The Restaurant Group PLC (LSE:RTN), owners of hospitality brands like Wagamama, soared by around 8% higher on Wednesday morning after a first-half trading update dispelled concerns about the success of its non-core brands.
Like-for-like sales for the London-listed firm’s leisure business, which mainly refers to Frankie & Benny's and Chiquitos and has been a hot topic of debate between shareholders and management, sank by 4% in the year to date.
In recent months, several activist investors have been expressing displeasure with management and their remuneration package as well as making calls to siphon off all its brands apart from Wagamama.
“Despite our Leisure business being the most impacted by the current cost-of-living pressures, good progress has been made on further improving cash generation within the business,” a statement said.
In the first few weeks of the third quarter, the leisure division has been able to post a yearly sales increase of 12% - the largest rise in sales for the division this financial year.
The leisure business is currently going through a “rationalisation programme”, the group added, with plans to shrink the number of sites by 35 over the current financial year.
Wagamama, the group’s flagship Japanese restaurant, saw sales jump by 5% in the first six months of 2023.
Hot weather in late May and June “temporarily impacted” the restaurant’s trading but the brand was still able to outperform the market in the second quarter with sales rising 9% year-on-year.
Both the group’s two other divisions, concessions and pubs, grew sales also, rising year-on-year by 28% and 9% respectively.
Shares in the hospitality firm are now trading at around the 42p mark.