
the consolidated financial statements have been prepared in accordance with internationalfinancial reporting standards“ifrss”
and its interpretationsadopted by the internationalaccounting standards board“iasb” and as adopted by the european union
b basis of preparation
the accounting year runs to the nearest sunday to 31 december each year which will bea52or53week period 
the financial statements arepresented in sterling rounded to the nearest thousand they arepreparedonthe historicalcost basis
except derivative financial instruments which areheld at their fair value noncurrentassets and disposal groups held for sale arestated
at the lower of carrying amount and fair value less costs to sell
the preparation of financial statements in conformity with ifrs requires managementtomake judgements estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities income and expenses the estimates and associated
assumptions arebased on historicalexperience and various other factors that arebelieved to be reasonable under the circumstances
the results of which form the basis of making the judgments about carrying values of assetsand liabilities that arenot readilyapparent
from othersources actual results may differ from these estimates
the estimates and underlying assumptions arereviewed on an ongoingbasis revisionstoaccounting estimates arerecognised in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and futureperiods if
the revision affects both current and future periods
in the current year the group has adopted ifrs7“financial instruments disclosures” which is effective for annual reporting periods
beginning on or after1january 2007 and the related amendmenttoias1“presentation of financial statements”the impact of the
adoptionofthese standards has been to expand the disclosuresprovided in the financial statementsregarding the group’s financial
instruments and management of capital
futureaccounting policies
ifrs8“operating segments” will be mandatoryfor the group for the 2009 year end results this will require the group to amend
certain disclosures but will not change the group’sresult the group does not consider that any other standards or interpretations
issues by the iasb but not yet applicable will have any significant impact on the financialstatements
c basis of consolidation
i subsidiaries
subsidiaries areentities controlled by the companycontrol exists when the company has the powerdirectly or indirectlytogovern
the financial and operatingpolicies of an entity so as to obtain benefitsfromits activities in assessing control potential voting rights that
presently areexercisable or convertible aretaken into accountregardless of management’sintention to exercise that option or warrant
the financialstatements of subsidiaries areincluded in the consolidated financial statements from the date that control commences until
the date that control ceases
ii associates
associates arethose entities in which the group has significant influencebut not control overthe financial and operating policies
the consolidated financial statements include the group’sshareofthe total recognised gains and losses of associates on an equity
accounted basis from the date that significant influence commences until the date that significantinfluence ceases when the group’ s
shareoflosses exceeds its interest in an associate the group’scarrying amount would be reduced to nil and recognition of further
lossesisdiscontinued except to the extent that the group has incurred legal or constructive obligations or made payments on behalf
of an associate
iii transactions eliminatedonconsolidation
intragroup balancesand any gains and losses or income and expenses arising from intragroup transactions areeliminated in preparing
the consolidated financial statements unrealised gains arising from transactions with associates areeliminated to the extent of the
group’sinterest in the entityunrealised losses areeliminated in the same way as unrealised gains but only to the extent that there
is no evidence of impairment d foreign currency
assets and liabilities in foreign currencies aretranslated into sterling at the rates of exchange ruling at the date of the balance sheet
transactions in foreign currencies aretranslatedinto sterling at the rate of exchange at the date of the transaction the profitand loss
accounts for overseas operations aretranslated at the average rate of exchange for the periods covered by the accounts exchange
differences that relate to the net equity investment in overseas activities aretaken directly to reserves allother translation differences
aretaken to the income statement
e derivative financial instruments
the group uses derivative financial instruments to hedge its exposuretointerest rate risks arisingfromoperational financingand
investment activities in accordance with its treasury policythe group does not hold or issue derivative financial instrumentsfor trading
purposes howeverderivatives that do not qualify for hedge accounting areaccountedfor as trading instruments
derivative financial instrumentsare recognised initiallyatcost subsequent to initial recognition derivativefinancial instruments are
stated at fair value the gain or loss on remeasurement to fair value is recognised immediately in the income statement howeverwhere
derivatives qualify for hedge accounting recognition of anyresultantgain or loss depends on the nature of the item being hedged
the fair value of interest rate swaps is the estimated amount that the group would receive or paytoterminate the swap at the balance
sheet date taking into account current interest rates and the current creditworthiness of the swap counterparties 
f propertyplant and equipment
items of propertyplant and equipment arestated at cost less accumulateddepreciation see below and impairment losses
see accountingpolicyk
whereparts of an item of propertyplant and equipment have different useful lives they areaccountedfor as separate items of property 
plant and equipment
leases in terms of which the group assumes substantially all the risks and rewards of ownership areclassified as finance leases
the owneroccupied property excluding land element acquired by way of finance lease is stated at an amount equal to the lower
of its fair value and the present value of the minimum lease paymentsatinceptionofthe lease less accumulated depreciation
see below and impairment losses see accounting policy k lease paymentsare accountedfor as describedinaccounting policy r
subsequent costs
the group recognises in the carrying amount of an item of propertyplant and equipment the cost of replacing part of such an item
when that cost is incurred if it is probablethat the futureeconomic benefits embodied with the item will flow to the group and the cost
of the item can be measured reliablyall other costs arerecognisedinthe income statement as an expenseasincurred
depreciation
depreciation is charged to the income statement onastraightline basis over the estimated useful lives of each part of an item
of propertyplant and equipmentthe estimated useful lives areasfollows
freehold land indefinite
freehold buildings50years
long and short leasehold property term of lease or 25 years whichever is lower
fixtures and equipment 310 years
motor vehicles 4years
computer equipment 35 years
g intangible assets–goodwill
all business combinations areaccounted for by applyingthe purchase method goodwill represents amounts arising on acquisition
of subsidiaries associates and joint ventures in respectofbusiness acquisitions that have occurred since1january 2004 goodwill
representsthe difference between the cost of the acquisition and the fair value of the net identifiable assets acquired
the classification and accounting treatment of business combinations that occurred prior to1january 2004 has not been reconsidered
in preparing the group’s opening ifrs balancesheet at1january 2004
goodwill is stated at cost less any accumulated impairment losses goodwill is allocated to cash generating units and is tested at least
biannually for impairment see accounting policy k in respect of associates the carrying amount of goodwill is included in the carrying
amount of the investment in the associate
negativegoodwill arising on an acquisition is recognised directly in the income statement
33
the restaurant group plc
annual report 2007 34
the restaurantgroup plc
annual report 2007
h trade and other receivables
trade and other receivables arestated at their cost less impairment losses see accounting policy k
i stock
stock is stated at the lower of cost and net realisable value net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and selling expenses
j cash and cash equivalents
cash and cash equivalents comprises cash balances and call deposits bank overdrafts that arerepayable on demand and form
an integral part of the group’scash management areincludedasacomponent of cash and cash equivalents for the purposeofthe
statement of cash flows
k impairment
the carrying amounts of the group’s assets arereviewed at each balance sheet date to determine whether thereisany indication
of impairment if any such indication exists the asset’srecoverable amount is estimated for goodwill and assets that have an
indefinite useful life the recoverable amount is estimated at each balance sheet date an impairment loss is recognisedwhenever
the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount impairmentlosses arerecognised in
the income statement
l sharebased payment transactions
the shareoption programme allows group employees to acquireshares of the companythe fair value of options granted is
recognisedasanemployee expense withacorresponding increase in equitythe fairvalue is measured at grant date and spread over
the period during which the employees become unconditionally entitled to the options the fair value of the options granted is measured
usingastochastic modeltaking into account the terms and conditions upon which the options weregranted the amount recognised
as an expense is adjusted to reflect the actual number of shareoptions that vest except whereforfeitureisonly due to market based
conditionsnot achieving the threshold for vesting
m provisions
aprovision is recognised in the balance sheet when the group hasapresent legal or constructive obligation asaresult ofapast event
and it is probable that an outflowofeconomicbenefits will be required to settle the obligation if the effect is material provisions are
determined by discountingthe expected futurecash flows atapretax rate that reflects current market assessmentsofthe time value
of money and whereappropriate the risks specific to the liability
n deferred and current tax
corporation tax payable is provided on the taxable profit at the current rate deferred tax is recognisedinrespect of all temporary
differences that have originated but not reversed at the balance sheet date except to the extent that the deferred tax arises from
the initial recognition of goodwill temporary differencesare differences between the carrying amount of the group’sassets and liabilities
and their tax base
deferred tax is measured at the tax rates that areexpected to apply in the periodsinwhich the timing differences areexpected to
reverse based on tax rates and laws that areenacted or substantively enactedbythe balance sheet date deferred tax is measured
onanondiscountedbasis
o pensions
the groupmakes contributions for selected employees into defined contribution pension plans and these contributions arecharged to
the income statement as they become payable the group does not operateany defined benefit plans
p onerous contracts
aprovision for onerous contracts is recognisedwhen the expected benefitstobederived by the group fromacontract arelower than
the unavoidable cost of meeting its obligations under the contract
q revenue
revenue represents amounts received and receivable forservices and goods provided excluding value added tax and voluntary
gratuities left by customers for the benefit of employees and is recognised at the point of sale
accounting policies for
the consolidated accounts
continued r expenses
i operating lease payments
payments made under operating leases arerecognised in the income statement onastraight line basis over the term of the lease
incentives to enter into an operating lease arealso spreadonastraight line basis over the lease term
ii finance lease payments
minimum lease payments areapportioned between the finance charge and the reduction of the outstanding liability the financecharge
is allocated to each period during the lease term so as to produceaconstantperiodic rate of interestonthe remaining balanceo f
the liability 
iii preopening expenses
property rentals and related costs incurred up to the date of opening ofanew restaurant arewritten offtothe income statement in
the period in which theyare incurredpromotional and trainingcosts arewrittenoff to the income statement in the period in which
they areincurred
vi borrowing costs
debt is stated net of borrowingcosts whichare spread over the term of the loan
s dividend policy
in accordancewith ias 10 “events after the balance sheet date” dividends declared after the balance sheet date arenot recognisedas
aliability at that balance sheet date and arerecognised in the financialstatements whenthey have received approval by shareholders 
critical accounting judgements and key sources of estimation and uncertainty
in the process of applying the group’saccounting policiesasdescribed abovemanagement has made the following judgements and
estimations that have the most significant effect on the amounts recognised in the financial statements
a impairment of carrying value of associate
following the disposal by livingventures limited of the living rooms business and the subsequent capital restructure the directors
have concluded that it is appropriate to makeafurther provision of £17m which together with the £95m provision made in the year
ended 31 december 2006 leavesa£nil carryingvalue of both the investment and the loan note due further details areprovided in
notes5and 14
b impairment of goodwill
the group determines whether goodwill is impaired at least onabiannualbasis this requires an estimate of the valueinuse of the
assets to which goodwill is ascribedto estimating the valueinuse requires the group to makeanestimate of the futurecash flows
from those assets and to chooseasuitable discountrate in order to calculatethe present value of those cashflows
c acquisition of brunning and price limited
following the acquisition of brunningand price limited on 17 october2007 the group has consolidated the fair value of its assets
and liabilities at that date this required an estimate of the fair value of the properties acquired which the directors have determined
based on advice from an independent firm of qualified valuers 
35
the restaurant group plc
annual report 2007 36
the restaurantgroup plc
annual report 2007
year ended 30 december 2007 year ended 31 december 2006
continuing discontinued total continuing discontinued total
note £’000 £’000 £’000 £’000 £’000 £’000
revenue 3 366710– 366710 314018 730 314748
cost of sales 4 296669 –296669 256060 1026 257086
gross profitloss 70041 –70041 57958 296 57662
administrationcosts 21834 –21834 18475 –18475
provision against carrying
value of associate 5 1656 –1656 9500 –9500
loss on integration of dpp 5 ––– 4582 –4582
profit on disposal of fixed assets 5 247 –247 –––
operating profitloss 46798 –46798 25401 296 25105
interest payable 7 4254 –4254 3308 –3308
interest receivable 7 1025 –1025 699 –699
profitloss beforeshare
of associate and tax 43569 –43569 22792 296 22496
shareofposttax result in
associated undertaking 14 749 –749 917 –917
profitloss beforetax 42820 –42820 21875 296 21579
profitloss beforetax
analysed as
trading business 43480 –43480 35312 296 35016
nontrading items 5 660 –660 13437 –13437
42820 –42820 21875296 21579
taxonprofitloss
from ordinaryactivities 8 13644 –13644 11264 101 11163
profitloss on ordinary
activitiesafter tax 29176 –29176 10611 195 10416
profit on sale of businesses
net of tax 5 ––– –3950 3950
profit for the financial year
attributable to equity shareholders29176 –29176 10611 3755 14366
earnings per sharepence
basic 9 1490 –1490 536 190 726
diluted 9 1482 –1482 534 189 723
dividend per sharepence
ordinary 10 725 600
special 10 – 1600
consolidated income statement year ended year ended
30 december 31 december
2007 2006
note £’000 £’000
opening equity 65204 91436
profit for the year 29176 14366
foreign exchange translation differences 40 1
taxonsharebased payments taken directly to equity 712 1529
total recognised income and expense for the year28504 15896
dividends–ordinary 10 12173 9490
dividends–special 10 – 34793
issue of new shares 20 23 1090 1096
sharebased payments–credit to equity 22 23 1738 1059
employee benefit trust–purchase of shares21 7209 –
total changes in equity in the year 11950 26232
closing equity 77154 65204
consolidated statemen t
of changes in equity
37
the restaurant group plc
annual report 2007 38
the restaurantgroup plc
annual report 2007
at at
30 december 31 december
2007 2006
note £’000 £’000
noncurrent assets
intangible assets 12 26516 11275
propertyplant and equipment 13 228757 174035
investment in associate 14 – 7810
trade and other receivables 14 – 875
255273 193995
current assets
stock 15 3349 2992
financial assets–derivative financial instruments 26 415 652
trade and other receivables 16 7027 5170
prepayments 12830 12138
cash and cash equivalents 25 1692 683
25313 21635
total assets 280586 215630
current liabilities
shortterm borrowings 25 – 1165
income tax liabilities 6842 4947
trade and other payables 17 85191  74864
other payables–finance lease debt 27 271 271
92304 81247
net current liabilities 66991 59612
noncurrent liabilities
longterm borrowings 25 78265 47000
other payables–finance lease debt 27 2558 2466
deferred tax liabilities 19 25388 16247
provisions 18 4917 3466
111128 69179
total liabilities203432 150426
net assets 77154 65204
equity
sharecapital 20 55295 54863
sharepremium 23 21004 20346
foreign currency reserve 23 121 81
other reserves23 3648 1823
retained earnings 23 4382 11909
total equity shareholders’ interests 77154 65204
the financial statements on pages 32 to 60 wereapproved by the boardofdirectors and authorised for issue on5march 2008 and
weresigned on its behalf by
alan jackson
stephen critoph aca
consolidated balance sheet year ended year ended
30 december 31 december
2007 2006
note £’000 £’000
cash flows from operating activities
cash generated from operations 24 73812 63374
interest received 1546 68
interest paid 3468 2906
taxpaid 10228  9656
net cash flows from operating activities 61662 50880
cash flows from investing activities
acquisition of subsidiarynet of cash acquired 11 32884  –
disposal of business net of cash disposed – 1455
net proceedsfromdisposal of business by associate 6280 –
integration of business – 584
purchase of propertyplant and equipmen t 47407  40775
proceeds from sale of propertyplant and equipment 815 58
net cash flows used in investing activities73196 42756
cash flows from financing activities
net proceeds from issue of ordinary share capital 1090 1096
employee benefit trust–purchase of shares 7209 –
net proceedsfromissue of bank loans 32000 36000
dividends paid to shareholders 10 12173  44283
net cash flows fromused in financing activities 13708 7187
net increase in cash and cash equivalents 2174 937
cash and cash equivalents at start of year 25 482 1419
cash and cash equivalents at end of year 25 1692 482
consolidated cash
flow statemen t
39
the restaurant group plc
annual report 2007 40
the restaurantgroup plc
annual report 2007
notes to the accounts
1segmental analysis
year ended 30 december2007
operating
ebitda operating profit
turnover ebitda margin profit margin
£’000 £’000 £’000 
leisure285226 76161 267 61572 216
concessions 81199 16567 204 12485 154
principal trading brands 366425 92728 253 74057 202
noncorebrands 285 11343980 1449 5085
continuing operations 36671091594 250 72608 198
discontinued operations –––––
total all brands 36671091594 250 72608 198
preopening costs included in cost of sales 256707 2567 07
administration19483 5320096 55
sharebased payments 173805 1738 05
total beforenontrading items 67806 185 48207 131
provision against carrying value of associate 1656
loss on integration of dpp –
profit on disposal of fixed assets 247
operating profit 46798
year ended 31 december 2006
operating
ebitda operating profit
turnover ebitda margin profit margin
£’000 £’000 £’000 
leisure236258 62703 265 50745 215
concessions 72479 15154 209 11088 153
principal trading brands 308737 77857 252 61833 200
noncorebrands 5281 1789339 1999 378
continuing operations314018 76068 242 59834 191
discontinued operations 730 296 406 296 406
total all brands 31474875772 241 59538 189
preopening costs included in cost of sales 187606 1876 06
administration17192 5517416 55
sharebased payments 105903 1059 03
total beforenontrading items 55645 177 39187 125
provision against carrying value of associate 9500
loss on integration of dpp 4582
profit on disposal of fixed assets –
operating profit 25105
no geographical segment analysishas been provided as the directorsdonot consider theretobemateriallysignificantgeographical
segments the group currently operates three restaurantsoutside of the united kingdom
ebitda is operating profitbeforedepreciation amortisation and nontrading items 1segmental analysis continued
year ended 30 december 2007
capital segment segment
depreciation additionsassets liabilities
£’000 £’000 £’000 £’000
leisure14589 39834 236353 50670
concessions 4082 7166 22216 13638
principal trading brands 18671 47000 258569 64308
noncorebrands 315 12 1836 10567
continuing operations 18986 47012 260405 74875
discontinued operations ––––
total all brands 18986 47012 260405 74875
administration 613 395 10912 10438
unallocated items –– 9269 118119
total group 19599 47407 280586 203432
year ended 31 december 2006
capital segment segment
depreciationadditionsassets liabilities
£’000 £’000 £’000£’000
leisure11958 31628 167970 43086
concessions 4066 5087 19099 11504
principal trading brands 16024 36715 187069 54590
noncorebrands 210 –2233 7112
continuing operations 16234 36715 189302 61702
discontinued operations ––– 2568
total all brands 16234 36715 189302 64270
administration 224 4060 10920 10614
unallocated items –– 15408 75542
total group 16458 40775 215630 150426
segmental assets areallocated to divisions wherepossible unallocated segmental assets include the investment in associate
noncurrent and current trade and otherreceivables derivativefinancial instruments cash and cash equivalents and certain prepayments
unallocated liabilities include borrowings provisions current and deferred tax and certain accruals and other creditors
41
the restaurant group plc
annual report 2007 42
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
2additionalincomestatement
additional income statement information is provided asauseful guide to underlying tradingperformancethe adjustments from the
statutoryincome statementexclude the nontrading items as described in note 5 and aretoaid understanding of the income statement
and should be read in conjunctionwith rather than asasubstitute forthe reported information
the 2007 and 2006 results includeanumber of items which areofaoneoffnatureorare unrelated to the period’sresultand hence are
not representative of theunderlying trading performance of the business these have been separately identified in the additional income
statementasnontrading items
2a additional income statement
year ended 30 december2007
continuing discontinued tradingnon
operations operationsbusiness trading total
£’000 £’000 £’000 £’000 £’000
revenue 366710 – 366710 – 366710
cost of sales
excluding preopening costs 294102 – 294102 – 294102
preopening costs 2567 – 2567 – 2567
296669 – 296669 – 296669
gross profitloss 70041 – 70041 – 70041
administrationcosts 21834 – 21834 – 21834
trading profitloss 48207 – 48207 – 48207
provision against carrying value of associate –– – 1656 1656
loss on integration of dpp –– – – –
profit on disposal of fixed assets –– – 247 247
operating profitloss 48207 – 48207 1409 46798
interest payable 4017– 4017 237 4254
interest receivable 39 – 39 986 1025
profitloss beforeshareofassociate and tax 44229 – 44229 660 43569
shareofposttax result in associatedundertaking 749 – 749 – 749
profitloss on ordinary activities beforetax 43480 – 43480 660 42820
taxonprofitloss from ordinary activities 14802 – 14802 1158 13644
profitloss on ordinaryactivities after tax 28678 – 28678 498 29176
profit on sale of businesses net of tax –– – – –
profitlossfor the year 28678 – 28678 498 29176
earnings per sharepence
basic 1464 1490
diluted 1456 1482
dividend per sharepence
ordinary 725
special – 2a additional income statement continued
year ended 31 december 2006
continuing discontinued trading non
operations operations business trading total
£’000 £’000 £’000 £’000 £’000
revenue 314018730 314748 – 314748
cost of sales
excluding preopeningcosts 254184 1026 255210 – 255210 
preopeningcosts 1876– 1876 – 1876 
256060 1026 257086 – 257086
gross profitloss 57958 296 57662 – 57662
administration costs 18475 – 18475 – 18475
trading profitloss  39483 296 39187 – 39187
provision againstcarrying value of associate –– – 9500 9500
loss on integrationofdpp –– – 4582 4582
profit on disposal of fixedassets –– – – –
operating profitloss 39483 296 39187 14082 25105
interest payable3308 – 3308 – 3308 
interest receivable54– 54 645 699
profitloss beforeshareofassociate and tax 36229 296 35933 13437 22496
shareofposttax result in associated undertaking 917 – 917 – 917
profitloss on ordinary activities beforetax 35312 296 35016 13437 21579
taxonprofitloss from ordinary activities 12364 101 12263 1100 11163
profitloss on ordinary activities after tax 22948 195 22753 12337 10416
profit on sale of businesses net of tax –– – 3950 3950
profitloss for the year 22948 195 22753 8387 14366
earnings per sharepence
basic 1150 726
diluted 1145 723
dividend per sharepence
ordinary 600
special 1600
43
the restaurant group plc
annual report 2007 44
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
2b additional nonstatutory information
results arestated excluding nontrading items
year ended 30 december 2007
operating
ebitda operating profit
turnover ebitda margin profit margin
£’000 £’000 £’000 
leisure285226 76161267 61572 216
concessions 81199 16567 204 12485 154
principal tradingbrands 36642592728 253 74057 202
noncorebrands 285 1134 3980 1449 5085
continuing operations 36671091594 250 72608 198
discontinued operations –––––
total all brands 366710 91594 250 72608 198
preopening costs included in cost of sales 2567 07 256707
administration 19483 53 2009655
sharebased payments 1738 05 1738 05
ebitdaadjusted operatingprofit 67806 185 48207 131
total net interest charges 3978
adjusted profit beforeshareofassociate and tax 44229
shareofposttax result in associated undertaking 749
adjusted profit beforetaxation 43480
taxation 14802
adjusted profit after taxation 28678
earnings per sharepence–trading business
basic 1464
diluted 1456
year ended 31 december 2006
operating
ebitda operating profit
turnover ebitda margin profit margin
£’000 £’000 £’000 
leisure236258 62703265 50745 215
concessions 72479 15154 209 11088 153
principal tradingbrands 30873777857 252 61833 200
noncorebrands 5281 1789 339 1999 378
continuing operations 31401876068 242 59834 191
discontinued operations 730 296 406 296 406
total all brands 314748 75772241 59538 189
preopening costs includedincost of sales 1876 06 1876 06
administration 17192 55 1741655
sharebased payments 1059 03 1059 03
ebitdaadjusted operatingprofit 55645 177 39187 125
total net interest charges 3254
adjusted profit beforeshareofassociate and tax 35933
shareofposttax result in associated undertaking 917
adjusted profit beforetaxation 35016
taxation 12263
adjusted profit after taxation 22753
earnings per sharepence–trading business
basic 1150
diluted 1145
no geographical segment analysis has been provided as the directorsdonot consider there to be materiallysignificant geographical
segments the group currently operates three restaurants outside of the united kingdom 
financial information regarding segmental assets and liabilities is detailed in note 1
ebitda is operating profit beforedepreciationamortisation and nontrading items 3 revenue
2007 2006
£’000 £’000
revenueconsists of the following
continuing operations 366710 314018
discontinued operations see note5 – 730
366710 314748
other income not included within revenuein the income statement
rentalincome 4013 5960
investment income 1025 699
371748 321407
4profit from operations
2007 2006
£’000 £’000
cost of sales consists of the following
continuingbusiness excluding preopeningcosts 294102 254184
preopeningcosts 2567 1876
continuing operations 296669 256060
discontinued operations see note5 – 1026
totalcost of sales for the year296669 257086
2007 2006
£’000 £’000
profit for the year has beenarrivedat after chargingcrediting
depreciation 19599 16458
purchases 86300 75362
staffcosts see note 6 111059 94479
operating lease rentals of landandbuildings 47380 44102
rentalincome 4013 5960
auditor’s remuneration
audit of theannualaccounts 133 138
audit of overseas subsidiary 9 5
totalaudit fees 142 143
tax services 60 58
disposalofbusiness by associate 45 –
corporatefinance services 120 –
duediligenceassurancefees 200 –
other assurance services 34 47
totalnonaudit fees 459 105
totalfees paid to thecompany’s auditors 601 248
audit fees included in theabove total relating to thecompany areborneby a subsidiary undertakingof the totalfees paid toauditors
£02m was expensedas administrationcosts £03m was capitalisedas part of the professionalfees incurred onanacquisitionand
£01m was expensedas professionalfees incurred on disposalofbusiness by associatein 2006 of the totalfees paid toauditors
£02m was expensedas administrationcosts
during the year thegroupappointeddeloitteand touchellpas auditorsof the totalfees paid toauditors in the year ended
30 december 2007 £01m was paid tobdostoy haywardllp 2006 £02mand £05m was paid todeloitteand touchellp
2006 £nil
45
therestaurant groupplc
annualreport 2007 46
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
5nontrading items
2007 2006
note £’000 £’000
items classified as nontrading within ordinary activities 
provision against carrying value of associate i 1656 9500
interest receivable from associateii 986 –
loss on integration of dpp iii – 4582
finance chargegain arising from remeasurement of interest rate swap iv 237 645
profit on disposal of fixed assets v 247 –
loss on ordinary activities beforetax 660  13437
taxationchargecredit on nontrading items 225 1100
credit in respect of rate change on deferred tax liability vi 1383 –
profitloss on ordinary activities after tax 498 12337
profit on sale of businesses
profit on disposal of est est est restaurantslimited vii – 184
profit on disposal of the caffe uno business viii – 2696
profit on sale of businesses beforetax – 2880
taxonsale of businesses – 1070
profit on sale of businesses after tax – 3950
total nontrading items after tax 498 8387
ia£17m provision has been made against the carrying value of the group’s associate companyliving ventures limitedwhich
together with the £95m provision made in the year ended 31 december 2006 leavesa£nil carrying value of both the investment
and the loan note further details areprovided in note 14
iiacredit of £10m has been recognised in respect of accrued loan note interest received from living ventures limited not previously
recorded in the income statement further details areprovidedinnote 14
iii the loss on integration of the deep pan pizza business is in relation to costs incurred during 2006 on employee and contract
terminations andanumber of property costs including the write down of the carrying value of the business on integrationprovisions
for onerous leases and premiums on disposal of some of the properties
iv the group has takenacharge of £02m 2006£06m credit in respect of the remeasurement of its interest rate swap further details
areprovided in note 26
v during the year the group disposed of fixed assets and provided for committed disposals and realisedanet profit of £02m
2006£nil
vianontrading taxationcredit of £14mhas been recognisedinthe income statement due to the impact of the rate change on the
deferred tax liabilityfurther details areprovided in note 8
vii on 31 march 2005 the group sold est est est limited to living ventures limited andaprofitof£16m was recognised in the year
ending1january2006afurther £02m was recognised in the year ended 31 december 2006 no further profit has been recognised
in 2007
viii on 12 december 2005 the group disposed of 53 of the 59 sites that formed the caffe uno brand to paramount foraprofit of
£37m in 2006afurther £27m profit was recognised followingthe release of accruals in respect of dilapidations and warranty claims
that werenolonger required as they became time lapsed and followingthe completion of better than anticipated deals on disposal of
some of the sites not sold to paramount therehas been no furtherprofit recognised in 2007 the discontinued results in 2006 relate
to the sites not sold to paramount all of which have been subsequently disposed
6staffcosts and numbers
2007 2006
a staffnumbers including executive directors
restaurant staf f 8566 7485
administrationstaf f 179 178
8745 7663 6staffcosts and numbers continued
2007 2006
£’000 £’000
b staffcosts including directors comprise
wages and salaries 100860 86403
social security costs 8198 6759
sharebased payments 1738 1059
pension costs 263 258
111059 94479
c directors’ remuneration
emoluments 2747 1810
money purchaseand other pensioncontributions 226 284
2973 2094
charge in respect of shareoptions 917 586
3890 2680
further details of the directors’ emoluments and the executive pensionschemesare given in the directors’ remuneration report on
pages 23 to 29 of which the information on pages26to29has been audited
7net finance charges
2007 2006
£’000 £’000
bank interest payable 3370 2816
other interest payable 330 149
interest on obligations under finance leases 317 343
fair value charge on interest rate swap 237 –
interest payable 4254 3308
bank interest receivable 9 11
interest received on loan note from living ventures 986 –
other interest receivable 30 43
fair value credit on interest rate swap – 645
interest receivable 1025 699
net finance charges 3229 2609
8taxation
a the taxation charge comprises
2007 2006
£’000 £’000
current taxation
uk corporation tax at 30 12901 8594
adjustments in respectofprevious periods 107 115
12794 8479
deferred taxation
origination and reversal of timing differences 2306 2684
adjustments in respectofprevious periods 73 –
credit in respect of rate change 1383 –
850 2684
taxationcharge on ordinary activities 13644 11163
current tax credit on saleofbusiness 1082
deferred tax charge on sale of business – 12
total taxationcharge for the yearincluding impact of disposalofbusiness 13644 10093
47
the restaurant group plc
annual report 2007 48
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
8taxation continued
b factors affecting the tax charge for the year
the tax assessmentfor the year is higher than the standardukcorporation tax rate of 30 due to the following factors
2007 2006
£’000 £’000
profit on ordinary activities beforetaxation 42820 21579
profit on ordinary activities beforetaxation multiplied
by the standardukcorporation tax rate of 30 2006 30 12846 6474
effects of
loss made by associate with no tax credit available 225 276
depreciation on nonqualifying assets 1416 1555
expenses not deductible for tax purposes 794 2263
profitloss on disposal of nonqualifying assets 74 710
credit in respect of rate change on deferred tax liability 1383 –
adjustment in respect of previous years 180 115
taxationcharge on ordinary activities 13644 11163
taxationcredit on disposal of business – 1070
total taxation charge for the year including impact of disposal of business 13644 10093
current tax charge on ordinary activities consists of £128m 2006£86m for continuing activities and £nil 2006£01m credit in
respect of discontinuedactivities deferred tax on ordinary activities consists of £08m 2006£27minrespect of continuing activities
and £nil 2006 £001m credit in respect of discontinued activities in additionatax credit of £11m was recognised in respect of the
disposal of the caffe uno business in 2006
the finance act 2007 reduced the rate of corporation tax from 30 to 28 from april 2008 and this rate is required to be used in
calculating deferred tax provisions at the balance sheet date this has resulted inaoneoffnontrading tax credit in the income statemen t
of £14m
9earnings per share
2007 2006
a basic earnings per share
weighted average ordinaryshares in issue during the year 195878089 197790404
total basic profit for the year£’000 29176 14366
basic earnings per sharefor the year pence 1490 726
total basic profit for the year£’000 29176 14366
effect of nontrading items on earnings for the year £’000 498 8387
earnings excluding nontrading items £’000 28678 22753
adjustedearnings per sharepence 1464 1150
b continuing and discontinuedactivities
profit for the year from continuingactivities 29176 10611
basic earnings per sharefromcontinuing activities pence1490 536
profit for the year from discontinued activities – 3755
basic earnings per sharefromdiscontinued activities pence – 190
c diluted earnings per share
weighted average ordinary shares in issueduring the year 195878089 197790404
dilutive shares to be issued in respect of options granted under the shareoption scheme 1023168 953597
196901257 198744001
diluted earnings per sharepence 1482 723
adjusteddiluted earnings per sharepence 1456 1145
diluted earnings per sharefromcontinuing activitiespence 1482 534
diluted earnings per sharefromdiscontinued activities pence – 189
the additional earnings per shareinformation wherenontrading items describedinnote 5 have been added back has been provided
as the directorsbelieve theyprovideauseful indication as to the underlying performance of the group
diluted earnings per shareinformation is basedonadjusting the weighted average numberofshares in issue in respect of notional share
awards made to employees in respect of shareoption schemes no adjustment is made to the reported earnings for 2007 and 2006 10 dividend
2007 2006
£’000 £’000
amountsrecognised as distributions to equity holdersduring the year
final dividend for the year ended 31 december 2006 of 495p 2005 384p per share 9702 7442
interimdividendfor the year ended 30 december 2007 of 126p 2006105p per share 2471 2048
total ordinary dividends paid in the year 12173 9490
special dividend of 16p per sharepaid on9march 2006 – 34793
total dividends paid in the year 12173 44283
proposed final dividendfor the year ended 30 december 2007
of 599p 2006 actualproposedand paid 495p per share11777 9702
the proposed final dividend is subjecttoapproval by shareholdersatthe annual general meetingtobeheld on7may 2008 and
is not recognised asaliability in these financial statements the proposed final dividend payablereflects the number of shares in issue
on 30 december 2007
aspecial dividendof16p per sharetotalling £348m was paid to shareholderson9march 2006 this is in respect of the returnofvalue
to shareholders following the disposalofthe caffe uno business in december 2005
11 acquisition of brunningprice
on 17 october 2007 the restaurant group plc completed the acquisition of 100 of the ordinary sharecapital of brunningprice
limited “bp” for £264m plusthe costs of acquisition andafurther payment of £57m for the repayment of existingdebt withinbp 
bp operates 14 pub restaurants predominantly in the northwest of england in the period that bp wasasubsidiary of the group
it contributed £04m to net profit if the acquisition had occurred on1january 2007 group revenue would have been £3813mand
profit beforetax wouldhave been £436m
the acquisition had the following effect on the group’sassets and liabilities
recognised fair value carrying
values adjustments amounts
£’000 £’000 £’000
intangible assets259 259 –
propertyplant and equipment17933 9213 27146
stocks 374 138 236
trade and other receivables 255 65 320
net debt 5687 –5687
trade and other payables 2154 1279 3433
deferred tax 197 6429 6626
net identifiable assets and liabilities 11956
goodwillonacquisition 15241
consideration paid satisfied in cash 27197
net debt acquired and settled 5687
cash outflow including settlementofacquired debt 32884
12 intangible assets
goodwill
£’000
cost
at1january 2007 11275
acquisition of brunningprice limitedsee note 11 15241
at 30 december 2007 26516
goodwillarising on business combinations is not amortised but is subjecttoanannual impairment reviewormorefrequently if events
or changes in circumstances indicate that it might be impaired goodwill arising on the acquisition of blubeckers limited and brunning
price limited is monitoredatabrand level and the review is based onavalueinuse calculation whereby the cash flow projections of
the businesses discounted at 74 arereviewed against the carrying value cash flow projections arebased on historical performance
and budgeted information as approved by the boardaprudent approach has been adoptedwith no growth rate being applied
and no residual value being factored into the calculations as at 30 december 2007 management concluded that therehas been
no impairment
49
the restaurant group plc
annual report 2007 50
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
13 propertyplantequipment
fixtures
land and equipment
buildings vehicles total
£’000 £’000 £’000
cost
at2january2006 170952 80496 251448
exchangemovement 112
additions 27344 13431 40775
disposals 3439 8142 11581
at 31 december 2006 194858 85786 280644
accumulated depreciation and impairment
at2january2006 55672 44439 100111
exchangemovement 1– 1
provided during the year 12207 4251 16458
impairment 359 1225 1584
disposals 3439 8106 11545
at 31 december 2006 64800 41809 106609
cost
at1january2007 194858 85786 280644
exchangemovement 206 73 279
acquisitions see note 11 26339 807 27146
additions 32012 15395 47407
disposals 2674 818 3492
at 30 december 2007 250741 101243 351984
accumulateddepreciation and impairment
at1january2007 64800 41809 106609
exchangemovement 107 39 146
providedduring the year 12206 7393 19599
disposals 2366 761 3127
at 30 december 2007 74747 48480 123227
net book value as at 31 december 2006 130058 43977 174035
net book value as at 30 december 2007 175994 52763 228757
the impairment in 2006 is the write down of the carrying value of the deep pan pizza business on integration
2007 2006
£’000 £’000
net book value of land and buildings
freehold 48099 29986
long leasehold 1890 1739
short leasehold 126005 98333
175994 130058
2007 2006
£’000 £’000
assets held under finance leases
cost at start and end of year 1961 1961
depreciation
at start of year 1023 982
provided during the year 26 41
at end of year 1049 1023
net book value at end of year 912 938 14 investment in associate
the group’sassociate company began the year as living ventures limitedfollowing the disposal of the living rooms businessin
june 2007 the company underwentacapital restructureandanew companypimco 2637 limitedwas formed the group now holds
a38 investment in pimco 2637 limited and the loan note of £104mwhich is fullyprovided as described in note5i is receivable
from lv finance limitedasubsidiary of pimco 2637 limited 
a investment in livingventureslimited
the 38 investment in living ventures limited is accountedfor using the net equity method living ventures limitedhistorically had
an accounting year end date of 31 march and as therewas no material benefit in making the accounting year end coterminus with the
group no change has been made
on 22 june 2007 living ventures limited disposed of the living rooms business asaresult of this transaction the group received
aconsideration of £63mincash net of costs in addition the outstanding interest on the loan note amounting to £15m was settled
in full of the £15m interest received £10m had not been previously recognised in the income statement and was recorded asanon
trading credit in the income statement in the year ended 30 december 2007 2006 £nil the directors have concluded that it is appropriate
to makeafurther provisionof£17m which together with the £95m provisionmade in the year ended 31 december 2006 leaves
a£nil carrying value of both the investment and the loan note
the group’sshareofthe posttax result of living ventures limited for the period to 22 june 2007 wasaloss of £07m 2006 £09m
summarised financial information on living ventures limited for the period to 22 june 2007 is as follows
2007 2006
£’000 £’000
noncurrent assets – 34857
current assets – 3606
noncurrent liabilities – 29478
current liabilities – 9458
equity – 473
revenue 21720 47567
net loss 1972 2292
at 30 december 2007 living ventures limited was contractually committedto£nil 2006 £0025m of capital expenditure
b investment in pimco 2637 limited
following the disposal of the living rooms business on 22 june 2007 living ventures limited underwentacapital restructureand
anew companypimco 2637 limited was formed the restaurant group holdsa38 investment in pimco 2637 limited and this
investment is accounted for using the equity methodpimco 2637 limited also has an accounting year end date of 31 march
the group’sshareofthe posttax result of pimco 2637 limited for the period 23 june to 30 december 2007 wasaloss of £02m 
this loss has not been recognised in the income statement in accordance with ias 28 “associates and joint ventures”
interest is receivablefromlvfinance limitedasubsidiary of pimco 2637 limited on the loan note of £104m atarate of libor
since 22 june 2007 £03m of interest has been accrued of which the group has recognised £nil under the terms of the loan note
none of this interest was payable at 30 december 2007 consequently in addition to the loan note of £104m outstanding at that date
£03m of interest receivable was also due from lv finance limited 
summarised financial information on pimco 2637 limited for the period is as follows 
2007
£’000
noncurrent assets 20196
current assets 2442
noncurrent liabilities 17170
current liabilities 4812
equity 656
revenue 10744
net loss 433
at 30 december 2007 pimco 2637 limited was contractually committedto£04m of capital expenditure
51
the restaurant group plc
annual report 2007 52
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
15 stock
stock comprises raw materials and consumables and have been valued at the lower of cost and estimated net realisable value
the replacement cost at 30 december 2007 is considered by thedirectors not to be materially different from the balance sheet value 
the group recognised £863m of purchases as an expense in 2007 2006£754m
16 trade and otherreceivables
2007 2006
£’000 £’000
amounts fallingdue within one year
trade debtors 3294 2583
other debtors 3733 2587
7027 5170
17 trade and other payables
2007 2006
£’000 £’000
amounts fallingdue within one year
trade creditors 35809 30110
other tax and social security 10581 9511
other creditors 8190 8964
accruals 30611 26279
85191 74864
18 provisions
2007 2006
£’000 £’000
provision for onerous lease contracts
balance at start of year 3466 763
charged to the income statement during the year 1653 3009
unwinding of discount 254 74
utilisedduring the year 456 380
balanceatend of year4917 3466
the provisionfor onerous contracts is in respect of lease agreements and covers the element of expenditure over the life of those
contracts which areconsidered onerous expiring in1–33yearsadiscount rate of 74 has been applied in calculating the provision
19 deferred taxation
2007 2006
£’000 £’000
balance at start of year 16247 13971
capital allowances in advance of depreciationcharged to the income statement 2619 2845
other timing differences 386 161
adjustment arising on disposal of business assets of caffe uno – 12
credit in respect of rate change 1383 –
deferred tax taken directly to the income statement 850 2696
taxonsharebased paymentstaken directly to equity 1623 1529
charge in respect of rate change 42 –
deferred tax taken through equity 1665 1529
deferred tax arising on acquisition of brunningprice limited see note 11 6626 –
transfer of corporation tax balance reclassified as deferred taxation – 1109
other adjustments 6626 1109
balanceatend of year25388 16247
2007 2006
£’000 £’000
deferred tax consists of
capital allowances in advanceofdepreciation 27836 18183
capital gains held over 148 460
capital gains rolled over 591 633
other timing differences 3187 3029
25388 16247 20 sharecapital
number £’000
authorised
at1january 2007 and 30 december 2007 ordinary shares of 28
1
⁄ 8peach 284444444 80000
allotted called up and fully paid
at2january 2006 25p ordinary shares 217462569 54366
shareconsolidation on 27 february 2006 24162505 –
revisednumberofshares 28
1
⁄ 8pordinary shares193300064 54366
exercise of shareoptions 1767199 497
at1january 2007 195067263 54863
exercise of shareoptions 1537995 432
at 30 december 2007 196605258 55295
on 27 february2006 the restaurant group plc undertookashareconsolidation whereby nine existing shares wereexchanged for
eight new shares following the share consolidation the nominal value of an ordinary shareofthe restaurant group plc is 28
1
⁄ 8p
the authorised sharecapital is 284444444 shares and the allotted called up and fully paid up number of shares was 193300064
immediately after the shareconsolidation 
21 employee benefit trust
an employee benefit trust “ebt”was established in 2007 in order to satisfy the exercise or vesting of existing and futureshareawards
under the longterm incentive plan “ltip” the ebt purchases shares in the marketusing funds provided by the company based
on expectations of futurerequirements dividends arewaived by the ebtat30december 2007 the trustees appleby trust jersey
limited held 2500000 shares in the company1500000 purchased on 29 june 2007 at an average price of £3270544per share
and 1000000purchased on 27 november2007 at an average price of £223621 per share net cash outflow in the year ended
30 december 2007 was £72m net of costs
details of optionsgrantedunder the group’sshareschemes aregiven in note 22
22 sharebasedpayment schemes
the group operatesanumber of shareoptionschemesdetails of which areprovided in thedirectors’ remuneration report on pages 23
to 29 the group has taken advantageofthe exemption under ifrs2“sharebased payments” not to account for shareoptions
granted before7november 2002
the charge recorded in the financial statements of the group in respect of sharebased payments is £17m 2006 £11m
executive shareoption plans “esops”
the group has in place three esopsthe 1998 scheme the 2003 scheme andaoneoffscheme under these schemes the
remuneration committeemay grant options over shares in the restaurant group plc to employees of the group the contractual life
of an option is ten years awards under the esops aregenerally reserved for senior management level and above and 47 employees
wereeligible to participate at 30 december 2007 options granted under esops becomeexercisable on the thirdanniversary of the
date of grant subject to growth in earnings per shareexceeding rpi growth by morethan 4 under the 1998 scheme or 25
under the 2003 scheme exercise of options is subjecttocontinuedemployment within the group options werevalued using
astochasticoption pricing model no performance conditions wereincluded in the fair value calculations
53
the restaurant group plc
annual report 2007 54
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
22 sharebased payment schemes continued
year ended 30 december 2007
exercise outstanding outstanding exercisable
period during which options areexercisable price at start of year granted exercised lapsed at end of year at end of year
1998 scheme
2002–2009 750p 50244 –50244 –––
2003–2010 486p 6030 –2240775 3015 3015
total number56274 –52484 775 3015 3015
weighted average exercise price 722p –739p 486p 486p 486p
2003 scheme
2006–2013 674p 967742 –776333– 191409 191409
2007–2014 977p 1667500 –1830005000 1479500 1479500
2008–2015 1344p 1479000 –– 10000 1469000 –
total number4114242 –959333 15000 3139909 1670909
weighted average exercise price 1038p –732p 1222p 1130p 942p
oneoffscheme see note below
2004–2011 450p 400000 –200000– 200000 200000
total number400000– 200000 –200000 200000
weighted average exercise price 450p –450p –450p 450p
total number4570516 –1211817 15775 3342924 1873924
weighted average exercise price 982p –686p 1186p 1089p 889p
year ended 31 december 2006
exercise outstanding outstandingexercisable
period during which options areexercisable price at start of year granted exercised lapsedatend of year at end of year
1998 scheme
2002–2009 750p 110586 –60342 –5024450244
2003–2010 486p 58853 –52823 –6030 6030
total number169439– 113165 –5627456274
weighted average exercise price 658p –627p –722p 722p
2003 scheme
2006–2013 674p 2231825 –1254034 10049 967742 967742
2007–2014 977p 1760000 –– 92500 1667500 –
2008–2015 1344p 1544000 –– 65000 1479000 –
total number5535825 –1254034 167549 4114242 967742
weighted average exercise price 957p –674p 1101p 1038p 674p
oneoffscheme see note below
2004–2011 450p 800000 –400000– 400000 400000
total number800000– 400000 –400000 400000
weighted average exercise price 450p –450p –450p 450p
total number6505264 –1767199 167549 4570516 1424016
weighted average exercise price 887p –620p 1101p 982p 613p
during 2007the weighted average market price at date of exercise was 304p per share2006 227p
note the oneoffscheme is in respect of alan jackson’sshareoptions granted on5june 2001 further details areprovided in the directors’ remuneration report on page 29
during the year alan jackson exercised 200000 options under this scheme and as at 30 december 2007 thereare 200000 shareoptions outstanding no charge to the income
statement is recognised in respect of alan jackson’sshareoptions as they weregranted prior to7november 2002
longterm incentive plan
on9november 2005 an extraordinary general meeting of the restaurant group plc approved the adoption ofanew longterm
incentive plan “ltip” for the groupdetails of which areprovided in thedirectors’ remuneration report on pages 23 to 29 awards under
the ltip aregenerally reserved for senior management level and above and 70 employees wereeligible to participate at 30 december 2007
conditional awardshareoptions and matching awardshareoptions weregranted to directors and selected employees on7december
2005 and8march 2007 in respect of the matching awardshareoptions the respectivedirector or employee was requiredtoacquire
anumber of shares by7may 2006 in respect of the7december 2005 awardand by 30 june 2007 in respect of the8march 2007
award known as “deposited shares” and retainthese shares untilthe matching awardshareoptions vest for those matching award
shareoptions to be valid vesting of shareoptions under the ltip is dependentoncontinuing employment
the options from the ltip scheme will be satisfied through sharepurchases viaatrust further details areprovided in note 21 22 sharebasedpayment schemes continued
year ended30december2007
period during which shareprice outstanding at outstanding at exercisable at
options areexercisable type of awardatgrant date start of year granted exercised lapsed end of year end of year
2009 conditional1470p1079712–– 66325 1013387–
2009 matching 1470p 386339 –– 16977 369362–
2010 conditional 3255p –567293 –– 567293–
2010 matching 3255p –247908 –64187 183721–
total number1466051815201 –147489 2133763–
year ended 31 december 2006
period during which shareprice outstanding at outstanding at exercisable at
options areexercisable type of awardatgrant date start of year granted exercised lapsed end of year end of year
2009 conditional 1470p –1131188 –51476 1079712–
2009 matching 1470p –643515 –257176 386339 –
2010 conditional 3255p ––––––
2010 matching 3255p ––––––
total number– 1774703 –308652 1466051–
save as youearnscheme
under the save as youearn“saye” scheme the boardmay grant optionsover shares in the restaurant group plc to ukbased
employees of the group options aregranted withafixed exercise price equal to 80 of the average market price of the shares for
the five days prior to invitation employees payafixed amount from their salary intoasavings account each month for the threeyear
savings period at the end of the savings periodemployees have six months in which to exercise their options using the funds saved
if employees decide not to exercise their options they may withdraw their funds saved and the options expire exercise of options is
subject to continued employment within the group in exceptional circumstances employeesmay be permittedtoexercisethese options
beforethe end of the threeyear savingsperiod options werevalued using the stochastic sharepricing model
year ended30december2007
period during which outstandingatoutstandingatexercisable at
options areexercisable exercise price start of year granted exercised lapsed end of year end of year
20072008 790p 401602– 323892 18228 59482 59482
2009 1600p 266029– 2286 44424 219319 –
total number667631 –326178 62652 278801 59482
year ended 31 december 2006
period during which outstanding at outstandingatexercisable at
options areexercisable exercise price start of year granted exercised lapsed end of year end of year
20072008 790p 444472–– 42870 401602 –
2009 1600p –292317 –26288 266029 –
total number444472 292317 –69158 667631 –
assumptions used in valuation of sharebased paymentsgranted in the year ended 30 december 2007
2007 ltip 2007 ltip
conditional awardmatching award
scheme tsr element eps element
grant date 8307 8307 8307
sharepriceatgrant date 3255p 3255p 3255p
exercise price na na na
no of options originally granted 187787 379506 247908
minimum vestingperiod years 3years 3years 3years
expected volatility 276 276 276
contractuallife 35 years35 years 35 years
risk free rate na na na
expected dividend yield 000 000 000
expected forfeitures 5 5 5
fair value per option 2409p 3360p 3360p
55
the restaurant group plc
annual report 2007 56
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
23 reserves
foreign
sharesharecurrency otherretained
capital premium reserve reserves earnings total
£’000 £’000 £’000 £’000 £’000 £’000
at2january2006 54366 19747 80 764 16479 91436
issue of shares497 599 ––– 1096
profit for the year –––– 14366 14366
dividend–ordinary –––– 9490 9490
dividend–special –––– 34793 34793
sharebased payments–credit to equity ––– 1059 – 1059
taxonsharebased payments
taken directly to equity –––– 1529 1529
foreign exchange translation differences– –1 –– 1
at 31 december 2006 and1january2007 54863 20346 81 1823 11909 65204
issue of shares432 658 ––– 1090
profit for the year –––– 29176 29176
dividends– ––– 12173 12173
sharebased payments–credit to equity ––– 1738 – 1738
employee benefit trust–purchase of shares ––– 7209 – 7209
taxonsharebased payments
taken directly to equity –––– 712 712
foreign exchangetranslation differences –– 40 –– 40
at 30 december 2007 55295 21004121 3648 4382 77154
the other reserve reflects the credit to equity made in respect of the charge for shareoptions made through the income statement and
the purchase of shares in the market in order to satisfy the vesting of existingand futureshareawards under the longterm incentive
plan see notes 21 and 22
since1january 1989 the cumulativeamount of goodwill written offagainst realised reserves is £504m 2006£504mrecords for
periodsprior to this dateare not readily available
24 reconciliation of profit beforetax to net cash flow from operatingactivities
2007 2006
£’000 £’000
profit beforetax 42820 21579
net finance charges 3229 2609
profit on disposal of fixed assets 247 –
loss on integration of dpp net of operatingcash flow – 4101
provision against carrying value of associate 1656 9500
shareofloss made by associate 749 917
sharebased payment charge 1738 1059
depreciation 19599 16458
increase in stocks 121 229
increase in debtors 3043 1295
increase in creditors 7432 8675
cash flows from operating activities73812 63374
discontinued operations had an ebitda of £nil in the year ended 30 december 2007 2006 £03m loss no separate cash flow has
been presented in respect of discontinued activities as it is notpossibletoseparately identify working capital or financing payments and
receipts in respect of these operations as these arecentrally managed ebitda and capital additions approximately represent operating
and investing cash flows respectively 
major noncash transactions
during the year ended 30 december 2007 the group received £63m net of costs following the disposal of the living rooms business
by living ventures limited an associate of the group followingthis transaction the group madeaprovision of £17m 2006 £95m
againstthe carrying value of the investmentinliving ventures and the loan note receivable further details areprovided in note 14
this impairment representsasignificant noncash transaction 25 reconciliation of changes in cash to the movement in net debt
2007 2006
£’000 £’000
at the beginning of the year 47482  12419
movements in the year
loans taken out 32000  36000
non cash movementsinthe year 735 –
cash inflow 2174 937
at the end of the year 76573  47482
represented by
at cash flow at cash flow non cash at
2january movements 1january movements movements 30 december
2006 in the year 2007 in the year in the year 2007
£’000 £’000 £’000 £’000 £’000 £’000
cash at bank and in hand 426 257 683 1009 – 1692
overdrafts 1845 680 1165 1165 – –
1419 937 482 2174 – 1692
bank loans falling due within one year – – – –– –
bank loans falling due after one year 11000 36000 47000 32000 735 78265
11000 36000 47000  32000 735 78265
12419 35063 47482  29826 735 76573
26 financial instruments and derivatives
the group finances its operations through equity and borrowings the group borrows at floating rates and uses interest rate swaps
to generatethe desired interest profile the use of any financial instruments is carefully controlledand monitored by the boardinline with
the group’streasury strategyand the terms and conditions of its facilities
management’sapproach to treasury is to
•ensuresufficient committed loan facilities areinplace to supportanticipated businessrequirements
•ensurethe group’sdebt service will be supported by anticipated cash flows and that covenantswill be complied withand
•manage interest rate exposurewithacombinationoffloating rate debt and interest rate swaps
further details on the businessrisk factors that areconsidered to affect the group and morespecific financial risk managementincluding
sensitivity to increases in interest rates areincludedinthe report of the directors on page 21 further details on market and economic
risk is included in the chief executive’sreview on pages4to7further detail on headroom against covenants is includedinthe finance
director’s review on pages8and 9
a financial assets and liabilities
financial assets
the financial assets of the group comprise
2007 2006
£’000 £’000
cash and cash equivalents–sterling 1555 510
cash and cash equivalents–euro 137 173
1692 683
derivative financial instruments 415 652
trade and other receivables 7027 5170
current financial assets 9134 6505
noncurrent financial assets – 875
total financialassets 9134 7380
cash and cash equivalents include balances held on which interest is received at floating rates in the overnight money market and
balances held on account for deposits paid by tenants under the terms of their lease agreement 
57
the restaurant group plc
annual report 2007 58
the restaurantgroup plc
annual report 2007
notes to the accounts
continued
26 financial instruments and derivatives continued
financial liabilities
the financial liabilities of the group comprise
2007 2006
£’000 £’000
shortterm borrowings–atfloating interest rates – 1165
trade and other payables 85191 74864
finance lease debt 271 271
shortterm financial liabilities85462 76300
longterm borrowings–atfloating interest rates  78265 47000
finance lease debt 2558 2466
provisions 4917 3466
longterm financial liabilities 85740 52932
total financial liabilities 171202 129232
t otal financial liabilities attracting interest were£790m 2006 £482m interest is payable at floating interest rates which fluctuate and aredependent on libor or base rate
the average weighted year end interest rate for these borrowings was 741 2006 630 after taking into account the effect of the interest rate swap the average weighted
year end interest rate for these borrowings was 640 2006 541
on 19 december 2007 the group entereda5year facility agreement for £120m which was utilised from 17 january2008 and replaced
the existingfacility under which the borrowingsset out above weredrawn down interestispayableonthe amount drawn down at
libor plus mandatory cost and the bank’smargin which is dependent on the debt to ebitda ratio the group hasa£10m overdraf t
facilitywhich is repayableondemand on which interest is payableatthe bank’soverdraft rate
the maturitiesset out above constitute the earliest contractual maturities trade and otherpayables arelargely due within three months
furtherdetails of maturityofthe finance lease debt is provided in note 27 and further details of the maturity of provisions is provided in
note 18
the grouphas £410m 2006 £330m of committed borrowing facilities in excess of gross borrowings at 30 december 2007
effective from 16 january 2006 the group entered into an interest rate swap for an initial notionalamount of £20m rising to £50m from
18 april 2006 until 16 january 2008 when it reduced to £30m until 16 january 2009 when it terminates the fixed rate for the duration
of the three years is 4695 
effective from 18 january 2008 the group entered intoanew interest rate swap foranotional amount of £25mfor3years the fixed
rate for the duration of the three years is 492 
fair value of financial assets and liabilities
the group has derivative financial instrumentsrelating to interest rate swaps and in accordance with ias 39 these have been valued
at 30 december 2007 the fair value of these instruments was £04m 2006£07m and this is accounted for as an asset in the
consolidated balance sheet the movement in fair value has been recorded asanontrading item in the consolidated income statement
all financial assets and liabilities excluding the interest rate swap areaccounted for at cost and the directors consider the carrying value
to approximate their fair value
b credit risk
credit risk refers to the risk thatacounterparty will default on its contractual obligations resulting in financial losses to the group
counterparties for cash and derivative balances arewith financialinstitutions with strong creditratings the group is exposed to credit
related losses in the event of nonperformance by the financial institutions but does not expect them to fail to meet their obligations
credit risk with respect to trade receivables is limited due to the group’scustomer base beingspread overalarge number of
customers primarily transacting in cash or by credit cardand areshortterm in nature management thereforebelieve thereisno
additional provisionrequired in excess of thenormal provision for doubtful debts and thereare no material amounts past due that
have not been provided against 26 financial instruments and derivatives continued
the group has an outstanding longterm receivable of £104m due from lv finance limited previously living ventures limited
this debt is secured on the assets of living ventures restaurants limitedformerly est est est restaurants limited but is subject
toaprior ranking behind lv finance limited’sbank followingadetailed review of the carryingvalue of the business including the
loan note receivable the boardconcluded that it is appropriatetomakeafull provision against the loan note due 2006 £95m
provision following the restructuring of living ventures limited in june 2007 the payment terms and interest on the loan have
also been restructured
the carryingamount of financial assets recordedinthe financial statements net of any allowances for losses representthe group’ s
maximum exposuretocredit risk 
c liquidity risk
the group has built an appropriate mechanism to manage liquidity risk of the short medium and longterm funding and liquidity
management requirements liquidity risk is managed through the maintenance of adequate cash reservesand bank facilities by
monitoring forecast and actual cash flows and matching the maturityprofiles of financial assets and liabilities the group’sloan
facilities which maturein2012 as set out in note a above ensurecontinuity of funding
d foreign currency risk
as the group operates primarily within the united kingdom any transactional or translational exposuretochanges in foreign exchange
rate is limited the three restaurants the group operates in spain areserviced by local eurodenominated debt the group is not
materiallyexposed to changes in foreign currency rates and does not use foreign exchange forwardcontracts
e interest rate risk
exposure to interest rate movements is controlled through the use of floatingrate debt and an interest rate swap to achieveabalanced
interest rate profile and to ensurethataminimum level of borrowings areatfixed rates for the next three years in line with the group’ s
treasury strategy details of the current swap areset out in note a above the interest rate profile is reviewed onaregular basis
27 lease commitments
futurelease payments in respectoffinance leases aredue as follows
present value of
minimum lease minimum lease
payments payments
2007 2006 2007 2006
£’000 £’000 £’000 £’000
withinone year 271 271 271 271
withintwo to five years 1082 1082 830 830
after five years 6157 6427 1728 1636
7510 7780
less futureinterest payments 4681 5043
present value of lease obligations2829 2737 2829 2737
analysedas
amount due for settlement within one year 271 271
amount due for settlement after one year 2558 2466
present value of lease obligations 2829 2737
lease commitments areinrespect of property leases wherethe term of the lease is in excess of 25 years and the conditions of the lease
areinkeeping withafinance lease the interest rate applied in calculating the present value of the payments is the incrementalborrowing
cost of the groupinrelation to each lease the fair value of the lease payments is estimated as £28m 2006£28m
the total futureminimum rentals payable under operatingleases over the remaining lives of the leases are
payable receivable payable receivable
2007 2007 2006 2006
lease expiring £’000 £’000 £’000 £’000
withinone year 1015 – 1942 –
withintwo to five years 25321 2608 22859 1316
after five years 483653 42914 405723 49724
509989 45522 43052451040
the group has entered intoanumber of propertyleases on standardcommercial terms thereare no restrictions imposedbythe
group’soperating leaseseither in the current or prior year 
included within the minimum rentals areamounts payableasconcessionfees these arrangements areprincipallyinthe group’ s
concessions division which operatesinukairports within these concession arrangements thereisusuallyaconcession fee for
each unit which is based on the revenue derived from that unit
59
the restaurant group plc
annual report 2007 60
the restaurantgroup plc
annual report 2007
28 capital commitments
2007 2006
£’000 £’000
authorised and contracted for 12948 15948
29 related party transactions
pimco 2637 limited formerly living ventures limited isarelated party to the restaurant group plc throughthe group’s38 holding
during the year interest of £07m 2006 £06m was accrued on the loan note between lv finance limitedasubsidiaryofpimco 2637
limited and the restaurant group plc at the rate of libor the group recognised £10m 2006 £nil in respect of interest income from
living ventures limited not previously recorded for the period ending 22 june 2007 since this dateafurther £03m of interest due from
lv finance limited has been accrued of which the grouphas recognised £nil under the terms of the loan note none of this interest
was payable as at 30 december 2007 consequently in additiontothe loan note of £104m outstanding at that date £03m of interest
receivablewas also due from lv finance limited further details areprovided in note 14
for the year to 30 december 2007 alan jacksonreceivedafee of £2916 2006 £35000 from pimco 2637 limited formerly living
ventures limitedinrespect of his duties as nonexecutive chairman of that companyalan jackson resignedasadirectorofliving
ventures limited on 17 january 2008
alan jacksonisanonexecutive director of charles wells limited an independent brewing pub and distribution companyduring 2005
the restaurant group plc entered intoalease forasite owned by charles wells limited and subsequently this site was converted into
afrankiebenny’srestaurantnopremium was paid by the group to charles wells limitedthe group has enteredinto the lease with
charles wells limitedonanarms length basis withanannual rent of £73850 per annuminaddition the group purchased products
withavalue totalling£07m 2006 £06m from charleswells limited during the yearonanarms length basis no balance was directly
outstanding at the year end alan jacksonreceived no remuneration or compensation in respect of these transactions
remuneration in respect of key management personnel defined as the directors for this purpose is disclosed in note 6
furtherinformation concerning the directors’ remunerationisprovided in the directors’ remuneration reportonpages 23 to 29 of which
pages 26 to 29 areaudited
notes to the accounts
continued we have audited the parent company financial statements of the restaurant group plc for the 52 weeks ended 30 december 2007
which comprise the balance sheet and the relatednotesitovi these parent company financialstatements have been prepared under
the accounting policies set out therein
we havereported separatelyonthe group financial statementsofthe restaurantgroup plc for the 52 weeksended 30 december 2007
and on the information in the directors’ remunerationreportthat is described as having been audited
this report is made solely to the company’smembers asabodyinaccordance with section 235 of the companies act 1985 our
audit work has been undertaken so that we might state to the company’smembers those matters we arerequiredtostate to them
in an auditors’ report and for no other purpose to the fullest extent permitted by lawwedonot accept or assume responsibility to
anyone other than the company and the company’smembers asabodyfor our audit work for this report or for the opinionswe
have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual reportand the parent companyfinancial statementsinaccordance with
applicable law and united kingdom accounting standards united kingdom generally accepted accounting practice areset out
in the statement of directors’ responsibilities
our responsibility is to audit the parent company financial statements in accordance with relevant legaland regulatory requirements
and international standards on auditing uk and ireland
we report to you our opinion as to whetherthe parent company financial statements giveatrue and fair view and whether the parent
company financial statements have been properly preparedinaccordance with the companies act 1985 we also report to you
whetherinour opinion the report of the directorsisconsistent with the parent company financial statements
in additionwereport to you if in our opinion the company has not kept proper accounting records if we have not received all the
information and explanations we requirefor our audit or if information specified by law regarding directors’ remuneration and other
transactions is not disclosed
we read the other information contained in the annual report as described in the contents section and consider whether it is consistent
with the audited parent company financial statements we consider the implications for our report if we become awareofany apparent
misstatements or material inconsistencies with the parentcompany financial statementsour responsibilities do not extend to any further
information outsidethe annual report 
basis of audit opinion
we conducted our audit in accordance with internationalstandards on auditing uk and ireland issued by the auditing practices
board an audit includes examination onatest basis of evidence relevant to the amounts and disclosures in the parent company
financial statements it also includes an assessment of the significant estimates and judgments made by the directors in the preparation
of the parent company financialstatements and of whether the accounting policies areappropriatetothe company’scircumstances 
consistently applied and adequately disclosed 
we planned and performed our auditsoastoobtain all the information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance that the parent company financial statements arefreefrommaterial
misstatement whether caused by fraud or other irregularity or errorinforming our opinion we also evaluated the overall adequacy
of the presentation of informationinthe parent company financial statements
opinion
in our opinion
•the parent company financial statements giveatrue and fair viewinaccordance with united kingdom generally accepted
accounting practice of the state of the company’saffairs as at 30 december 2007
•the parent company financial statements have been properly prepared in accordance with the companies act 1985 and
•the information given in the report of the directors is consistent with the parent company financial statements 
deloittetouche llp
chartered accountants and registered auditors
london
5march 2008
independent auditors’ report
to the members of
the restaurant group plc
61
the restaurant group plc
annual report 2007 62
the restaurantgroup plc
annual report 2007
company financialstatements
–under uk gaap
company balance sheet
at at
30 december 31 december
2007 2006
note £’000 £’000
fixed assets
investment in associated undertaking i – 7810
investments in subsidiary undertakings ii 139177 110242
139177 118052
current assets
debtors
amounts falling due withinone year from group undertakings 48529 36529
48529 36529
creditors
amounts falling due within one year to group undertakings iii 89021  49810
net current liabilities 40492  13281
total assets less current liabilities 98685 104771
net assets 98685 104771
capitaland reserves
calledupsharecapital vi 55295 54863
sharepremium account vi 21004 20346
other reservesvi 3648 1823
profit and loss account vi 26034 27739
shareholders’ funds 98685 104771
the financialstatements on pages 62 to 64 wereapproved by the boardofdirectors and authorised for issue on5march 2008 and
weresigned on its behalf by
alan jackson
stephen critoph aca
accounting policies and basisofpreparation
basis of accounting
the accounts for the company have been prepared under uk gaapwhilstthe group accounts have been prepared under international
financialreporting standards the company accounts have been prepared under the historical cost convention in accordance with
applicable uk accounting standards and onagoing concernbasis
investments
investments arevalued at cost less any impairment
dividend
in accordance with frs 21 “events after the balance sheet date” dividends declared after the balance sheet date arenot recognisedas
aliability at that balancesheet date and arerecognised in the financialstatements when they have received approval by shareholders 
sharebased payment transactions
the shareoptionshave been accounted for as an expense in the company in which the employees areemployed usingavaluation
based on the stochastic simulation model
in accordance with an available election in frs 20 sharebased awards granted before7 november 2002 have not been subject
toacharge an increase in the investment held by the company in the subsidiary in which the employees areemployed with a
corresponding increase in equityisrecognised in the accountsofthe companyinformation in respect of the company’sshare
option schemes is provided in note 22 to the consolidated financial statements
the value is accounted for asacapital contribution in relevantgroup subsidiaries thatemploy the staffmembers to whom awards
of shareoptions have been made i investment in associate
£’000
at1january 2007 7810
impairment of investment 1532
repaymentofequity 4488
repaymentofpreference shares 2200
fees 410
at 30 december 2007 –
ii investment in subsidiaries
loans
shares and other total
£’000 £’000£’000
cost
at1january 2007 66902 44762 111664
additions–shareoption scheme –1738 1738
acquisition of brunningprice limited27197 –27197
at 30 december 200794099 46500 140599
amountswritten of f
at1january and 30 december 2007 888 534 1422
net book value at 30 december 2007 93211 45966 139177
net book value at1january2007 66014 44228 110242
the company’soperating subsidiaries are
proportion of voting
rights and shares held
holding at 30 december 2007
city centrerestaurants uklimited ordinary shares 100
chiquitolimited ordinary shares 100
blubeckers limited ordinary shares 100
frankiebenny’ssl ordinary shares 100
dpp restaurants limitedordinary shares 100
brunningprice limited ordinary shares 100
held by subsidiary undertakings
 on 17 october 2007 the group acquired 100 of the sharecapital of brunningprice limited further details aregiven in note 11 of the consolidated accounts
other than frankiebenny’ssl the company’sprincipaloperating subsidiaries areregistered in england and wales and operate
restaurants in the united kingdom frankie benny’ssl is registered and operates three restaurants in spain
all other subsidiary undertakings arewholly owned by the company or one of its subsidiaries and aredormant
63
the restaurant group plc
annual report 2007 64
the restaurantgroup plc
annual report 2007
iii creditors–amounts falling due within one year
in accordance with frs 21 the proposed dividend payable in respect of 2007 is not recognised asaliabilityinthese accounts
as it has not yet been approved by shareholders the creditors falling due within one year areinrespect of intercompany balances
iv profit attributable to membersofthe holding company
as permitted by section 2303 of the companies act 1985aseparate profit and lossaccount has not been presented for the
holdingcompanyduring the year the company madeaprofit of £105m which included dividends of £120m received from
subsidiary undertakings 2006 profit of £627m which includesdividends of £650m received from subsidiary undertakings
remuneration of the auditors is borne by subsidiary undertakings refer to note4inthe consolidated accounts
v employee costsand numbers
all costs of employeesand directors areborne by subsidiary undertakings at 30 december 2007 the company employed six persons
31 december 2006 five persons
vi sharecapital and reserves
shareshareother profit and
capital premium reserves loss account total
£’000 £’000 £’000 £’000 £’000
at1january2007 54863 20346 1823 27739 104771
issue of shares 432 658 –– 1090
profit for the year ––– 10468 10468
employee shareoption schemes –– 1738 – 1738
employee benefit trust–purchase of shares –– 7209 – 7209
dividends– –– 12173 12173
as at 30 december 2007 55295 21004 3648 26034 98685
details of shareissues during the year aregiven in notes 20 and 23 of the consolidated financialaccounts and details of the dividends
paid and proposed during the year aregiven in note 10 of the consolidated accounts
company financialstatements
–under uk gaap
continued 2007 2006 2005 2004 2004 2003
ifrs ifrs ifrs ifrs uk gaap uk gaap
£’000 £’000 £’000 £’000 £’000 £’000
revenue 366710 314748302328255446255446 227438
trading business excluding dpp 48207 39187 31962 26070 25904 21793
underlying interest 3978  3254 1823 1667 1179 2539
shareofassociate 749 917 600 –––
adjusted profit beforetaxation43480 35016 29539 24403 24725 19254
loss beforetaxation made by dpp – –1733 –––
nontrading items 660 13437 1348 3390 2597 2613
profit on ordinary activities beforetaxation 42820 21579 26458 21013 22128 16641
taxation 13644  11163 8617 6942 7039 5606
profit on ordinary activities after taxation 29176 10416 17841 14071 15089 11035
profit on sale of businessesnet of tax – 3950 5504 –––
profit for the year 29176 14366 23345 14071 15089 11035
basic earnings per share 1490p 726p 1078p 659p 706p 568p
adjusted earnings per share 1464p 1150p 908p 784p 795p 666p
proposed total dividend per share 725p 600p 475p 420p 420p 365p
dividend cover excluding nontrading items 202 192 191 187 189 182
employment of finance
propertyplantequipment 228757 174035151337154678149683 146220
othernoncurrent assets 26516 19960 30377 –––
net current liabilities 66991  59612 61848 5101455111 43617
long term liabilities 85740  52932 14459 120567625 35687
102542 81451 105407 91608 86947 66916
financed by
equity shareholders’ funds 77154 65204 91436 75883 70855 50144
deferred tax 25388 16247 13971 15725 16092 16772
102542 81451 105407 91608 86947 66916
net debt 76573  47482 12419 1165211294 38163
gearing 992 728 136 154 159 761
interest cover beforenontrading items times 121 120 175 156 220 86
the amounts stated for 2003are stated on the basis of uk gaap as it is not practicable to restate this period forthe transition to ifrs
group financialrecord
65
the restaurant group plc
annual report 2007 66
the restaurantgroup plc
annual report 2007
directors
alan jackson
nonexecutive chairman
andrew page
chief executive officer
stephen critoph
group finance director
kevin bacon
executive directorleisure
trish corzine
executive directorconcessions
john jackson
nonexecutive
david richardson
nonexecutive
tony hughes
nonexecutive
company secretary
robert morgan
registeredoffice
151 st vincent street
glasgowg25nj
head office
57 marshalsea road
london se1 1ep
telephone number
0845 612 5001
company number
sc030343
registrar
equiniti limited
po box 28448
finance house
orchardbrae
edinburgh eh4 1wq
auditors
deloittetouchellp
hill house
1little new street
london ec4a 3tr
financial calendar
annual general meeting
7may 2008
proposed final dividend–2007
announcement5march 2008
ex dividend 11 june 2008
recorddate 13 june 2008
payment date9july 2008
shareholder information 67
therestaurant groupplc
annualreport 2007
notes 68
therestaurant groupplc
annualreport 2007
notes designedand producedbythecollege 44 020 7457 2030
7 the restaurant group plc
57 marshalsea road
london se1 1ep
tel 0845 612 5001
wwwtrgplccom


Summary:
 04
therestaurantgroupplc
annual report 2007
introduction
2007 was another year of good progress for the restaurant group “trg” building on
the strong performance of the previous yearboth divisions performed well and all of our
key performance metrics improved revenue ebitda profits and margins all grew and
this serves to highlight both the benefits of our strategy of focusing on the out of town
marketplace and also the efficacy of our model it is particularly encouraging that trg
was able to achieve these results againstamorechallenging economic backdrop and this
demonstrates both the defensive and resilient characteristics of our market positioning
and the strength of our operations and brands asaresult the group achievedarecor d
level of adjusted earnings per shareat1464p representing growth of 27 on the previous
yearconsidering that the “bar” had been raised significantlyin2006 when earnings
per sharegrewby27 these results representavery satisfactory performance
trgrationale
our coreobjective continues to be growth in shareholder value and our strategy to
achieve this has been and will continue to be to buildabusiness capable of delivering
longterm sustainable and growing cashflowsiampleased to report that again we
have successfullyconverted our profits into cash atavery healthy rate strong growth in
earnings per sharehas translated into strong growth in cashflow per share our model
enablesthe group to continue its growth inapredominantly organic and highly value
accretive wayfunded through internally generated funds wherewedeem it appropriate
we arealso able to supplement this organic growth via targeted acquisitions as we did
during 2007 with the acquisition of the brunningprice pub restaurant business our
touchstones arecashflow and returnoninvestment and whether we areassessinga new
site or an acquisition our focus is on ensuring that the investment is value accretive
trg’sprimary focus is on edge of town out of town rural semirural and airport
locations these locations have significant barriers to entryoffer good growth prospects
and enableustogenerate consistentlyhigh returns on investment we occupy leading
marketpositions in each of these segments and we arewell placed to continue to grow
our business in these areas looking forward we haveastrong pipeline of new sites for
the next three years
group results
results marked as adjusted arestated excluding nontrading items refer to note 2
all of our key performance metrics improved during 2007 with growth in both of our
divisions
 building on the 5 increase in likeforlike sales in 2006 we grew this metric by 55
in 2007approximately70 of this increase represented “covers” growth with mor e
people using our restaurants and in 2007 we sold morethan 30 million meals
 revenue increased by 17 to £367m
 adjusted ebitda increased by 22 to £678m and adjusted operating profit increased
by 23 to £482m and
 margins improved at both divisional and group levels with our group adjusted operating
profit marginincreasing by 60 basis points to 131–avery satisfactory result
particularly againstatough hurdle of 140 and 90 basis point improvements in 2006
and 2005 respectively
again the increase in profit was the product of three principal components–likeforlike
profit increases from the existing estate profitable contribution from new openings and
further cost savings resulting from operational efficiencies and purchasing initiativesthis
combination representsahealthy background to our continued profitable development
operatingand financial review
chiefexecutive
officer’sreview
ofoperations
“theteamdeliveredanother
impressiveperformancein2007
withearningsup27and36new
restaurantssuccessfullyopened
andtradingwell”
andrew page
chief executive officer
17
increaseinrevenue 05
therestaurantgroupplc
annual report 2007
total revenue
£2852m
operatingprofit
£616m
operatingmargin
216
frankiebenny’s159units
frankiebenny’sperformed superblywith both ebitda and operating profit increasing
by morethan 20 and good growth in margins during the year we opened 20 new
restaurantsofwhich 10 wereonnoncinema sites the results from the new openings
have been excellent and they areset to deliver very strong returns this year we ar e
aiming to openasimilar number of new restaurants and having been busy in recent years
buildingahigh quality pipeline of new sites we lookforwardtocontinued strong returns
chiquito53units
chiquito enjoyed another excellent year with growth in ebitdaand operating profit
of almost30 and operating profit margin up 90 basis points againstabackground
of very high growth in profits and margins in both 2006 and 2005 this represents an
outstanding performance last year we challenged the chiquito team to build on their
terrific performance in 2006 and they did not let us downiamconfident that they will be
just as keen to repeat that feat in 2008 during the year we opened eight new restaurants
and we aredelighted with their performance we expect to open 58 new chiquito
restaurantsin2008 as noted in my report last year we areparticularly pleased with the
performance of our restaurants which arecolocated with frankiebenny’sand we ar e
continuing with our plans to pursue these dual rollout opportunities
garfunkel’s26units
garfunkel’sperformed well during 2007 and notwithstanding that we lost 19 weeks of
trade during the first half whilst restaurants wereclosed for refurbishment the business
delivered approximatelythe same level of profit as for 2006 the refurbishments wer e
completed by the end of the first half and during the second half profits and margins
increased significantly garfunkel’sisnow in its 29th year and continues to deliver
excellent profits and returns
pubrestaurants42units
this business now comprises blubeckers and following its acquisition in october 2007
the brunningprice pub restaurant business blubeckers performed solidly during 2007
and has good potentialduring 2006 we embarked uponamoreambitious rollout
programme for blubeckers and this continued in 2007last year we opened six new
blubeckers pub restaurants and in the summer we strengthened the blubeckers team
by introducing senior management withastrong track recordwithin trg of operational
management and also good experience of executing successful rollouts the impact
of this has been very positive
following the acquisition of brunningprice “bp” we addedafurther 14 new pub
restaurantstoour portfolio we aredelighted with the performance of the bp pub
restaurantssince the acquisition and we intend to grow the businessthe bp pub
restaurantshaveamorerelaxed feel compared with blubeckers although bp’spubs
arenot branded they all shareasimilar typeoffit out and operating style the quality
of food is high–bp won the good pub guide’s pub group of the year awardfor the
thirdtime in 2007–and they attractaregular and loyal customer base we aredelighted
to have retained all of the operational management team at brunningprice it is an
experienced talented and successful team and we look forwardtoworking with the
team to further develop and grow our pub restaurant business
during 2008 we areexpecting to openatotal of 510 new pub restaurants and longer
term the pub restaurantbusiness has the potential to becomeasignificant part of
the group
frankiebenny’sand chiquito blackbur n
brunningprice cornmill
leisur e
21
growth in revenue in our
leisuredivision 06
therestaurantgroupplc
annual report 2007
total revenue
£812m
operatingprofit
£125m
operatingmargin
154
our concessions division enjoyed another year of good progress producingastrong
increase in operating profit and an improvement in margin againstamorechallenging
operating background both logisticallyand costwise this is an outstanding performance
we opened two new units during 2007 and these aregenerating strong returns we
expectasmallnet increase in the number of concessions units during 2008 in what will
beayear of significant change given the developments at heathrow airport in late march
we will open four new sites at the new terminal5and later in the year when terminal 2
closes we will close our restaurant there during 2008 we areexpecting some significant
swings in trading patterns at heathrow as passengers migrate from the existing terminals
into the new t5 going forward we areconfident that these new developments place our
concessions business inavery strong position
noncor e
during the year losses from noncoreactivities decreased by £055m and we will continue
to take steps to reduce these noncorelosses
corporateactivity
in october 2007 we acquired brunningprice limited for £32m in cash the business
comprises of 14 trading pub restaurants and one development site bp is based
predominantly in the north west and hasalong history of profitable growth we have
retained bp’soperational management team will continue to operate the pub restaurants
in the existing highlysuccessful style and we will gradually add new pubs to the bp
business together bp and blubeckers provideavery attractive opportunity to grow
our pub restaurant business
marketdynamicsandeconomicbackdrop
we areconfident that prospects for the eating out market remain positive socio
economic factors such as an ageing population morefemales in work and levels of
disposableincomes significantly higher than in previous generations augur well for our
industrylifestyle changes arealso positive with an increasing propensity to spend
on leisureactivitieseating out particularly at our popular price points £10£16 spend
per headhas becomeahabitual part of most people’slives and is something many ar e
reluctant to give up during 2007 the smoking ban came into effect in england and
wales following the ban in scotland the previous yearoverall we believe that trg has
benefited from this as morefamilies and those with an aversion to smoking have visited
our restaurants
during most of 2007 and into 2008 much has been said and written aboutthe
deteriorating economic backdrop and pressures on the consumera series of successive
interest rate rises starting in 2006 and continuing through into 2007 saw base rates rise
by 125 basis points in effect increasing the cost of borrowing almost 30 the cost
of servicing an already high level of personal debt thereforerose for much of the uk
population compounding this we saw inflation rise by varying amounts depending upon
which particular index one chose to use and the burden of taxation increase together
this combination has served to make life moredifficult for the uk consumer and looking
forwardinto 2008 we anticipateacontinuation of these tighter conditions
whilst we would not suggest that trg is completely impervious to these economic
factors we arevery encouraged that our business has demonstratedaconsiderable
level of resilience in the face ofaslowing uk economy andatighter consumer market
we believethat this is the result ofanumber of factors including our popular price point
and value for moneyour focus on areas with higher barriers to entry and thus lower
supplyside risk the strength of our brands consumers’ reluctance to forego eating out
and very importantly the skill and application of the trg team restaurants which have
opened within the last few years have performed very well delivering strong returns and
we intend to continue to openasimilar number of new restaurants each year for the
foreseeable future
operatingand financial review
chiefexecutive
officer’sreview
ofoperations
continued
concessions50units
shakeahula gatwick airport
22
increaseinebitda
brunningprice pantyrochain wrexham 07
therestaurantgroupplc
annual report 2007
we believe that interest rates and employment levels aretwo key drivers of consumer
spend which can potentially impact our marketplace we have recently seen two
reductions in base rates to the current level of 525 and we note that employment levels
are and areprojected to remain high whilst it is suggested that thereisscope for further
monetary relaxation during 2008 we believethat in the light of current levels of inflation as
measured by the cpi it may take some time beforethe base rate drops back below 5
we arealso mindful of the risks of further taxation pressures asaresult of the level of the
budget deficit furthermore gdp growth is forecast to slow in 2008 toabelow trend level
but looking further ahead thereisthe prospect ofapickup back towards trend in 2009
asaresult we have factoredaless favourable macroeconomic backdrop into our
planning for 2008 than we have experienced over the last five years
despite this we believe that trg is wellplaced to weather these tighter conditions recent
trading has been solid and we continue to see excellent results from our new openings
cost pressures have been an issue for some time we identified the risk of inflationary
cost pressures with respect to our input costs two years ago and during 2006 wherew e
wereable to we took steps to remove or minimise that risk through taking out longer term
typically three years fixed or capped price contractsthis approach served us well during
2007 and we will continue to benefitfromthis in 2008 and 2009 howeverweare still
exposed in some areas wherecurrently cost pressures arebeing felt mainly fresh meats
and dairymilk products in these areas we would normallyfix prices for 612 months
but at present we are in most cases eschewing fixes of morethan three months as our
purchasing team anticipateareasonable possibility of prices softening later in the year
we have also kept our menu content under regular review so as to try to mitigate the
impact of cost inflation through careful menu engineering in the light of the current tighter
consumer market and we believe the importance of value for our customers we arelikely
to hold offincreasing menu prices in the short term but we will be carefully reviewing this
during the second quarter with the prospect of some increases later in the year
futureprospects
2007 was another year of good progress for the group with both divisions achieving
growth the current year has started well with likeforlike sales growth during the first nine
weeks at 4 of which covers growth represents 70 and total revenue for the same
period up 21 a 16 increase excluding bp at this stage last yearlikeforlike sales
growth was 5 of which covers growth represented 75 and total revenue was 16
ahead whilst we areencouraged by this we recognise both the ongoing impact of
acontinuation ofatighter consumer marketplace and alsothe fact that our comparative
likeforlike hurdlesat83 and 73 in quarters two and three aredemanding
we have madeasolid start to the year and providing thereisnotasignificant further
deterioration in the uk economyweare confident of continuing our progress in 2008
andrewpage
chiefexecutiveofficer
5march 2008
30m
customers served
chiquito southampton
frankiebenny’s portsmouth
27
earningsper sharegrowth in 2007