Wagamama owner The Restaurant Group (TRG) has reported a strong recovery since the loosening of pandemic restrictions as it lifted its earnings targets for the year.
Shares in the company, which also runs Frankie & Benny’s and Brunning & Price venues, shot higher after it updated shareholders.
The group, which has around 400 sites across the UK, said it has “traded well” and outperformed the wider hospitality market since its previous update in September.
Two months ago it reported “good progress” and said it was successfully navigating industry challenges including supply chain disruption and labour shortages.
It also said Wagamama, which currently has 144 outlets, has the potential to grow to between 180 and 200 restaurants as it confirmed plans to invest in its portfolio after a number of restaurant closures within the group’s leisure arm last year.
On Tuesday, the company increased its adjusted earnings guidance to between £73 million and £79 million for the current financial year, assuming it faces no further pandemic-related disruption.
It comes after the business tumbled to a £127.6 million pre-tax loss in the last financial year.
TRG said it has recently been boosted by a “partial recovery” in sales across its concessions business on the back of an improvement in UK airport passenger numbers.
Douglas Jack, equity analyst at Peel Hunt, said: “Post-Covid, the company will have to deal with rapidly rising labour costs and act to prevent rising delivery volumes from undermining the in-store experience.
“However, we believe it has the scale and quality to manage this whilst market supply continues to fall.”
Shares in the Restaurant Group rose by 17.1% to 92.86p in early trading on Tuesday.