Wagamama owner to raise £175m because of Covid struggles | Business
The Restaurant Group, the owner of the Frankie & Benny’s and Wagamama chains, is planning to raise £175m as it continues to struggle with the impact of Covid-19.
The company said the outlook for the hospitality industry remained uncertain as long as coronavirus restrictions stayed in place.
The Restaurant Group (TRG) intends to use the proceeds from the cash call to increase its financial cushion in case of any resurgence of the pandemic, to allow it to expand its Japanese-inspired Wagamama chain and its Brunning & Price pubs business, and to help it reduce its debt.
The group said it expected there to be “good and profitable opportunities” where it could open more locations.
It has set an offer price of £1 for each new ordinary share, representing a 10.5% discount on its closing price the previous day. Shareholders will be asked to approve the fundraising at a meeting at the end of the month.
The casual dining operator also reported that its revenues fell 57% in 2020 to £460m, as a result of months of closures.
Since the start of the Covid-19 pandemic last spring, TRG has permanently closed more than a third of its sites, reducing its number of branches to 400 from 653 at the start of 2020, which resulted in the loss of almost 4,500 jobs.
The majority of the closures affected Frankie & Benny’s and the Tex-Mex dining chain Chiquito. The group employs about 14,000 people.
Andy Hornby, the chief executive of the Restaurant Group, said: “The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to restructure our business and preserve the maximum number of long-term roles for our colleagues. TRG is operationally a much stronger business than 12 months ago.”
Hornby added that a successful fundraising would allow the company to emerge from the pandemic “as one of the long-term winners”.
TRG said about half of its restaurants remained open for delivery and takeaways, and called the performance of those sites “extremely encouraging”.
Its average weekly delivery and takeaway sales for Wagamama were two and a half times higher than pre-Covid levels during February and about five times higher at its leisure locations.
At the the start of the month, the company announced it was burning through £5.5m a month during the latest lockdown, and said it had secured a £500m loan.
Under the government’s plan for easing restrictions, hospitality venues in England will be allowed to serve customers outdoors from 12 April but dining and drinking will not permitted indoors before 17 May.