Garfunkel's Owner To Serve Up McCue As CEO

The struggling owner of the restaurant chains Garfunkel’s and Frankie & Benny’s is to oust its chief executive following a string of profit warnings and a share price collapse.

Sky News has learnt that Restaurant Group (Other OTC: RSTGF - news) , which has a market value of £742m, will announce on Friday that Danny Breithaupt is to leave after less than two years in charge.

Sources said on Thursday that his replacement had been lined up and that Andy McCue, who stepped down as the chief executive of Paddy Power (Other OTC: PDYPF - news) after its recent merger with Betfair, was the likely successor.

The changes at the top of the company, which also owns casual dining brands such as Chiquito and Coast to Coast, are expected to be welcomed by investors four months after its most recent profit alert.

Mr McCue has been without a full-time role since departing the merged gambling group in April, although leisure industry sources said that other executives could also be logical candidates for the role.

Restaurant Group said in April that it was launching a review of its operating strategy, including its property portfolio, programme of site openings, brand positioning and overheads.

It (Other OTC: ITGL - news) added that it would update the City on the review when it reports interim results later this month, although that is now likely to be delayed following the appointment of Mr Breithaupt's successor.

The company's travails have prompted a broader shake-up of management, with the installation of Debbie Hewitt, a former boss of the RAC (Taiwan OTC: 2237.TWO - news) , as its chairman.

In April, it announced the departure of its finance director, despite a denial by Instinctif Partners, its financial public relations adviser, that he was leaving.

Six weeks later it announced the appointment of Barry Nightingale, a former finance chief at the airline Monarch, as Stephen Critoph's successor.

Restaurant Group's plummeting share price has whetted the appetite of activist investors and private equity firms, although a recent recovery in its value has deterred suitors from making formal takeover approaches.

Cinven, the buyout firm that used to own Pizza Express, was among the firms which had been in the early stages of evaluating an approach to the board of Restaurant Group.

Restaurant Group, which operates more than 500 sites, has warned investors that this year's profits are to be no higher than £80m.

Despite a partial recovery, the shares have still lost close to half their value over the last 12 months.

Restaurant Group was unavailable for comment.