Home Business NewsBusiness The Restaurant Group perks up

The Restaurant Group perks up

by LLB Reporter
17th Mar 23 11:27 am

Having been the target of an activist investor, The Restaurant Group has come out fighting with its latest update, saying trading has improved in its business. The fact dine-in customers are back will be a relief to management given how delivery demand continues to weaken.

An improvement in trading is only step one in its recovery plan. It also needs to further bring down costs, get net debt to more manageable levels and right-size its estate.

AJ Bell’s Russ Mould said: “Now is the time to strike deals with landlords for new Wagamama sites. The commercial property market has been shaken by the pandemic and needs to undergo a transformation to the modern world. That means there could be good deals for a brand like Wagamama which could pull in the crowds.

“There have been growing calls for Restaurant Group to sell off more of its assets including the pub restaurant arm, yet that looks like a cash cow for the business which is a robust source of earnings.

“The airport concessions arm has also been a good earner in ‘normal’ times, so there is merit in keeping that bit of the business as the travel sector recovers. However, it would also have a lot of value to other people looking to take advantage of a captive audience, so selling it could be a potential way to put a decent cash injection into the business.

“That leaves Frankie & Benny’s and Chiquito as the duds in the portfolio. These are tired brands and dinosaurs of the restaurant industry which has radically changed over the past decade or so, with posh burgers, noodles, fried chicken and street food now all the rage.

“Why would you want to go to a tatty place for an overpriced plate of fish and chips or bland fajitas when there are so many better flavours on offer elsewhere?

“The Restaurant Group would be better off turning them into Wagamama sites or perhaps launching a new concept.”

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