Investors were tucking into Restaurant Group PLC (LON:RTN) as Wagamama, the latest addition to its portfolio of restaurant chains, brushed off the gloom lurking over the casual dining sector with its first-half results.
Restaurant Group completed its £559mln takeover of the Japanese restaurant chain at Christmas, having reached a deal with its former owners at the end of October.
In the first six months of its financial year – April to October – turnover jumped 13.7% to £178.9mln (H1 17: £157.4mln). Like-for-like sales, an important metric for retailers and restaurants, rose 12.0% in the period.
A higher tax bill and refurbishments to ten of its sites meant Wagamama was still loss-making, although the £4.0mln loss recorded this year was more than half what it posted for the same period a year ago (H1 17: loss of £8.2mln).
Excluding various one-off costs, underlying earnings (adjusted EBITDA) grew to £25.9mln, up from £23.5mln last year.
Much better than peers
It is an impressive performance, especially considering the struggles many of its peers have had to endure over the past couple of years, with the likes of Byron and Jamie’s Italian all having to shut stores.
Most of their issues have been caused by the fact that too many restaurants – a net 4,000 over the past four years – have opened in recent years which has given customers a wealth of options to choose from.
There is also the impact of weakening consumer spending, with Brexit, stagnant wage growth and above-target inflation all working to squeeze peoples’ pockets.
Wagamama’s showing is more notable given the fact the period includes the hot summer months and football World Cup, neither of which served as a boon for the industry.
'Well-prepared for next chapter'
“We want Wagamama to be special, both the bowl and the soul and so have continued to invest in our amazing teams, our vegan food and our customer service this quarter,” said chief executive Emma Woods.
“As a result, we have sustained our outperformance of the UK market. The business is well prepared for, and excited about the next stage of its development, with The Restaurant Group as our new owners.”
Restaurant Group investors, pleased with their firm’s new acquisition, helped to drive the share price 1.1% higher to 147.8p on Friday morning.