- Strong Q1 like for like sales growth
- Favourable property market dynamics lift Wagamama openings
- Trading ahead of medium-term margin and deleveraging plans
Shares in Wagamama owner Restaurant Group (RTN) jumped over 10% to 44.6p on Tuesday after the company announced strong progress against its medium-term margin and deleveraging targets.
In addition, the company said ‘favourable’ UK property market dynamics are providing further opportunities for new Wagamama sites on ‘attractive’ terms and good incentives.
The company has consequently increased guidance on new openings to seven to eight from five in FY24.
STRONG SALES GROWTH
In the thirteen weeks to 2 April, the Wagamama and pubs estates registered strong like-for-like sales growth of 9% and 10% respectively while concessions benefited from an omicron impacted prior period with sales up 44%.
Even so, like-for-like sales in concessions are up an encouraging 5% compared with 2019 so far this year.
Dine-in trade was ‘particularly’ strong with VAT adjusted like-for-like sales up 15% and 10% in Wagamama and pubs respectively while concessions were up 36% for the 17 weeks to 30 April.
Better than expected performance and proactive cost cutting actions has allowed the group to deliver around £5 million of incremental cost savings.
Roughly 70% of the savings are expected to fall into 2023 with the remainder flowing through in 2024 and beyond.
ACCELERATED RESTRUCTURING
As part of previously announced plans to accelerate disposals in the ‘highly contested’ market segment where Frankie & Benny's and Chiquito operate, the company will now close 23 sites at the end of May 2023, having successfully negotiated several early exits.
Following today’s positive update, the company said it is tracking ahead of its medium-term target to expand EBITDA (earnings before interest, tax, depreciation, and amortisation) margin by 2.5% to 3.5% over the next three years.
GREATER TRANSPARENCY PROMISED
In a nod to activist criticisms over corporate governance and lack of transparency, management said the group intends to provide ‘enhanced’ financial disclosure for all four divisions at its half year results in September.
The group also said the board continues to consider long term strategic options.
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