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Restaurant Group PLC on Wednesday said it will close about 35 ‘potentially loss-making locations’ in its Leisure business over the next two years, as it reported a wider loss in 2022, amid a ‘challenging’ year for the casual dining sector, but a ‘very encouraging’ start to 2023. Restaurant Group shares were down 14% at 38.82 pence on Wednesday morning in London, following its earnings report. The Leisure business includes restaurant chains Frankie & Benny’s and Chiquito, but not recent acquisition Wagamama. Pretax loss on an IFRS 16 basis was £86.8 million in the financial year that ended January 1, widening significantly from £35.2 million the year prior. IFRS 16 is an accounting rule related to the financial treatment of leases. Sales rose to £883.0 million from £636.6 million. ‘We entered the year with the Omicron variant still impacting our business, shortly followed by the war in Ukraine which significantly impacted utility and supply chain costs and resulted in increasing cost-of-living pressures for our customers,’ said Chair Ken Hanna. Adjusted earnings before interest, tax, depreciation and amortisation edged up 2.2% to £83.0 million from £81.2 million. Net debt on an IFRS 16 basis was stable at £581.7 million from £582.0 million a year before. It rose slightly on a pre-IFRS 16 basis, to £185.7 million from £171.6 million. ‘Whilst it is still early days’, the company’s trading performance in the first eight weeks of 2023 has been ‘very encouraging’, it said. In the eight weeks from January 2 to February 26, like-for-like sales were up by 2% at Wagamama and up by 9% in the Pub division, though they were down 4% in the Leisure arm. The company said the restaurant closures in the Leisure division will be achieved through ‘a combination of exercising break clauses, lease expiries, selective conversions and accelerated disposals’. This will reduce the Leisure estate by about 30% to 75 to 85 restaurants from 116 currently. Restaurant Group highlighted the return of in-restaurant dining following the end of the Covid-19 pandemic. This was led by Wagamama, where dine-in like-for-like sales were up 9% in recent weeks. The company operates 156 Wagamama noodle shops in the UK and aims to increase this to 200 long-term. Restaurant Group said the cost outlook for 2023 remains in line with prior guidance and its overall expectations for the year remain unchanged. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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