Wagamama owner Restaurant Group PLC (LSE:RTN) (TRG) reported an increase in statutory loss for 2022 and said it will close around 35 restaurants over the next two years.
TRG reported a statutory loss before tax of £86.8mln on an IFRS 16 basis compared to a loss of £35.2mln for the year earlier, according to a statement.
Much of the loss was put down to a exceptional pre-tax charge of £117.5mln as a result of lower forecast future earnings expectations, largely in its leisure division, which includes the Frankie & Benny's and Chiquito restaurant chains, due to inflationary and cost-of-living pressures, the company said.
As a result of the macro-environment, the group is expecting to close roughly 30% of its leisure locations by 2024, with some sites being converted into Wagamama restaurants.
However, sales for the year ended 1 January 2023 were up to £883mln from £636.6mln the year before, TRG said.
The London-listed company reported adjusted underlying profits (EBITDA) of £83mln on a pre-IFRS 16 basis, up slightly from the prior year of £81.2mln.
Trading, it said, was “robust” in the casual dining market, with Wagamama, pubs and concessions all out-performing like-for-like sales in 2022 in their respective benchmarks compared to pre-pandemic 2019.
"We've delivered a strong operating performance for the year in a market which has continued to pose a number of headwinds for casual dining operators,” said chief executive Andy Hornby.
TRG said it has made an encouraging start to 2023, with expectations unchanged and like-for-like sales at Wagamama, pubs and concessions increasing in the eight weeks to 26 February 2023 compared to the same period 12 months ago.
Utilities are hedged until the fiscal year 2025, providing certainty on the cost base and based on current prices, broadly in line with the spot market, it noted.
In the medium term, the group said it has developed a strategic plan to deliver a 250-350 basis points (bps) EBITDA margin accretion over a three-year time period, driven by site expansion at Wagamama, like-for-like sales growth in pubs and managing costs.
“Current trading has been very encouraging to the great credit of our teams who continue to ensure our customers receive the best experience possible,” Hornby added.
Last month, activist shareholder Oasis Management blasted the company after it lost two-thirds of its share price value.
Oasis Management, an Asia- based hedge fund, has called for TRG to “re-align its priorities” by taking immediate action to revitalise investor confidence.
The fund, which owns 6.5% of the hospitality company, expressed a desire for management changes in the near future.