'Good progress' at owner of Frankie & Benny's and Wagamama as venues reopen

Frankie & Benny's and Wagamama owner The Restaurant Group (TRG) hailed "good progress" over the past half-year as it said very strong trading since reopening venues has seen it upgrade its earnings targets.

The company, which operates some 400 restaurants and pubs across the UK, said the recovery has been spearheaded by strong performances by its Wagamama pan-Asian chain and the group's pub arm.

Chief executive Andy Hornby said trading has outperformed the wider hospitality sector but warned that the group is still navigating industry challenges including "labour availability and supply chain" issues.

TRG told shareholders that it has seen 21 per cent like-for-like growth across Wagamama since reopening until August 29, with its pubs business reporting 14 per cent growth.

Frankie & Benny's owner The Restaurant Group appears to be on a recovery track after last year's major restructuring and the reopening of venues to sit-in customers post-lockdown. Picture: Anna Gowthorpe/PA Wire

The group said the strength of its trading after reopening sites following the latest lockdown has reinforced its plans to expand its portfolio.

It said Wagamama, which currently has 144 outlets, has the potential to grow to between 180 and 200 restaurants.

The firm is on track to open five additional branches in the current financial year, with a further aim for between five and seven new locations each year.

The company also hopes to open at least five new Wagamama delivery kitchens each year.

Meanwhile, TRG said it plans to roughly double its pub estate, which currently stands at 78 sites, in the long term.

Hornby said: "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 reopening of the business and welcoming back dine-in customers as government restrictions eased.

"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."

The group also revealed that it posted a £58.8 million statutory loss for the half-year to July 4, compared with a £234.7m loss over the same period last year. Sales dipped by 4.6 per cent to £216.8m for the six-month period.

Harry Barnick, senior analyst at Third Bridge, said: “The casual dining sector has taken a Covid pummelling. Now as customers return The Restaurant Group is operating in a less competitive environment allowing for some breathing space during the recovery period.

“That being said, we are hearing about aggressive expansion from smaller brands, such as Franca Manca, which could challenge The Restaurant Group's dominant position in the market.

“Given the reduction in operating costs during the pandemic, analysts will be hoping for improved margins post-Covid once trading normalises. This largely depends on how successful The Restaurant Group can be in reducing rental rates.

“However, testing labour and food shortages could drive up costs in the short-term which limits the margin upside potential.”

Shore Capital analyst Greg Johnson noted: “We believe a much better business is emerging post last year’s estate rationalisation, with an attractive rollout story and a potential reshaping of industry dynamics, with the significant capacity reduction continuing to be witnessed.”

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