2 May 2023 07:00
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 LFL sales | Dine-in LFL sales VAT Adjusted |
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 EBITDA1 margin accretion over a three-year time horizon2 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 Andy Hornby, Chief Executive Officer Kirk Davis, Chief Financial Officer Umer Usman, Investor Relations
| 020 3117 5001 |
MHP Communications Oliver Hughes Simon Hockridge | 020 3128 8789/8742 |
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.