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Restaurant Groups reports underwhelming results

The Restaurant Group’s trade was severely disrupted by lockdowns earlier in the year

The Restaurant Group has reported underwhelming results for H1, recording a statutory pre-tax loss of £58.8m.

The owner of Wagamama saw its sales fall by 4.5% to £216.8m when compared to the same time period in 2020.

The Restaurant Group saw a slight recovery in its EBITDA, which rose from a loss of £18.2m to a profit of £11.2m year-on-year.

The firm also confirmed its secured refinancing and recapitalisation, raising £500m from loans and a senior credit facility.

“Whilst there are some well documented sector challenges to navigate in the short-term, particularly around labour availability and supply chain, we believe the Group is well positioned for the long- term,” said Andy Hornby, Chief Executive Officer.

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For the first six months of the year, trade was severely disrupted by restrictions on the hospitality industry, which was only able to do takeaways and deliveries for large periods.

Harry Barnick, Senior Analyst at Third Bridge, commented on the Restaurant Group’s results: “The casual dining sector has taken a Covid pummelling. Now as customers return the Restaurant Group is operating in a less competitive environment allowing for some breathing space during the recovery period.”

“That being said, we are hearing about aggressive expansion from smaller brands, such as Franca Manca, which could challenge The Restaurants Group’s dominant position in the market,” said Barnick.

“Given the reduction in operating costs during the pandemic, analysts will be hoping for improved margins post-Covid once trading normalises. This largely depends on how successful The Restaurant Group can be in reducing rental rates. However, testing labour and food shortages could drive up costs in the short-term which limits the margin upside potential.”

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