Restaurant Group PLC (LSE:RTN) (TRG), owner of the restaurant brand Wagamama, will close 23 sites by next month.
The sites affected are the group’s ‘Leisure Brands’, which will mean the exit of Frankie & Benny’s and Chiquito sites.
TRG’s leisure brands was the only division in the first quarter to experience a drop in sales year-on-year, falling by 3%.
Wagamama, arguably the firm's key driver of growth, will not close any sites and analysts at Liberum noted “management is now guiding for seven to eight openings” for the Japanese restaurant.
The closures, announced in the company’s first-quarter update, come after activist investors began calling for change from chief executive, Alex Hornby.
Shares in the restaurant operator are down by more than a quarter in the last twelve months, leading to shareholders Oasis Management and Irenic Capital Management both asking questions about leadership.
Oasis, which owns 6.5% of TRG, has been vying for management to “realign its priorities” and voiced concern about the group’s remuneration policy.
New York-based Irenic asked for the disposal of non-core assets and to focus on Wagamama as well as also calling for an overhaul of the firm's pay scheme which saw Hornby paid £658,000 in 2022.
Management has clearly listened to some of the concerns as recently TRG cut costs by £5mln per year.
Investment bank Liberum believes these savings allied to strong sales growth justify an increase of 4% to underlying earnings guidance and a 24% rise to pre-tax profit estimates for 2023.
The TRG closures are not the only firm shutting sites, at the end of April Prezzo confirmed it would be shutting 46 of its sites.
On Tuesday, the Italian restaurant said it was beginning a legal process with site landlords to start the closure of stores.
Shares in TRG were down 3.5% on Wednesday after opening at 45.20p.