Bid on the menu at Chez Gerard

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The Independent Online
Groupe Chez Gerard has done well for shareholders since it floated three years ago. Its shares have tripled on the back of a steady opening and refurbishment programme, doubling the group's size to 13 restaurants.

Full-year profits yesterday of pounds 3m were only 6 per cent ahead of last year's pounds 2.9m, but that comparison does the company scant justice. Last year's figure benefited from a pounds 130,000 profit on the disposal of the Chutney Mary Anglo-Indian restaurant in Chelsea while this year's were hit by the costs of refurbishing Scotts, Bertorelli's and the Opera Terrace. Underlying growth in profits was a healthier 20 per cent. Earnings per share rose 15 per cent to 12.4p (10.8p).

Chez Gerard restated its intention yesterday not to stray outside London, claiming that 13 out of 10,000 eating and drinking establishments in the capital leaves it with plenty of room to grow. That should reassure shareholders - with the eating-out market set to grow at 8 per cent a year for the rest of the decade, the trick will be to do the simple things with excellence and not dilute the brand.

Now the refurbishments are out of the way, earnings should start to motor again. Consensus forecasts show an accelerating trend. Forecast profits of over pounds 4m to next June will mean earnings growing at more than 30 per cent a year.

That compares favourably with a prospective p/e ratio of 18 at yesterday's close of 288.5p, up 7p. Having focused on two distinct meat and fish restaurant chains that could be rolled out across the country, Chez Gerard looks like a tempting take-away for one of the majors. Worth tucking away in case of a bid.

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