Wagamama owner lifts outlook as it sees cost pressures improving in medium term

The company behind Wagamama has said costs are increasing in line with expectations and will start to improve in the medium term, as it upped its outlook for the year.

The Restaurant Group, which also owns Frankie & Benny’s, said it swung to a £2.3 million pre-tax profit in the six months to the start of July, compared with a £28.5 million loss in the same period a year earlier.

Revenue was up 10% to £467.4 million in the same period, the business added.

It came as bosses said they have not been surprised by the rate at which costs are increasing.

They also sounded a positive note about the future, saying that in 2023 “costs (have been) in line with previous expectations and medium-term cost outlook continues to improve”.

Wagamama reported an 11% rise in like-for-like sales to dine-in customers, but takeaways dropped by 8%, it said.

The Restaurant Group’s pub business grew 8% on a like-for-like basis, while its concessions unit rose 29%.

It was enough for managers to say they now expect earnings before interest, tax, depreciation and amortisations (EBITDA) to be slightly ahead of previous forecasts.

Chief executive Andy Hornby said: “We are encouraged by the significant progress made in the first eight months of the year, delivering strong LFL sales growth despite the consumer backdrop.

“In light of the strong trading we are increasing our expectations for the 2023 financial year adjusted EBITDA.

“We are making excellent progress on our medium-term plan and the board continues to actively explore strategic options to further accelerate margin accretion and deleveraging.

“A massive thanks to each and everyone of our dedicated team members who have worked so hard to deliver these excellent results.”

Shares in the business rose by 3.9% on Wednesday morning following the news.