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Richoux Group is a classic AIM restaurant roll-out story With a portfolio of sixteen restaurants operating four themes, Richoux Group has grown sales steadily and is now reporting profits. Better still, the company has a significant net cash position. If a retail format with the potential to roll-out nationwide is identified early, share price gains can be significant when the business scales. A great AIM example is Prezzo: profits have soared as the chain has expanded.

no published forecasts for the company Richoux has existed on AIM for over ten years in a number of guises. Previously known as City Gourmets, Madisons Coffee and then Gourmet Holdings, Richoux Group plc took its current name in 2008. The company runs seven Italianstyle Villagio restaurants, two Zippers restaurant bar and grill establishments, five Dean’s Diners and four of the eponymous Richoux. Three years ago, the company ran twelve restaurants. Since then, Richoux has added one more Zippers, a further Dean’s Diner and another three Villagios. On researching Richoux Group, I am struck by a number of peculiarities. First, the company rarely issues any information on trading other than with 4

its six month and full year results. The last separate trading statement was issued in July 2012, when the company reported a significant improvement in profitability. The company’s septuagenarian Chief Executive, Mr Salvatore Diliberto, is never mentioned as a shareholder contact in regulatory statements. For a number of years, the company has not retained financial PR. That’s a little unusual for a £30m company, particularly one that operates leisure brands and would be expected to welcome media coverage. I can find no published forecasts for the company, suggesting that Richoux does not seek analyst coverage and has negotiated commensurately lower broker fees in return.

unlikely to ever be a liquid market for the shares Finally, nearly 80% of the company’s shares are owned by just four investors. Unusually, for a quoted business, three of these are private investors: Hon. Robert Rayne (17% of all shares), CEO Salvatore Diliberto (21%) and Mr Phillip Kaye (24%). The Kaye family are major players in the UK’s casual dining scene. Phillip Kaye was the man behind the Garfunkel’s, Deep Pan Pizza, ASK and Zizzi brands. His nephew Jonathan is today boss of AIM-quoted Prezzo. The fourth major shareholder is Michinoko Limited with

17% of the company. Strangely, I regard many of these points as positives. Engaging with ‘the market’ is an expensive and timeconsuming activity. With so little free float there is unlikely to ever be a liquid market for the shares, whatever the company does. Large management shareholdings are a significant incentive to succeed.

management shareholdings are a significant incentive to succeed The facts demonstrate the investment case better still. In 2007, Richoux reported a £0.5m loss on £2.5m of group sales. By 2012, this had improved to a £0.9m profit on £10m of sales. In the most recent six-month period, increased openings helped Richoux to report a 13% sales increase and a similar improvement in operating profits. For smaller investors who can live with Richoux’s atypical set-up, there is a successful business here, run by industry heavyweights. Furthermore, Richoux is well-financed for continued expansion. Richoux Group (LON:RIC) FOR Winning, established formats Strong balance sheet and cash generation AGAINST Rich valuation Hard to buy shares in size Market cap Bid:offer P/E (historical)

£31m 32p:35p 32.5

Yield (historical)


52week low:high


April 2014  
April 2014  

Featuring ISG, London Capital Group, Proxama, Richoux and RWS Holdings.