Wagamama owner under fresh pressure from investors as it hires advisers

An activist investor in Wagamama owner the Restaurant Group (TRG) has renewed calls for the board to be replaced despite a rise in sales.

 

Irenic, which owns a 2.4% stake and was denied a seat on the board, said improved trading at the group highlighted how its current share price was “significantly lower” than the company’s true value.

 

It added that shareholders had “lost confidence” in the company’s willingness to align executive pay with shareholder returns and sell off its wider brands to focus on Wagamama.

 

“TRG will not achieve an appropriate valuation until there is new board leadership and decisive strategic action,” Irenic said in a statement.

 

In a trading update yesterday, TRG said it was working with independent advisers to assess its "strategic options" for the future.

 

The business, which operates around 400 restaurants under different brands across the UK, has faced growing pressure from investors over its direction and performance this year.

 

TRG said it was on track to close around 35 restaurants under its historically loss-making leisure division, which includes the Frankie & Benny's chain, by the end of the year. It is also set to open seven to eight new Wagamama restaurants.

 

The group reported that total year-to-date like-for-like sales increased 5% at Wagamama, 9% in its pubs arm and 28% across its concessions business.

 

TRG's leisure arm saw a 4% drop in sales but a 12% increase in the third quarter of the year.

 

It said its leisure business was "most impacted by the current cost of living pressures" but that "good progress" had been made on managing costs.

 

At the same time, new Wagamama openings were "trading ahead of expectations".

 

The strategy comes after investors called on TRG to sell off its wider pub and restaurant estate, which includes the Chiquito brand, and focus on Wagamama.

 

Shareholders had also criticised the pay packet of TRG chief executive Andy Hornby amid widening losses.

 

Earlier this month, Irenic called for TRG’s chairman Ken Hanna to be replaced over claims he had showed a “disregard for the best interests of all shareholders”.

 

A TRG spokesperson said: “TRG has enjoyed a very encouraging first half of the year outperforming the wider hospitality market.

 

"Highlights include Wagamama’s continued market out-performance and exceptionally strong trading from both our pubs and concessions business.

 

“We have made an excellent start executing our three-year margin improvement plan and continue to review our wider strategic options to further accelerate TRG’s deleveraging profile.”