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FTSE 100: Wagamama owner sales surge but uncertainty looms

·2-min read
CHEADLE-ENGLAND- MARCH 12: A lady walks to a Wagamama Restaurant store on March 12, 2021 in Cheadle, England. (Photo by Nathan Stirk/Getty Images)
Wagamama sales have surged in the first six months of 2022, but owners The Restaurant Group warned that an 'uncertain consumer environment looms'. Photo: Nathan Stirk/Getty

Wagamama sales have surged in the first six months of 2022, when compared to the same time in 2021, but owners The Restaurant Group (RTN.L) warned that an uncertain consumer environment looms.

Sales nearly doubled to £423.4m ($486.4m) in the first half of 2022, up from £216.8m in the first six months of 2021, up £206.6m.

Shares in The Restaurant Group were at 42.92p on Thursday morning, down 0.14% in 24 hours.

In the six months to 3 July, the Wagamama chain owner reported a pre-tax loss of £28.5m, narrowed from £57.6m in the previous year.

The Restaurant Group also added that the concessions business had been adversely affected in the first quarter of its financial year as a result of limited travel due to coronavirus.

However, the Group said that it has since seen a "better than expected recovery".

The firm said that they are well positioned to deliver long-term growth despite an uncertain consumer environment.

The Group pointed to expected challenges for the company in the coming months, as consumer demand is forecast to slump amidst the escalating cost of living crisis.

Read more: FTSE rises ahead of Liz Truss energy relief package and ECB meeting

The macroeconomic environment is starting to become more restrictive, with a rising cost of interest on borrowing.

The company also said that the cost inflation of general food and drink was up 10% compared to the same time in 2021.

UK inflation surged to a fresh 40-year high, as July’s inflation rate hit 10.1%, according to the Office for National Statistics (ONS).

Andy Hornby, chief executive officer of The Restaurant Group, said: "Whilst the uncertain consumer environment presents challenges for the hospitality sector, the group is well positioned to further develop our brands to deliver long-term growth for all stakeholders underpinned by our strong balance sheet."

Lara Martinez, analyst at Third Bridge, said: “The Restaurant Group has reported above-market like-for-like growth in its core divisions, underlining the resilience of its consumer-centric brands.

“After an initial surge in demand, the casual dining sector has faced an uphill battle in its COVID recovery.

"From a strained labour market, to food shortages and spiralling energy costs, operator margins haven’t seen the upside potential from 2020’s cost-reduction efforts.

“Amongst the casual dining sector, The Restaurant Group is more recession-proof than most, thanks to their recipe for consumer-centric brands, a young customer demographic, and higher-margin dark kitchens."

Watch: What is a recession and how do we spot one?