The Restaurant Group reports “good progress”

By Joe Lutrario contact

- Last updated on GMT

The Restaurant Group reports “good progress”

Related tags: Wagamama, The restaurant group

Wagamama owner The Restaurant Group has chalked up a significant increase in like-for-likes since the reopening of indoor trading but its dine-in business is still down on 2019.

Delivery is picking up the slack, with like-for-like delivery sales reported up 146% and like-for-like takeaway sales up 90% in the last eight weeks (period ending 29 August). 

Predictably, The Restaurant Group’s (TRG) strongest brand was Wagamama, achieving +21% like-for-like growth on 2019. 

The company - which also owns Chiquito and Frankie & Benny's - announced it is on track to open an additional three new Wagamama restaurants in the UK during the current financial year, as well as three new delivery kitchens. In total, TRG is targeting a total Wagamama estate of 180-200 restaurants, and 20-30 delivery kitchens.

But The Restaurant Group chief executive Andy Hornby warned that the firm is tackling ‘labour availability and supply chain’ issues.

TRG’s pubs (+12%) and leisure (+18%) business units also achieved double digit growth in like-for-like sales versus 2019 over this period. Within pubs, performance was supported by investment in 30 covered outside areas and an online booking system. 

In the leisure division, delivery and takeaway performance was described as being “very strong” with delivery and takeout sales accounting for 16% of sales compared to only 4% in 2019 (for the eight-week period ending 29 August), with virtual brands now accounting for about half of off premise sales.

The leisure division has been the focus of restructuring with a 60% reduction in sites.

TRG’s concessions business, which is predominately located in airports, was impacted by significantly reduced passenger numbers, with sales down by -53%.

Total sales over the 27 weeks ended 4 July 2021 reached £216.8m, compared to £227.2m during the 2020 equivalent. 

Edison Group analyst Richard Finch points out that the results for the half to June do not invite comparison owing to Covid-19 disruption and considerable changes in the estate. 

“Positive news from Restaurant Group with double-digit % market outperformance across the board since May reopening accompanied by confirmation of substantial liquidity (£235m+ cash headroom) to pursue clear growth opportunities," he says. 

"Encouragingly, the company reports considerable opportunity from 21% reduction in local competition, rapid development of the delivery market and continued strong roll-out, notably 5 to 7 Wagamama (sites and delivery kitchens) a year from 2022 (target 180 to 200 sites from current 144)." 

“Trading performance since re-opening supports an increase in our FY21 EBITDA expectations,” the company says. 

However, the group warned of inflationary cost pressures in food and drink, cost inflation from certain commodity markets, distribution cost increases and material market driven increases in utility costs.

In March 2021, TRG agreed new long-term debt facilities raising net proceeds of £166.8 million of new capital, with the purpose of investing its existing estate while opening new restaurants and pubs.

“We have made good progress in the past six months, securing the refinancing and recapitalisation of the Group in the first quarter before focusing our attention on the re-opening of the business and welcoming back dine-in customers as government restrictions eased," says chief executive officer Andy Hornby. 

"I am particularly proud of the way that our teams have pulled together to support one another, ensuring a great experience for our customers and delivering a strong LFL sales outperformance versus the market.

"Whilst there are some well documented sector challenges to navigate in the short-term, particularly around labour availability and supply chain, we believe the Group is well positioned for the long- term.”

Related topics: Business & Legislation, Casual Dining

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