Monday, 24 Jun 2024

Frankie & Benny's owner to buy Wagamama in £559m deal

The deal will see The Restaurant Group (TRG) swallow up a business, founded in 1992, which now has nearly 200 outlets, most of them in the UK.

It comes as the new owner seeks areas of growth during a challenging period for the UK’s casual dining sector, with the likes of Gaucho, Prezzo and Byron struggling.

The Restaurant Group’s chief executive Andy McCue described the Wagamama deal – expected to complete by mid-December – as “an exciting and transformative opportunity”.

He added: “Wagamama is a fantastic brand, with a market leading pan-Asian proposition, which has consistently outperformed the casual dining market in recent years.”

The deal sees TRG pay £357m in cash and assume £202m in debt. It will be funded partly through a £315m cash call on the group’s shareholders. Shares fell 1%.

Wagamama will operate as an autonomous part of the group with current chief growth officer Emma Woods becoming chief executive and chairman Allan Leighton set to join the TRG board as a non-executive director.

TRG said it would accelerate the brand’s UK expansion including in some cases by converting existing sites into Wagamama restaurants, as well as piloting new “food to go” offerings and exploring international growth.

Wagamama currently has 133 UK restaurants plus 5 in the US and 58 franchise sites across Europe, the Middle East and New Zealand.

It employs more than 6,000 people and reported revenue of £307m and underlying earnings of £43m last year.

TRG has 381 casual dining restaurants under a number of brands plus more than 60 pubs and also operates dozens of concessions at airports and railway stations. The group employs more than 15,000 people.

The group has endured a tough time in recent years with a series of profit warnings culminating in a boardroom overhaul. Performance has stabilised since the appointment two years ago of former Paddy Power executive Mr McCue as its boss.

It has shaken up its offering by cutting prices and introducing more budget options.

The group disclosed in its takeover announcement that like-for-like sales so far this year were down by 2.2% but added that they were up 1.4% in the 14-week period since the end of the World Cup.

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