The Restaurant Group upgrades expectations following market outperformance

21 January 2022

The Restaurant Group has issued a trading update this morning, upgrading expectations after strong trading relative to the market. It now expects FY21 adjusted EBITDA to be at the top end of previous guidance (£73-£79m) with net debt of less than £180m (previously less than £190m).

Like-for-like sales at Wagamama grew by 11% and 8% in October and November respectively vs 2019 comparatives.

Looking forward, the Board remains confident in the Group’s prospects, underpinned by the strength of its brands and its ability to outperform the market in all conditions.

In TRG’s last market update on 16 November 2021, the Group provided guidance that on an IAS 17 basis it expected FY21 Adjusted EBITDA to be a range of £73m-£79m and FY21 year-end Net Debt was expected to be less than £190m. The Group is pleased to announce that due to good cost control and continued strong trading relative to the market, management now expects the Group’s FY21 Adjusted EBITDA will be at the top end of the range and FY21 year-end Net Debt will be less than £180m.

The introduction of the UK Government’s "Plan B" in early December which included advice to work from home, calls for further caution in socialising and increased testing requirements for international travel reduced consumer confidence and put additional restrictions on the hospitality and travel sector.

TRG LFL sales (%) vs 2019 comparable for Q4 2021

Oct Nov Dec

Wagamama
+11% +8% +1%

Leisure
+16% +8% (2%)

Pubs
+9% +7% (7%)

Concessions
(34%) (24%) (34%)

It is clear from the trends that:

In both the Restaurant and Pubs markets LFL sales (as measured by Coffer Peach) were 10% to 12% lower in December than in October and November. TRG continued to trade ahead of the market demonstrating our ability to out-perform in all market conditions

Whilst we are encouraged with the recent Government announcement that all “Plan B” restrictions will be lifted next week, we expect consumer confidence may take longer to recover. We are also mindful that the recovery in air passenger volumes remains dependant on the timing of changes to both UK and International restrictions.

Despite the near-term uncertainties, the Board remains confident in the Group’s prospects given the strength of our brands, substantially reduced net debt and outperformance versus the market.

The Group's next scheduled update is the preliminary results announcement on 16 March 2022.