Sat 9th Sep 2023 - The Restaurant Group confirms advanced talks to sell its Leisure division to Big Table Group The Restaurant Group confirms advanced talks to sell its Leisure division to Big Table Group: The Restaurant Group (TRG) has confirmed it is in advanced talks to sell its Leisure division to Big Table Group. It follows reports earlier today that The Big Table Group, the operator of Las Iguanas, Café Rouge, Banana Tree and Bella Italia, is in talks to acquire the division, which includes the Frankie & Benny’s and Chiquito brands. Sky News reported banking sources said the talks could lead to an imminent agreement but warned that a deal could yet fall apart. “TRG confirms that it is in advanced discussions with The Big Table Group in relation to a potential divestment of its Leisure business,” a TRG spokesman said. “While discussions are ongoing, there can be no certainty that they will lead to a transaction nor as to the final terms of any such transaction. A further announcement will be made as and when appropriate.” TRG, which confirmed on Friday that chairman Ken Hanna would step down despite the company’s improving outlook, said this week that the Chiquito’s and Frankie & Benny’s estates were being shrunk from 116 sites at the end of last year to an anticipated 76 by the end of this. One industry source said that a deal could be valued at circa £30m-£35m. The Leisure division has acted as a drag on TRG’s improving financial performance, with sales growth lagging the wider casual dining market in recent years. On Wednesday, TRG said that total year-to-date like-for-like sales for Wagamama (VAT adjusted) were up 9%, with dine-in like-for-like sales (VAT adjusted) up 14%. Delivery and takeaway like-for-like sales for the brand were down 8%. Pubs like-for-likes sales for the year to date were up 10%, with Concessions up 31% but its Leisure division was down 1%. Earlier this week, TRG chief executive Andy Hornby told Propel that the company was seeing “real volume growth” with all parts of the business “firing on all cylinders”. Speaking following TRG’s interim results, where the business reported revenue for the half year was up 10% to £467.4m, Hornby said “most of the heavy lifting has now been done” in its leisure division, leaving it with 76 “high quality” sites. He also said that business continued to “actively explore strategic options to further accelerate margin accretion and deleveraging”. It is thought a successful sale would help TRG invest in the further expansion of Wagamama, Brunning & Price – its pubs business, and its Concession division. Yesterday, TRG announced that Hanna would step down as its chairman due to “due to personal reasons”. Hanna had been targeted by activists led by the Hong Kong-based fund Oasis Management, over the company’s strategy. The Times reported that Oasis this week acquired a stake in TRG from Columbia Threadneedle, lifting its holding from 14.9% to almost 18%. The sale by Columbia Threadneedle will come as a disappointment to TRG because it was the biggest shareholder until now and had been publicly supportive. The fund manager is believed to have sold a 6.5% holding, with some going to other activists. Dan Wosner, head of Europe at Oasis, told The Times he was “unsurprised” by Hanna’s resignation. “We recently voted against the re-election of the chairman at the AGM. The status quo is unacceptable.” Big Table Group, the Epiris-backed, Alan Morgan-led business, currently operates circa 160 sites across the UK. It is thought that if successful in acquiring TRG’s Leisure division, it will look to convert sites to a number of its current brands. It is currently growing the estate of the fast-casual pan-Asian brand, Banana Tree, which it acquired last September, through conversions from its Café Rouge business. It has so far converted six sites to the brand, taking its estate to 15 restaurants, with further conversions lined up in Henley-on-Thames, Bath and Greenwich. In July, Morgan told Propel that Big Table Group is one of the best capitalised restaurant groups in the UK and it continued to review targets for acquisition. At the same time, the company reported an “encouraging” performance in the first half of its current financial year to April 2023, with sales up 9% year-on-year (excluding prior year VAT benefit). It said trading Ebitda is “well-ahead of the prior year and ahead of expectations, even after accounting for significant additional energy costs. TRG and Big Table Group both feature in the Propel Turnover & Profits Blue Book, the latest edition of which was sent to Premium subscribers on Friday (8 September). TRG’s turnover of £883,000,000 for the year to 1 January 2023 is the 13th highest in the database. Big Table Group’s turnover of £206,170,246 for the year to 30 October 2022 is the 46th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription.