REG - Restaurant Group PLC - Trading Update

RestaurantAnnouncement

02/05/2023 07:00

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RNS Number : 9836X  Restaurant Group PLC  02 May 2023

The Restaurant Group plc

 

The Restaurant Group plc ("Group" or "TRG")

 

Encouraging trading momentum through the first four months of the year

 

TRG today provides a trading update for the first four months of the financial
year:

·    Current trading continues to be very encouraging

·    Good progress on cost saving initiatives delivering c.£5m of
incremental cost savings on an annualised basis

·    The combination of current trading and incremental cost savings
achieved provides confidence that TRG is tracking ahead of management
expectations on its medium-term margin accretion and deleveraging plans

Very encouraging trading momentum continues into the second quarter

Year To Date (YTD) LFL sales (%) vs 2022 comparable split by quarter

              Q1 Total LFL sales        Q1 Total LFL sales "Excl. VAT benefit" (illustrative)  Q2 to date

                                                                                               Total LFL sales
              13 weeks to 2 April 2023  13 weeks to 2 April 2023                               4 weeks to 30 April 2023
 Wagamama     +2%                       +9%                                                    +9%
 Pubs         +5%                       +10%                                                   +8%
 Leisure      (4)%                      +2%                                                    (1)%
 Concessions  +37%                      +44%                                                   +20%

VAT benefit boosted LFL sales by approximately 5 to 7% for the restaurant and
pub sector in Q1 2022 (13 weeks to 3 April 2022)

 

-      Wagamama and Pubs have both continued to deliver strong trading,
demonstrating the quality offerings and brand strength of both propositions

-      TRG is accelerating the previously announced rationalisation plan
for the Leisure business which will further improve cash generation in the
second half of FY 23

-      The exceptionally strong Concessions LFL sales are in part due to
the 2022 comparative when air passenger volumes were impacted by Omicron.
 However, very encouragingly, Concessions LFL sales are up 5% on 2019
(year-to-date) and up 10% on 2019 in Q2.

 

Dine-in trends have also been particularly strong

Year To Date ("YTD") LFL sales (%) vs 2022 comparable for the 17 weeks ended
30 April

 TRG Division  Total YTD LFL sales      Delivery and takeaway LFL sales  Dine-in       Dine-in LFL sales VAT Adjusted

                                                                          LFL sales
 Wagamama      +4%                      (13)%                            +10%          +15%
 Pubs          +6%                      n/a                              +6%           +10%
 Leisure       (3)%                     (14)%                            (1)%          +3%
 Concessions   +31%                     n/a                              +31%          +36%

 

The Group intends to provide enhanced segmental financial disclosure for all
four divisions at its interim results in September.

Strong progress made in three-year margin accretion plan

Through proactive management actions across the cost base the Group has been
able to deliver c.£5m of incremental annualised cost savings. The Group
expects to benefit from approximately 70% of the c.£5m of annualised cost
savings in FY23, with the full benefit flowing through from FY24 onwards.

As part of the previously announced Leisure estate rationalisation plan, the
Group will now close 23 sites in its Leisure estate at the end of May 2023,
having successfully negotiated a number of early exits.

Current favourable UK property market dynamics are providing further
additional opportunities for new Wagamama sites on attractive rent terms with
good incentives.  The Group will accelerate the expansion of Wagamama
restaurants and now anticipate seven to eight new openings in FY24 (versus
five planned previously), capitalising on the favourable property market
dynamics.

Outlook

·    Current trading continues to be very encouraging

·    The Group is delivering c.£5m of incremental annualised cost savings

·    This combination of encouraging current trading and incremental cost
savings provides confidence that TRG is tracking ahead of management
expectations on its medium-term margin accretion and deleveraging plans

TRG is pleased with the early progress in executing the plan to deliver
significant EBITDA(1) margin accretion over a three-year time horizon(2) and
the Board continues to consider long term strategic options.

 

(1) Pre IFRS 16 Adjustment and exceptional charges

(2) FY25 year-end run-rate

 

Enquiries:

 The Restaurant Group plc                                    020 3117 5001

 Andy Hornby, Chief Executive Officer

 Kirk Davis, Chief Financial Officer

 Umer Usman, Investor Relations

 MHP Communications                                          020 3128 8789/8742

 Oliver Hughes

 Simon Hockridge

 

Notes:

 

 

1.   The Restaurant Group plc operates approximately 410 restaurants and
pub restaurants throughout the UK as at 02 May 2023. Its principal trading
brands are Wagamama, Brunning & Price and Frankie & Benny's.  It also
operates a multi-brand Concessions business which trades principally
in UK airports.  In addition, the Wagamama business has a 20% stake in a JV
operating seven Wagamama restaurants in the US and over 50 franchise
restaurants operating across a number of territories.

 

2.    Statements made in this announcement that look forward in time or
that express management's beliefs, expectations or estimates regarding future
occurrences are "forward-looking statements" statements and reflect the
Group's current expectations concerning future events.  Actual results may
differ materially from current expectations or historical results.

 

 

 

 

 

 

 

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