Yahoo Finance Wagamama owner slumps to £235m loss due to Covid lockdown
The Restaurant Group (TRG), which owns the Wagamama, Frankie & Benny’s and Garfunkel’s chains, reported deeper losses in the first half of the year because of the coronavirus lockdown, but said sales had bounced back since branches were allowed to reopen.
The hospitality sector was hit hard by the coronavirus lockdown when restaurants, bars and pubs were shuttered for several months. Pretax losses rose to £234.7m for the 26 weeks to 28 June, compared with a loss of £87.7m a year earlier. This includes a £172m charge, mostly due to a writedown of assets related to the permanent closure of branches.
Since the Covid-19 outbreak, TRG has reduced its business to 400 branches from 650 at the start of 2020, with the loss of nearly 4,500 jobs, and has not ruled out further permanent closures. The majority of closures have affected Frankie & Benny’s and Tex-Mex dining chain Chiquito.
Sales have improved in recent weeks however, also boosted by the government’s eat out to help out scheme in August, although the 10pm curfew has hurt business. TRG said like-for-like sales at Wagamama rose 11% between 4 July and 20 September compared with the same period a year ago, while sales at Frankie & Benny’s, Chiquito, Firejacks, Garfunkel’s and Coast to Coast were up 4%.
Its pubs, which include the Brunning & Price chain, posted 14% like-for-like growth, outperforming the rest of the market. However, sales at its airport concessions fell 58%.
Andy Hornby, TRG’s chief executive, said: “While 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.”
The group has drawn heavy criticism over plans to hand Hornby generous annual share awards on top of his £630,000 base salary. Hornby – the former boss of HBOS – and the finance director Kirk Davis waived their 2019 bonuses and took pay cuts because of the pandemic.
But the new remuneration policy would hand Hornby a share award of up to £787,500 for this year, taking his total maximum pay packet to £1.3m. Next year, he would get his £945,000 cash bonus again along with a share award of up to £630,000, taking his potential maximum package to £2.2m.
Shareholders will vote on the proposals on Thursday. TRG said the share awards were based on performance and would not pay out for three years.
The group said: “In light of the external environment management have taken voluntary executive pay cuts of up to 40% and waived bonuses that were approved pre-Covid. This is a long-term scheme and no payout can be made within the next three years. In the short term the senior team continue to take voluntary pay cuts.”
However, Harry Barnick, a senior analyst at investment research firm Third Bridge, suggested the timing was questionable: “Investors will be taking a very close look at the proposed executive pay scheme and its potential fallout. After so many restaurant closures and redundancies, this is a very sensitive time for brands like Wagamama, Chiquito and Frankie & Benny’s to get embroiled in a pay row.”
“The entire casual dining sector faces an immense challenge and some brands simply won’t survive into the new year. Although these insolvencies will mean less competition for Restaurant Group’s brands they probably won’t mean more customers, and that’s the problem.”
