Wagamama Deal, Pub Openings Bolster Restaurant Group Sales
Sales at Frankie & Benny's owner Restaurant Group Plc surged 57% in the 19-week period that ended on May 12, boosted by the recent acquisition of noodle chain Wagamama and new pub openings.
The company, which operates restaurants and pubs in the UK under brands such as Chiquito and Coast to Coast, said its pubs business for the reported period traded ahead of the overall pub restaurant sector.
The update comes two weeks after the appointment of Andy Hornby as its new chief executive following the abrupt departure of Andy McCue as its top boss in February.
"We continue to believe the market is underpricing Restaurant Group's potential to improve returns over the medium-term," said JP Morgan analyst Alexander Mees in a note.
Better With Wagamama
Mees, who rates the stock overweight, said he believes Wagamama can sustain its track record of outperformance against the UK casual dining market and will provide significant long-term growth through the rollout of more sites.
"We continue to hold the view that a Restaurant Group that includes Wagamama is better than one that does not," Mees added.
Restaurant Group acquired Wagamama for £357 million in cash last October.
Wagamama began in 1992 in London's Bloomsbury and has expanded steadily into a national presence since, becoming a familiar feature on British high streets.