The Restaurant Group (TRG) has provided an update today for its year-to-date trading performance covering the 19 weeks ending 15 May 2022 (YTD), showing continued strong trading performance across the business.
Key highlights:
• Good progress on new site pipeline in Wagamama and Pubs
• Concessions recovery accelerating with total FY22 sales anticipated to be at least £100m
• Expected levels of food and drink inflation at 9-10% for FY22, vs previous 5%+
• Cash headroom in excess of £220m and a c.£6m reduction in net debt since year-end.
YTD FY22 TRG Like-for-like (LFL) sales vs. 2019 comparables:
Group trading continues to be strong year-to-date, driven by continued demand for TRG brands and their ability to out-perform the market:
• Wagamama and Pubs performing well, with LFL2 sales outperforming the market by 9% and 11% respectively
• Leisure LFL sales in line with the market
• Concessions recovery accelerating, with LFL sales running at a decline of 11% in the last six weeks (Q2).
On the back of this strong recovery, management now expects to have the entire Concessions estate of 41 sites trading by July 2022 and for total sales from this business to be at least £100m in FY2
Update on new site pipeline, cost inflation & net debt
New site pipeline: Good progress has been made on Wagamama new site expansion plans with at least eight restaurants and three delivery kitchens expected to open in FY22.
The firm's new site pipeline for its Pubs business, under the brand Brunning & Price (site pictured), remains on track with three new pubs expected to open in FY22. The continued strength of trading of these businesses has reinforced TRG's belief in their long-term roll-out potential.
General food & drink inflation: In-line with cost pressures experienced across the sector that have been exacerbated by the war in Ukraine, food and drink inflation is now expected to be around 9 to 10% in FY22, versus the 5%+ outlined at the time of group’s full-year results in March.
TRG will continue to work with its supply chain partners to mitigate some of this increased impact, but this remains a volatile inflationary market.
Strong financial position: Given continued trading outperformance, the group’s financial position has improved, with net debt reducing by approximately £6m since the year-end and cash headroom in excess of £220m. TRG has flexibility both to invest in growing the business and reducing leverage over the medium-term.
Outlook
Management’s current expectations for FY22 remain unchanged, with continued robust trading in the Wagamama and Pubs businesses and the stronger recovery in Concession sales offsetting the increased food and drink inflationary impact in FY22.