Wagamama owner The Restaurant Group (TRG) has cheered “very encouraging” trading as it revealed plans to speed up its closure programme.
Shares in the company, which also owns the Frankie & Benny’s brand, jumped on Tuesday morning after it hailed “good progress” on recent cost-cutting efforts.
In March, the company said it would shut 35 of its loss-making casual dining restaurants, which include Frankie & Benny’s, in order to boost profits.
In its latest update, the hospitality firm said it expected to save £5 million a year due to moves to slash costs.
The group, which currently runs 410 venues, added that it will now speed up the closure process, with 23 sites due to shut by the end of May after it negotiated exiting a number of contracts ahead of schedule.
“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,” the firm said in a statement.
TRG revealed that like-for-like sales grew by 2% at Wagamama over the first quarter of 2023, with a 5% rise for its pub arm and 37% growth across its concessions, amid a recovery in airport passenger numbers.
Meanwhile, Wagamama sales grew 9% over the four weeks to April 30, while the sales decline at its leisure sites slowed to 1%.
The group added that “favourable” property market conditions are creating further opportunities for new Wagamama restaurants on good rent terms.
TRG plans to accelerate its opening plans for the pan-Asian chain, with up to eight sites due to open next year, from previous plans for five sites.
Analysts at Barclays said: “The statement is strong across the board, with trading holding up well despite consumer spending headwinds.”
It comes amid continued pressure from activist investor Oasis Management, which owns a 12.3% stake in the group, to improve profits for investors.
Published: by Radio NewsHub