Cineworld’s demise should have little read-through on Wagamama owners Restaurant Group PLC (LSE:RTN), according to Peel Hunt.
Analysts at the investment bank said that only 135 of Restaurant Group's roughly 400 sites are located next to cinemas, while sales have held up compared to 2019 despite ticket entries into the big screen being weaker.
Additionally, the analysts point to some potential positives that should help performance, including possible government support and an improvement in the inflationary supply side.
Peel Hunt also added the company's reliance on delivery at its Wagamama chains has fallen, with deliveries accounting for roughly 22% of total sales as opposed to 32% last year.
“This should benefit the sales mix (towards drink), costs (reducing commissions) and improve the ratio of diners to delivery drivers in the restaurants.”
All its 41 concession sites, which are mostly located in airports, should open, although the extent to which they outperformed during the travel lull at the airports has weakened since competitors have re-opened stores.
However, Peel Hunt did note that Restaurant Group’s energy contracts, although fixed for the next two years at 95% and 75%, still represent downgrade risk.
Recent trading also was not helped by heatwaves and rail strikes, with prospects likely to be hit in the upcoming quarter by the consumer backdrop and the FIFA World Cup.
Peel Hunt did, however, maintain its 'buy' rating, with a target price of 90p.