Wagamama owner seeks £175m to get through lockdown and buy new sites

The Restaurant Group closed some 250 sites during pandemic and is now looking to expand again when restrictions are lifted

Sales for The Restaurant Group sank 57 per cent in 2020

Wagamama owner The Restaurant Group (TRG) is asking shareholders to supply a £175m war chest to help it get through the coronavirus lockdown and acquire more restaurants and pubs when the UK emerges from the pandemic.

The group revealed that sales had plummeted 57 per cent to £459.8m in 2020 as eateries were ordered to close for much of the year.

Pre-tax losses at the FTSE 250-listed hospitality firm grew to £127.6m, compared to a £37.3m loss in 2019.

TRG warned that the potential duration of lockdown restrictions and the pandemic would "materially impact" the group's ability to cut its debt pile or invest in growth.

The company closed about 250 sites during the pandemic, mostly affecting its Frankie & Benny's, Chiquito and Food & Fuel brands.

TRG said the £175m of new funding would allow it to weather the uncertain outlook, cut its debts and pursue “selective site expansion” for Wagamama and its pubs businesses, where the board expects there to be "good and profitable opportunities".

The group told investors it was in a strong position to reopen rapidly as restrictions ease and was "well-positioned" to benefit over the long term.

Thousands of struggling hospitality businesses face the prospect of going out of businesses as a result of the pandemic. Many have taken on large amounts of debt to cover overheads while they have remained closed, despite government support for the sector.

Big chains including Wetherspoon and Greene King have begun eyeing up opportunities to buy pubs cheaply as restrictions lift.

Restaurants and pubs can reopen outside-only from 12 April, with customers expected to dine indoors from May 17 at the earliest under the government's roadmap out of lockdown.

Andy Hornby, chief executive of TRG, said: "The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to restructure our business whilst preserving the maximum number of long-term roles for our colleagues.

"TRG is operationally a much stronger business than 12 months ago.

"The capital raise announced today, alongside the debt refinancing announced last week, represents the last important step in our restructuring process and provides TRG with the long-term flexibility to invest in growing our business.

"Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long-term winners."