Wagamama owner reports 'very encouraging' trading following shareholder backlash

Wagamama owner, the Restaurant Group, has reported “very encouraging” trading in the first quarter of 2023, despite continuing to come under pressure from activist investors.

 

Today’s trading update, covering the 13 weeks to 2 April 2023, reports a 9% increase in like-for-like sales compared to 2022 for flagship brand Wagamama, when adjusted to take into account the VAT benefit received last year.

 

Dine-in sales were particularly strong seeing a 15% increase, but this was offset by a decline in delivery and takeaway performance.

 

As a result, and in light of favourable property market dynamics, the group has announced it will accelerate the expansion of the brand, with seven to eight new openings anticipated in 2024, compared to the five previously planned.

 

The group’s Brunning and Price pub division also reported strong like for like sales, up 10% on 2022, while its leisure division, including Frankie & Benny’s restaurants as well as Chiquito and Firejacks reported a 2% uptick.

 

Airport concessions saw a 44% increase in like-for-like sales, but this follows the hit to international travel caused by the emergence of the Omicron Covid variant in 2022.

 

The Restaurant Group (TRG) said it also delivered £5m of incremental cost savings and is accelerating the rationalisation of its leisure division with a further 23 sites earmarked for closure, in a move anticipated to improve cash generation in the second half of 2023.

 

The casual dining operator has said the trading results and cost savings should “provide confidence it is tracking ahead of management expectations”.

 

The statement comes after activist investors Oasis Management and Irenic Capital Management publicly questioned the running of the group.

 

Since February Oasis has been calling for governance change at TRG, accusing it of a "failure to deliver value to shareholders".

 

Last week Irenic joined its calls for shareholders to vote against the pay packet of CEO Andy Hornby.

 

Under his tenure, shares have fallen by around 70% but Hornby's salary increased to £674,450 for 2023. He also receives shares on a time-vesting basis.

 

Irenic, which is understood to have around a 1% share in TRG, has told the board to adopt a new model that more closely ties Hornby's pay with shareholder returns.

 

TRG's remuneration policy will go before shareholders at its annual general meeting (AGM) on 23 May.

 

The Restaurant Group plc operates approximately 410 restaurants and pub restaurants throughout the UK.