TRG hopes to be “one of the long-term winners” with 40% retained estate

The Restaurant Group has reported “very encouraging” post-lockdown trading as it hopes its 60% estate reduction will allow it to emerge as “one of the long-term winners.”

Having reopened approximately 90% of its retained estate, the group has said trading performance for the 11 weeks from 4 July to 20 September across its Wagamama, leisure, pubs and concessions brands has been strong.

Since reopening Wagamama for dine in, the group has seen like-for-like sales growth of 11%, representing a 5% outperformance of the market.

The brand saw the strongest performances in its communities and destination shopping locations, representing 50% and 25% of the estate respectively, reporting sales growth of 25% and 9%.

Whilst growth in city sites were slightly lower – lfls +6% - and central London saw a significant decline of 24%, delivery and click and collect continued to see strong performance since lockdown, with lfl delivery sales up 66% and takeaway sales up 52%.

In its newly restructured leisure division – the group exited 128 underperforming Frankie and Benny’s sites through a CVA, and exited 45 underperforming Chiquito sites through an administration process – trade has been broadly in line with the market, achieving lfls growth of 4%.

By segment, the division saw the strongest performances in its retail park sites (growth of 10%), which comprises 20% of its estate, followed by destination shopping sites (+8%) and parks with a leisure scheme (+2%). Sales in central London saw a decline of 68%, though this represents just 1% of the estate.

As with Wagamama, delivery sales saw an uplift in the group’s leisure brands, with existing delivery propositions and further development of online brands seeing delivery and takeaway sales rise to 12% of total sales from 4% in the comparative period.

Since reopening its reopening its pub estate following the exit of 7 Food & Fuel sites through an administration process, the group has seen an “exceptional” trading performance. Its pubs have achieved lfls growth of 14%, representing a 20% out-performance of the market.

Suburban, rural and town sites carried the growth (at 17%, 16% and 4% respectively), compared to central London which saw sales decline 38%.

With only 16 sites open across its concessions brands, the group has reported declining lfls of 58%. It is in the process of exiting approximately 36 to 41 sites based on expected future passenger trends, and has secured improved terms with the majority of its airport partners for the remaining 30 to 35 sites.

The group has predicted that its retained estate – comprised of 37% Wagamama, 35% leisure, 19% pubs and 9% concessions – would be capable of delivering annualised EBITDA of between £110m to £125m (on an IAS 17 basis) if it were to achieve 2019 sales levels.

“It has been an extraordinary and difficult period for the hospitality sector but one in which we have pulled together to achieve a great deal,” said CEO Andy Hornby. “The priority throughout has been the safety of our colleagues and customers, and we have also accelerated the reshaping of our portfolio, resulting in a higher quality, diversified estate.

“Since reopening, I am genuinely pleased with the strength of our trading performance and would like to sincerely thank each and every one of our colleagues for their extraordinary efforts.

Whilst the sector outlook is uncertain, and we are mindful of recent restrictions across the UK, we are confident that the actions we have taken provide us with strong foundations to emerge as one of the long-term winners.”