Restaurant Group counts cost of portfolio restructure

The group was pushed further into the red by a £172m exceptional charge, which included a £119m writedown of the 147 sites it closed permanently during its first half. It entered into a CVA for these sites in June, which included its Frankie & Benny's, Chiquito, and smaller brands. The CVA has moved 83 sites onto turnover-based rents, which will help to defend them from any further deterioration in footfall over the coming months. 

There is light at the end of the tunnel, though. It hastened the opening of its sites to benefit from Eat Out to Help Out, and 90 per cent of its estate is now open. Wagamama sales were 11 per cent up in the 11 weeks to 20 September. The group is pressing ahead with the expansion of the chain, which it acquired in 2018 for £559m despite opposition from two-fifths of its shareholders. It now accounts for just over a third of its portfolio, and the group wants to add 54 restaurants to its existing 146 sites.

Its net debt of £311m, excluding lease liabilities, was “considerably better than expected” according to the group, which raised £54.6m in fresh equity via an April share placing and borrowed a further £25m during the period. But the group warned that a national lockdown in the first quarter of 2021 would see it breach its covenants on its revolving credit facility.

Analysts at Stifel forecast full-year 2020 adjusted pre-tax losses and losses per share of £25.9m and 3.6p, before returning to pre-tax profits and earnings per share of £34.3m and 4.5p in 2021.