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Slowdown at Wagamama hits Restaurant Group

Growth slows at chain despite new openings
November 27, 2019

The Restaurant Group’s (RTN) hopes of quickly revitalising its portfolio through the £559m purchase of the Wagamama chain have been dealt a short-term blow after the pan-Asian chain’s quarterly growth fell to its lowest point since early 2017.

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The company’s share price fell 9 per cent on the news, to 133p. Like-for-like growth in the three months to September was 6.3 per cent, down from 12.9 per cent in the previous quarter and 9.7 per cent in the year to 30 March.   

At the same time, Wagamama’s second-quarter numbers showed earnings increases, two new restaurant sites, a delivery kitchen and six Restaurant Group sites reopened as outlets of its flagship brand. Cost of sales were also up 9.6 per cent year on year, to £54m. 

Chief executive Emma Woods said the company would keep expanding despite the wobbly dining sector.  “We look forward to 2020, and while we don’t expect to be immune to the various headwinds facing our industry, we will stay true to our positive culture and growth mindset,” she said. 

When Restaurant Group bought Wagamama it was seen as a renewal of the company, which listed on the London Stock Exchange 50 years ago. The acquisition added significant debt and capital expenditure requirements, as the new owner said casual dining demand would support 40 to 60 new Wagamama restaurants. Investors have not yet come round as the company’s share price has fallen from over 200p when the deal was announced.