Slowdown at Wagamama piles pressure on its owner

SLOWING sales at Wagamama sent shares in its owner plunging.

In a gloomy update, the noodle chain said like-for-like sales grew by 6.3pc over the summer, compared to growth of 12pc during a similar period last year.

The figures are a blow to hopes the chain can revive parent firm The Restaurant Group’s fortunes as its other brands, including Frankie & Benny’s and Chiquito, close loss-making branches.

It triggered a sell-off that sent shares in The Restaurant Group tumbling by more than 10pc at one stage yesterday. They recovered slightly later on, closing down 8.8pc, or 12.9p, at 133.1p.

Wagamama said overall turnover rose by 11pc to £93.5m in the 13 weeks to September 29, but like-for-like sales increased by just 6.3pc.

Profits rose by 27.2pc over the same period to £16.7m and the number of restaurants it runs rose from 139 to 147.

However, in comments that spooked investors, Wagamama chief executive Emma Woods said that although the firm would continue its focus on growth, ‘we don’t expect to be immune to the various headwinds facing our industry’.

It underlined the challenges facing The Restaurant Group, which revealed in September it had swung from a £12.2m halfyear profit to an £87.7m loss.

Bosses previously said Wagmama, which the company bought for £559m a year ago, was key to turning around the group’s fortunes because of its rapid growth.

Its takeover prompted an investor rebellion over concerns The Restaurant Group was paying too much, although it was ultimately voted through.

Andy Hornby, the disgraced former chief executive of HBOS, took charge at the company in August, his first board-level job at a public company since he left banking under a cloud during the height of the financial crisis.

Analysts at Citi and Liberum warned the sales slowdown at Wagamama was a sign of wider pressure on the sector.