The Restaurant Group PLC (LSE:RTN), owner of Wagamama, has been tipped to report stable sales in the coming week as it faces rising costs and pressure from shareholders to split its businesses.
Activist investor Irenic Capital Management, a New York-based investor with a 2.4% stake, has called for chairman Ken Hanna to be replaced and said the board has responded with "dither and delay" to its calls for bonuses to be aligned with shareholder returns, costs to be cut and faster disposal of non-core assets.
Restaurant sector like-for-like sales have been stable since TRG last provided an update, said broker Peel Hunt in a preview for a trading update it expects on Tuesday 19 July.
The early-May update revealed LFL sales rose 9% in the first quarter and early second at Wagamama, while for its pubs groups were 10% in Q1 and 8% in Q2, and concessions sales were up 44% and 20%.
"The closure of 23 Leisure sites at the end of May represents an acceleration of an existing plan, as does the decision to open 7-8 Wagamamas pa in a favourable UK property leasehold market," said analyst Douglas Jack.
The group is set to miss out on falling wholesale gas prices as its fixed contracts, however.
"In our view, forecast risk is on the upside due to trading, particularly in the Concessions division. Nevertheless, we expect the pressure from institutions to break up the company will likely intensify," said Jack.