Wagamama owner moves to limit price rises for diners
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The owner of the Wagamama restaurant chain is trying to limit price rises for customers and reining in home delivery services as it attempts to remain competitive in a difficult market.
The Restaurant Group, which also owns the Chiquito and Frankie & Benny’s chains, expected food and drink inflation of about 10 per cent next year.
“Most good quality operators are passing on some or all of the food cost inflation,” said The Restaurant Group’s chief executive Andy Hornby. “We have tried wherever possible to absorb a chunk of that cost inflation.”
The company highlighted a near doubling in sales to £423.4mn for the first half of the year compared with 2021, when coronavirus measures were in place. It said its pub business had benefited from this summer’s heatwave, which drew more customers out.
It reported an adjusted pre-tax profit of £10.2mn for the first half, compared with a £19.9mn loss a year earlier.
The group planned to open between 14 and 16 new branches of Wagamama this and next year but said it would cease the rollout of dark kitchens due to a softening in demand in the home delivery market because of rising inflation.
Restaurant chains across the UK are grappling with soaring energy costs and rising food prices, which are squeezing companies’ profit margins and putting further pressure on consumer spending.
TRG claimed steps it had taken to fully hedge utilities costs until the end of 2024 would provide strong protection in a difficult environment.
Analysts at Numis suggested companies such as TRG with active hedges could receive similar rebates to other companies as prime minister Liz Truss announced plans on Thursday to cap business energy costs for six months.
During the pandemic, TRG used a set of company voluntary agreements to consolidate its estate and improve commercial terms for ongoing leases. It now operates 423 pubs and restaurants throughout the UK.
Performance in its concessions business, which largely operates bars and restaurants in airports, declined 17 per cent in the first half of this year, though Hornby expected air travel to gradually recover through the winter.
The UK government’s decision to cap consumer energy costs for a two-year period will be encouraging for TRG, which said it supported any measures to keep up consumer demand.
Speaking ahead of the announcement, Hornby said he strongly favoured “proper economic interventions such as energy support”.