Tootsies chain hoists 'for sale' sign as chief executive exits

Urban Dining, the restaurant operator behind the Tootsies chain, put itself up for sale yesterday and parted with its chief executive John Metcalf after a poor trading performance. Its shares dropped 13 per cent to 34.5p, giving the company a market value of £19.9m.

The company, listed on the Alternative Investment Market, announced a U-turn in its strategy to acquire other restaurant chains. "Difficult trading coupled with the current level of the company's share price means that the directors believe that is now no longer appropriate to pursue the original strategy of being a consolidator in the restaurant industry," it said.

The board was reshuffled following the decision not to pursue a multibrand strategy, leading to the departure of Mr Metcalf, who was responsible for identifying acquisition targets. Glen Tomlinson has been appointed executive chairman and is leading a strategic review of the business, which may result in a sale. Tim Woodcock stays on as finance director. Mr Woodcock said yesterday: "We are disappointed but accept the reality of the situation. There is an awful lot of corporate activity in the sector and Tootsies is a good brand. We expect interest from both trade and financial buyers."

Urban bought Tootsies for £31m in November last year and has been on the lookout for three other established restaurant brands. It has been associated with a number of restaurant chains, including the seafood chain Loch Fyne.

The company was set up two years ago by Mr Metcalf, Mr Tomlinson, who both hailed from Pizza Express, and Mr Woodcock as an investment vehicle designed to pick up assets in the restaurant sector. It floated on AIM in May last year to raise funds for its plans.

Analysts at Oriel Securities said: "You can double, or you can quit. That would appear to be the choice that Urban Dining was facing in the dog-eat-dog casual dining market, and it's chosen to quit." They pointed to Yates's decision to sell itself to Laurel last year and "it did its shareholders [GI Partners at the time] no harm at all".