Frankie & Benny’s and Wagamama owner TRG returns to profit

Frankie & Benny’s parent company has swung back to a first-half profit despite challenging conditions in the hospitality sector.

The Restaurant Group, which also operates Wagamama and Chiquito, declared a £2.3million statutory pre-tax profit for the six months ending 2 July, compared to a £28.5million loss in the same period last year.

Profitability was supported by significantly lower impairment charges and a bumper trading performance boosting turnover by 10 per cent to £467.4million.

Recovery: Frankie & Benny’s owner The Restaurant Group swung back to a first-half profit

Its concessions business saw the largest increase in sales, with like-for-like growth of 28 per cent thanks to a continued rebound in air travel following the absence of pandemic-related restrictions.

Demand at the start of 2022 was impacted by the Omicron variant’s emergence discouraging many Britons from commuting to work or visiting hospitality venues.

TRG also recorded healthy first-half trade at its pubs and Wagamama outlets, although like-for-like revenue declined in its leisure division, which it partly blamed on consumer cost-of-living pressures.

However, all the firm’s segments achieved turnover growth in the eight weeks to 27 August, with concessions sales jumping by a third.

TRG noted Wagamama benefited from cooler summer weather, while popular cinema releases like Barbie and Oppenheimer buoyed the leisure business.

Following the result, bosses at the London-listed company have made a ‘moderate increase’ to their expectations on adjusted core profits.

Andy Hornby, chief executive of TRG, said: ‘We are encouraged by the significant progress made in the first eight months of the year, delivering strong LFL sales growth despite the consumer backdrop.’

He added: ‘We are making excellent progress on our medium-term plan, and the board continues to actively explore strategic options to further accelerate margin accretion and deleveraging.’

TRG said annualised cost savings of £5million had been attained, while the planned reduction in its leisure estate portfolio was proceeding ahead of schedule.

From the next fiscal year, the group plans to launch eight to ten new Wagamama establishments, as well as up to three ‘high-quality’ pubs.

The Restaurant Group shares were 1.8 per cent down at 42.9p on early Wednesday afternoon, meaning they have slumped by approximately 72 per cent since Hornby took over in August 2019.

Hornby has faced considerable backlash from some investors for the company’s long-term share price weakness and its four consecutive annual losses.

In March, 46 per cent of shareholders – including activists Oasis Management and Irenic Capital – voted against the ex-HBOS chief executive’s proposed £792,000 pay package.