Frankie & Benny’s owner The Restaurant Group almost doubles revenues

Wagamama owner The Restaurant Group has said the relaxation of trading restrictions helped its sales nearly double in the first half of the financial year.

The hospitality operator, which also owns the Barburrito and Frankie & Benny’s chains, told investors on Thursday that revenues skyrocketed by 95 per cent year-on-year to £423.4million in the six months to 3 July.

With the exception of its concessions arm, which was impacted by the drop in international travel following the emergence of the Omicron variant, all divisions of the business experienced healthy trade during the period.

This enabled the firm to report a £10.2million adjusted pre-tax profit, compared to a £19.9million loss in the previous year when its establishments could only fully trade for seven weeks.

However, it made a statutory loss of £26.1million due to significant impairment charges in relation to worsening inflationary pressures and a problematic near-term economic outlook.

The Restaurant Group said that utility costs had grown by £2million more than predicted at its last trading update in mid-May.

To mitigate against future cost increases, it has hedged all electricity and gas costs until 2024, a measure the company predicts will save it between £40million and £70million in the coming two years.

It has also bought interest rate caps on £125million of gross debt up to November 2025 and repaid £89million of a loan facility, making it less vulnerable to any potential base rate hikes.

Precautions: To mitigate against future cost increases, The Restaurant Group has hedged all electricity and gas costs until 2024, thereby saving it a potential £70million

‘We have taken decisive management actions to reduce the impact of the industry cost pressure,’ said chief executive Andy Hornby.

‘Whilst the uncertain consumer environment presents challenges for the hospitality sector, the group is well-positioned to further develop our brands to deliver long-term growth for all stakeholders.’

TRG’s like-for-like revenues within most of its divisions outperformed the wider market for the 33 weeks to 21 August, according to the Coffer Peach tracker, a prominent industry sales monitor.

But trade slowed at its Wagamama and leisure outlets in the latter half of the period because of the summer heatwave and weaker delivery-related orders.

Demand at concessions outlets has also been affected by airlines limiting their summer flight schedule after staff shortages led to turmoil across British airports earlier this year.    

Lara Martinez, an analyst at research firm Third Bridge, said: ‘Visit frequency has dropped across UK operators, while spend per cover seems to have increased, an early indicator that people are choosing to eat out less often, but make more of an occasion out of it. 

‘That being said, we are hearing how TRG’s younger-facing brands, like Wagamama, could be somewhat shielded as their target audience doesn’t face the same increase in costs as older consumers, as reflected in LFL sales growth clearly above the market.’ 

The Restaurant Group shares were up 3.35 per cent to 44.4p during the late afternoon on Thursday, although their value has declined by 55 per cent since the start of the year.