Exclusive – TRG CEO – 2023 transformational year, takes 100% ownership of Wagamama US: Andy Hornby, chief executive of The Restaurant Group (TRG) has told Propel that 2023 was a transformational year, with strong growth across all of its businesses and that he is confident that Wagamama will work in the US, after the Apollo-backed company took 100% ownership of the brand in the States. Revenue from continuing operations for the year to 31 December 2023 was £824.0m (2022: £717.3m), which represented an increase of 14.9% on the prior year, with strong growth across Wagamama, and the company’s pubs (Brunning & Price) and concessions businesses. Pre-tax loss stood at £19.6m compared with a loss of £29.1m the year before. Operating profit from continuing operations (excluding its leisure division) increased to £29.8m in FY23 from £4.6m in FY22. Like-for-like dine-in sales for Wagamama for the year increased 11%, with total like-for-like sales up 7%, with delivery and takeaway down 5%. Brunning & Price saw like-for-like sales increase 10% and the concessions business reported a 29% rise. During the year, TRG reshaped its business with the disposal of its 75-strong leisure division to The Big Table Group, and was taken private when Apollo acquired it in December in a £506m deal. Hornby told Propel: “2023 was a genuinely transformational year for TRG. We traded strongly throughout the year thanks to the phenomenal efforts of our restaurant and pub teams. We completed the post-covid reshaping of the business with the divestment of our leisure division to Big Table Group. Finally, the acquisition of TRG by a shareholder with the scale and expertise of Apollo marks a hugely exciting new chapter for the business. Strategic progress since the acquisition by Apollo has been pleasing. It is really refreshing to be in a position where we can concentrate on investing in and growing three good businesses. We have hit our target of opening ten Wagamama sites in the UK during 2024 and we have acquired 100% ownership of our Wagamama business in the USA (having recently completed the purchase of our joint venture partner’s stake). While the consumer backdrop in the UK, USA and Europe remains challenging, we remain confident in the potential to continue growing Wagamama, Brunning & Price and TRG Concessions in the years ahead.” TRG features in the Propel Turnover & Profits Blue Book, which is available exclusively to Premium Club members and features 958 companies. TRG’s turnover of £824.0m is the 19th highest in the database. 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 kai.kirkman@propelinfo.com to upgrade your subscription.

At the start of 2020, the company entered into a US joint venture partnership with Conversion Venture Capital (CVC2) as financial partners and Robert Cornog Jr and Richard Flaherty as operating partners. CVC2 acquired 80% of the joint venture and TRG retained the remaining 20%. It also retained the option to repurchase the remaining 80% of the business starting in 2026. The joint venture opened three new sites in FY23 in Atlanta, Tampa and Dallas, taking Wagamama’s US estate to seven sites, with a site in Arlington due to open before the end of this year. TRG said the precise scale of future expansion plans in the US are yet to be determined, but that it continues to expect to target an overall estate size of 20 to 30 sites by December 2027. Hornby told Propel: “An obvious upside of being backed by a large US private equity firm is it understands the potential of developing a strong brand like Wagamama in the US. Equally, we are not getting carried away. What we have seen is that some sites have worked very well, and some sites have been much tougher. We certainly wouldn't have gone ahead with the joint venture purchase if we hadn't seen enough now that we are confident it really can work and will work. Equally, we are not going to make the mistake of growing too quickly. We will stay measured, and we will try to make sure we land sites that are really working. What we are seeing, which is very similar to here in the UK, is the sites that are working tend to be the absolutely top-class shopping centre/leisure park located sites. The ones where we are finding it tougher are those in traditional downtown locations in very large cities, which is exactly the same as what we see here in the UK. It is more marked in the US. It's exciting, and it's good to get it done early in Apollo‘s ownership.” At year end, the company’s Wagamama franchise business comprised 58 sites across Europe and the Middle East. It said: “We are exploring opportunities to further accelerate our international footprint – we have opened two new sites in 2024 so far, and expect to open a further three to five sites in the second half of the year, including in India, a new territory.”

The pubs business has enjoyed another outstanding year. The company opened one new pub during the first half of the year – the Mytton and Mermaid in Shrewsbury, which has “surpassed our expectations and is one of our most successful new pub openings”. The company said: “We aim to open between one to three high quality pubs per year from FY24 onwards. Brunning & Price is a high-quality asset with significant potential to create further value.”

Hornby said: “Barburrito is having a good year, it's really showing some decent momentum. It is ticking along very nicely and it's definitely not on my worry list. We will need to make a decision on what we do with it next – let it continue to tick along, or look at something to significantly push it forward.”

Hornby said: “In general, it has been ‘solid’ across the casual dining industry. This year is proving to be a strong year for pubs, especially food-led pubs like Brunning & Price. Our concessions business has clearly benefited hugely from the good recovery in air traffic volumes over the summer. This year has been a really good year for the concessions team. In terms of the core casual dining market you only have to look at the Coffer Peach data to see that volumes are still slightly subdued. That is what everyone is hoping to see change over the next six to 12 months. I am reasonably optimistic that it will with the inflationary backdrop. It's almost a reverse from where we were this time last year. Like-for-like sales were incredibly strong but profit conversion was quite difficult because you had the inflationary pressure from food pricing, in utilities and in labour costs. This year, the whole industry is saying the same thing, like-for-like volume is harder to come by but the inflationary environment is getting a lot more favourable. There is also definitely a feeling that it is now closer to four days in the office for people than the three days a week we had last year. I think people are feeling pretty good about Christmas. I think all of that is broadly positive.”

Hornby said: “Plan A, is to build out Wagamama, both in the UK and with gradual speed in the US. We currently have 168 Wagamama in the UK, I have always said something in and around 220 is a sensible size for the business. So, we have about five to six years of sensible site expansion here in the UK, and as I have already said we will be doing some considered site expansion in the US. Secondly, with Brunning & Price, we would definitely consider activity that helps us acquire more freehold-backed pubs in the sweet spot that we think we know and understand, which is typically food-led and in good demographics. Things have to make sense in their own right, but the number of opportunities in that space are limited. Of course, we would love to make Brunning & Price bigger over time, if the right opportunities came up. We will also continue to sensibly and organically grow our concessions business on the back of the excellent relationships we have with the core airports. Those are the starting building blocks that we will do regardless. Would we look at acquiring something else? We will look at options but definitely not at the expense of getting in the way or being a distraction to the growth of our three core businesses. Will there be brands/businesses that can enhance the overall business? There may or may not be. The key is that whatever businesses are in the family they need to have their own cultures, their own ability to breathe and not be conglomerated.”

Rileys delivers 20% increase in Ebitda in 2023, expects further 25% rise in 2024 and full-year turnover to exceed £10m: Sports bar operator Rileys has said it delivered a 20% increase in Ebitda in 2023 and expects a further 25% increase in 2024, and full year turnover to exceed £10m. It reported like-for-like sales growth in 2023 of 3.7% and grew its Ebitda to £1.2m, despite its Nottingham site being closed for six months for refurbishment. The company, which relocated its Chester business to a new, more prominent site in the city in February, added Cardiff to its portfolio this summer and will open in Leeds in 2025, taking the number of venues to 15. It also expects Ebitda to grow to £1.5m by the end of 2024, buoyed by sales growth of 9.8% in the first half of this year and the new sites, which means the business is on track to break through the £10m sales barrier during 2024. The company said double-digit growth in its core business has further fuelled its appetite to expand, and it is still seeking sites in Bristol, Birmingham, Manchester, Leeds, Newcastle and Glasgow. Chief executive Craig Mayes said: “I’m delighted with our performance in 2023. We refurbished Nottingham, which is trading ahead of expectations. Importantly we have continued to invest in our people, improving our onboarding process, which has driven significant improvements in customer service and average spend. Our refurbished site Ebitda conversion is in excess of 30%, which leaves us well placed to weather the cost pressures our industry faces. Alongside this, we have repeatedly delivered three-year returns and better on our refurbishment programme, and this is our expectation on Chester and Cardiff.” Non-executive chairman Peter Marks added: “To see Rileys bounce back so strongly in recent years is most pleasing. It is modernising its offer, and Craig and the team have continued to fine tune the operational performance. We have opened our first new site in 18 years, and the early signs are extremely promising. We have a great model with solid profit conversion and returns on capex, despite the difficulties many in the hospitality sector face.” Rileys, which is owned by Weight Partners Capital, shows live sport on HD screens as well as offering a dedicated sports zone with a large cinema-style HD projector. The clubs also host local and national pool, snooker and darts competitions including the Professional Darts Corporation qualifiers. 

Safestay – 2024 has been a ‘period of significant strategic progress’: Hostel operator Safestay has reported 2024 has been a “period of significant strategic progress” as it said its strong trading momentum has continued into the third quarter. The group said sales to the end of August “significantly ahead of last year supporting strong overall occupancy levels across the two peak summer months”. The company said forward bookings for the remainder of 2024 and into 2025 are “comfortably ahead of the prior year supported by continuing recovery in group bookings”. It comes as the business reported revenue from continuing operations increased 6.6% to £10.7m for the six months to 30 June 2024 (2023: £10.0m). Adjusted Ebitda for continuing operations increased 23.1% to £3.2m (2023: £2.6m). Loss before tax from continuing operations was £113,000 (2023: loss of £947,000). In January 2024, the company refinanced its debt with HSBC to increase the group’s overall funding capacity and support its long-term growth plans. Existing borrowings refinanced into a single £16m, five-year term loan with the addition of a new £2.5m revolving credit facility. There was a 6.0% increase in bed nights to 412,442 (2023: 389,124), of which 42.3% were booked through direct and non-commissionable channels (2023: 26.9%) “reflecting a step-change in marketing capabilities and supported by a gradual recovery in group bookings”, which represent 23% of accommodation sales in the period (2023: 13%). Occupancy rate of 70.6%, a 1.8% increase year on year (2023: 68.8%), nearing pre-pandemic levels (2019: 71.1%). Total revenue per bed increased 3.2% to £18.28 (2023: £17.72). The company opened its Edinburgh Cowgate hostel in June 2024 following acquisition in 2023 and said it was “very encouraged” by initial trading. During the period, the group signed its first management contract to run the resort-based,120-bed Calpe Seafront Hostel on Spain's Costa Blanca. The group also acquired the Hotel Lineros in Cordoba for €2m. The property is currently being converted into a 100-bed hostel and is the group's fifth in Spain. Safestay also acquired a freehold property in Brighton for £2.3m. The group intends to convert the property into a 220-bed premium hostel and is the Group's sixth site in the UK. Chairman Larry Lipman said: “2024 so far has been a period of significant strategic progress for Safestay as we have continued to strengthen our position as one of Europe's leading hostel operators. In addition to remaining focused on delivering organic growth through our operational initiatives, we will continue to actively evaluate new opportunities where well located, attractive sites become available. We are excited by the significant long-term growth opportunities available to us as an established international operator in the highly fragmented and significant global hostel market.” Safestay’s portfolio now comprises 20 sites.

Millennials spend most money on takeaway coffee with average of £728 a year: Millennials spend more money on takeaway coffee than any other generation – with their average annual outlay coming in at more than £700, a study has revealed. The poll found those aged between 28 and 43 spent an average of £728 on coffee over the past year. Millennials even outspend the younger Generation Z, who fork out £52 less a year at £676, reports The Telegraph. In contrast, baby boomers – those born between 1946 and 1964 – spend an average of just £260 a year on coffee on the go. That is just over a third of the millennials’ bill. The research, commissioned by McDonald’s, also found the average coffee drinker spends more than £29,000 on takeaway coffee in their lifetime. The OnePoll survey found 27%of Britons think they spend a lot on takeaway coffee. Latte was the most popular style, with 23% favouring it, followed by cappuccino on 21% and flat white on 11%. Of those surveyed, 74% said they preferred their coffee milky, with 18% liking it black. On average, those polled said a coffee on the go should cost £1.86 a cup, almost half of what the average takeaway coffee costs at £3.40, according to FreshGround. Costs aside, 56% said coffee was a luxury they would not want to live without.