The Restaurant Group eyes growth in pubs and Wagamama as it raises £175m: The Restaurant Group has outlined its growth ambitions for its Wagamama and pubs business, including a five times increase in the number of Wagamama delivery kitchens which generate a 75% return on invested capital. The company is raising £175m through a share placing to enhance liquidity, accelerate deleveraging and support selective growth. The company said its pubs business has a strong track record of delivering returns on invested capital of over 25% (on an adjusted leasehold basis) and approximately £450,000 average outlet Ebitda (based on new openings between 2015 and 2017). The long-term ambition is for further selective site expansion and growing the business from 78 pubs today to a target of circa 140-160 pubs. Of Wagamama the company stated: “Wagamama (excluding delivery kitchens) has a track record of delivering over 40% returns on invested capital and approximately £500,000 average outlet Ebitda (based on new openings between 2015 and 2017). The five Wagamama delivery kitchens currently in operation generate £225,000 average outlet Ebitda with over 75% return on invested capital. Given this track record, long-term ambitions include significant measured roll-out potential to expand both in the UK to a targeted circa 180-200 restaurants (from 144 today), circa 20-30 delivery kitchens (from five today), and in international markets via franchise and the US JV.” The company said its Leisure and Concessions estate is now ‘right-sized; with the exit of approximately 250 sites through restructuring actions’. Average standalone delivery and takeaway sales in Wagamama and Leisure are at circa 2.5x and circa 5.0x pre-covid-19 levels respectively during the current national lockdown (for the four weeks ended 28 February 2021). The company added: “The group has strong capability to deliver an accelerated reopening plan, once the current restrictions for hospitality businesses end/ The group is well positioned across its diversified brand portfolio to benefit from the sustained removal of restrictions over time and to deliver long-term shareholder value.” Chief executive Andy Hornby said: “The covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to re-structure our business whilst preserving the maximum number of long term roles for our colleagues. TRG is operationally a much stronger business than 12 months ago. I would like to sincerely thank each and every TRG colleague for their enormous efforts throughout this period. The capital raise announced today, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process and provides TRG with the long term flexibility to invest in growing our business. Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long term winners.” Chairman Debbie Hewitt said: “In spite of heroic efforts to reduce our operating costs during the year, (reduced to just circa £3.5m per month during the first national lockdown), adjusted losses before tax were £87.5m (2019: profit of £74.5m). Statutory loss before tax was £127.6m (2019 loss before tax of £37.3m) including exceptional charges of £40.1m (2019 £111.8m) relating primarily to restructuring charges We have also significantly restructured our estate through several initiatives, with our total estate now circa 400 sites, compared with 653 at the end of 2019.” The company reported 50% of it leasehold estate is now on a turnover rent structure. 

KPMG asks landlords for Angus Steakhouse rent concessions: Angus Steakhouse, part of the Gateshead-based leisure group Noble Organisation, has asked restructuring experts from KPMG to negotiate rent concessions as the closure of its restaurants puts its finances under severe pressure. It operates five sites in visitor hotspots, such as Piccadilly Circus and Leicester Square in the capital. KPMG had written to its landlords requesting a rent holiday until lockdown trading restrictions come to an end. While some have agreed to the plan, without unanimous support the company risks running out of money, according to the Daily Telegraph, which first reported the story. Landlords were being asked to accept the payment of rent on a daily rate rather than quarterly once its restaurants had reopened, the report said. The most recent set of accounts show Angus Steakhouse making an operating profit of just £373,000 in 2018, down from £1.7m a year earlier. Sales were down 10% at £32m. The lockdowns and other trading restrictions have been a major blow to the restaurant trade but for Angus Steakhouse, with its reliance on crowds of tourists, the pain is likely to have been even more acute.