Restaurant Group PLC Trading Update (9836X)

TIDMRTN

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.GBP5m 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      Q1 Total          Q2 to date 
                 LFL sales     LFL sales         Total LFL 
                               "Excl. VAT        sales 
                               benefit" 
                               (illustrative) 
                             ----------------  ------------- 
                13 weeks      13 weeks          4 weeks 
                 to 2 April    to 2 April        to 30 April 
                 2023          2023              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     Delivery and     Dine-in         Dine-in LFL 
                  YTD LFL    takeaway LFL    LFL sales    sales VAT Adjusted 
                   sales        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.GBP5m of incremental annualised cost savings. The Group expects to benefit from approximately 70% of the c.GBP5m 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.GBP5m 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 
  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.

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May 02, 2023 02:00 ET (06:00 GMT)