REG - Restaurant Group PLC - Trading Update

RestaurantAnnouncement

19/07/2023 07:00

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RNS Number : 4342G  Restaurant Group PLC  19 July 2023

The Restaurant Group plc

 

Strong first half and confidence in delivering medium-term plan

 

The Restaurant Group plc ("The Group" or "TRG") today provides a trading
update for the first 28 weeks of the financial year (year-to-date) covering
the period from 2 January to 16 July 2023.

Very encouraging year-to-date Trading performance

Total Like-for like ("LFL") sales (%) vs 2022 comparable split by quarter

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

                                                                                               Q2 Total LFL sales       Q3 (to-date) Total LFL sales

              13 weeks to 2 April 2023  13 weeks to 2 April 2023                               13 weeks to 2 July 2023  2 weeks to 16 July 2023
 Wagamama     +2%                       +9%                                                    +5%                      +21%
 Pubs         +5%                       +10%                                                   +13%                     +7%
 Leisure      (4)%                      +2%                                                    (7)%                     +12%
 Concessions  +37%                      +44%                                                   +23%                     +34%

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)

 

Dine-in trends have been particularly strong

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

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

                                                                                                            LFL sales
 Wagamama      +5%                  +8%                                   (10)%                            +10%          +13%
 Pubs          +9%                  +11%                                  n/a                              +9%           +11%
 Leisure       (4)%                 (2)%                                  (9)%                             (3)%          (1)%
 Concessions   +28%                 +30%                                  n/a                              +28%          +30%

 

·    Wagamama has continued to trade strongly. Despite trading being
temporarily impacted by the hot weather in late May and June, Wagamama still
outperformed the market in Q2. Very encouragingly, dine-in covers are also in
year-on-year growth.  Our recent openings are trading ahead of expectations
and we have confidence that our expansion plan will continue to deliver highly
attractive returns for shareholders.

·    Brunning & Price Pubs ("B&P) has delivered another
exceptional trading performance in the first half of the year, with dine-in
covers in year-on-year growth.  B&P has continued its long term trend of
out-performing the market and the business has recently been recognised as the
best Pub Group in the UK by the CGA PubTrack survey, further illustrating the
core strength of the B&P proposition.

·   Despite our Leisure business being the most impacted by the current
cost-of-living pressures,  good progress has been made on further improving
cash generation within the business, with costs being well-managed through
further operational efficiencies and the estate rationalisation plan
progressing ahead of expectations.

·    Concessions trading has strengthened even further in recent weeks,
benefitting from the rapid recovery of passenger volumes and strong
operational delivery leading to exceptionally strong LFL sales vs 2022.  The
strength of the Concessions performance is further illustrated by comparing
the trading run-rates against pre-Covid levels, with LFL sales versus 2019 up
3% in Q1, up 10% in Q2 and up 15% in Q3.

 

Property update

Leisure estate rationalisation programme: As part of the previously announced
Leisure estate rationalisation plan, the Group will have closed approximately
35 sites by the end of this financial year.  The 35 sites include 8 freehold
sites.

The TRG Property team have made good progress in efficiently managing the
disposal programme and protecting net cash.  We have seen encouraging levels
of interest across both the freehold and leasehold disposal sites across a
variety of alternative potential tenants and expect to have exited or sold the
majority of the 35 sites by the end of FY24.  The Freehold sales are expected
to generate approximately £8m to £10m of cash proceeds.

New sites:  In the current financial year we have opened four new Wagamama
sites and one Pub restaurant.

The new Wagamama sites have enjoyed an extremely strong start and are trading
ahead of expectations.  We remain confident in our ability to deliver 7 to 8
new Wagamama openings annually from FY24 onwards, capitalising on the
favourable property market dynamics.

Our latest new pub, The Mytton and Mermaid in Shrewsbury, has been
particularly successful and has delivered our highest ever level of sales for
a new opening.

Update on Strategy

At TRG's full-year results presentation in March, we set out the medium-term
strategy for the Group.  The plan targets significant EBITDA(1) margin
accretion over the next three years(2) as well as deleveraging to reduce net
debt / EBITDA(1) to below 1.5x by the end of FY25.

Since then, the Group has made an excellent start in execution of the plan
consisting of:

·    Strong LFL trading performance in the first half of the year

·    Incremental cost savings of £5m p.a.

·    Acceleration of both new Wagamama openings and the rationalisation of
the Leisure estate

 

Whilst we are pleased with the progress being made in delivering these
medium-term plans, the Board   has continued to review its wider strategic
options with the assistance of independent advisors in order to examine the
potential to accelerate TRG's deleveraging profile and further enhance
EBITDA(1) margin accretion.  In evaluating strategic options including
potential disposals, the Board remains mindful that any transaction must be at
attractive levels for shareholders and must reflect both the strength of
current trading and the long-term prospects of our businesses.

Outlook

Given the very encouraging trading performance in the first 28 weeks of the
financial year, TRG is confident in delivering management's expectations for
FY23.

 

 

 

 

(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                                          07885224532/07584142665

 Oliver Hughes

 James McFarlane

 

Notes:

 

 

1.   The Restaurant Group plc operates approximately 400 restaurants and
pub restaurants throughout the UK as at 18 July 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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