Nando's has warned that mounting cost pressures are set to weigh on its performance this year, despite reporting "strong" customer demand. The popular chicken chain slipped into the red for its most recent financial year, having been hit by soaring energy, labour and food costs.
Chief executive Rob Papps insisted the company's performance remained "positive" given the considerable challenges facing the wider sector.
"The macroeconomic environment remains uncertain, and we are mindful of the pressures facing both our business and our customers," he said. "Nevertheless, we remain confident in our model and the long-term opportunity across all our markets."
Sales climb but operating environment remains challenging
In newly filed accounts, Nando's revealed that sales continued to climb over the six months to August this year, buoyed by resilient consumer demand, though it cautioned that the "operating environment remains challenging".
The chain noted that while some commodity prices have softened, cost pressures remain broadly "elevated" owing to geopolitical tensions and persistent global inflation. Senior figures highlighted that the group is proactively tackling the impact of these pressures through various initiatives across its markets, including the rollout of energy-efficient grills throughout the UK and Ireland.
Losses and revenue performance
The update follows Nando's recording an £11.3 million pre-tax loss for the year to February, a reversal from the £38.2 million profit posted the previous year.
Revenues, meanwhile, edged up by 2% to £1.51 billion for the year, according to filings at Companies House. The results were underpinned by £116.6 million in capital investment, bolstering the group's ongoing expansion strategy.
Expansion plans continue
Nando's launched 34 new restaurants throughout the year, with 11 of those in the UK and Ireland, bringing its total number of sites to 984 by the year's end. The company stated it intends to press ahead with further openings this year, despite the tough trading environment.
Mr Papps said: "We are planning to open 15 new restaurants in the UK and Ireland this year, and in Australia, our drive-thru format has been a strong performer and continues to give us valuable learnings as we consider new formats. Alongside improvements to our digital experiences and menu innovation, these investments position us well for the future."
