Wagamama owner warns bounce-back in consumer confidence after Plan B may take a while
The owner of restaurant chains Wagamama and Frankie & Benny’s has warned that consumer confidence may take a while to bounce back even after Plan B restrictions are lifted.
Sales at The Restaurant Group last month were hit by working from home guidance, calls for caution in socialising and increased travel testing requirements, the company revealed in a trading update.
The restrictions put a dampener in the recovery of Wagamama, which went from 11% like-for-like growth compared to pre-pandemic levels in October to just 1% in December.
Omicron impacts business
Its other restaurant chains including Frankie & Benny’s and Chiquito also saw growth in consumer appetite dry up with revenues down 2% by last month.
The group’s pub division, including the Brunning & Price chain, saw sales 7% down in December.
But the company said it had delivered “good cost control and continued strong trading relative to the market”, meaning that full-year earnings would be at the top end of a previously expected £73m-£79m range.
The Restaurant Group said it was “encouraged” by the lifting of all Plan B restrictions from next week, but cautioned: “We expect consumer confidence to take longer to recover.”
It also pointed to a continuing tough time for its airport concession outlets with any recovery in passenger volumes dependent on the changes to UK and international restrictions.
The comments were a bit more cautious than those of Wetherspoons boss Tim Martin, who told Sky News this week that the lifting of restrictions had prompted “breakdancing round the living room”.
‘We can go back to the normal UK of the last couple of thousand years’
They also appear to chime with a closely-watched survey from GfK showing that consumer confidence has plunged this month as cost of living concerns grow.
Danni Hewson, financial analyst at AJ Bell, said: “It is pretty heroic for The Restaurant Group to be guiding for earnings at the top end of expectations given all the challenges currently facing it.
“All areas of the business are continuing to outperform the wider market and the company might well need to keep this up if it is going to continue to thrive against the backdrop of a cost of living crisis.
“This will put pressure on household budgets and likely reduce appetite for eating out.
“More positively the lifting of restrictions and the opening up of travel again, which would boost its airport-based concessions, could provide the business with a tailwind.”