Wagamama owner The Restaurant Group (RTN) said trading had been very encouraging since the reopening of hospitality in April, leaving the group well positioned to benefit from the removal of restrictions. The shares added 1% to 129.1p.
Prior to reopening the company had experienced strong delivery and takeaway sales across its Wagamama and Leisure sites with sales running at around 3-to-5.5 times pre-Covid levels respectively.
MARKET-BEATING GROWTH
Following the resumption of outdoor trading the Wagamama and Pubs sites traded approximately 85% of comparable 2019 levels, representing 15% outperformance of the underlying market.
This reflected ongoing strong delivery volumes as well as good trading from outdoor spaces and investments made in stretch tents and marquees.
Leisure sites traded at around 60% of pre-Covid levels reflecting the limited number of outdoor covers.
STRONG TRADING IN SCOTLAND
For the three weeks to 16 May the seven Wagamama sites and 16 Leisure sites open for indoor dining across Scotland saw very strong trading with sales running around a fifth higher than comparable 2019 levels.
Investment Director at AJ Bell, Russ Mould commented: ‘Now the company has to hope that the pent-up enthusiasm for eating out doesn’t fade with time as it looks to move from recovery to expansion mode.’
Retail guru at Shore Capital, Gregg Johnson sees today’s update as ‘highly encouraging’ and highlighting ‘the opportunity for the wider group as trading restrictions are lifted and conditions normalise.’
Johnson is forecasting that the business will recover fully by 2023 and said that although the stock trades on a premium rating to its pre-Covid valuation, ‘we believe this premium is justified as a better business emerges, with a higher quality income stream, significant growth opportunities and the prospect of a more favourable industry demand-supply balance.’
