Wagamama deal weighs on buyer’s 2018 profits

THE Restaurant Group’s annual profits declined as it booked higher costs relating to store closures and the £559 million acquisition of Wagamama.

The owner of Garfunkel’s and Chiquito made a pre-tax profit of £13.9m in 2018 compared with £28.2m the year earlier.

The firm booked a £39.2m charge related to the closure of 28 sites, onerous leases on stores, the acquisitions of Wagamama, Food and Fuel and Ribble Valley Inns as well as an impairment associated with certain restaurant assets.

The Wagamama acquisition was formally completed in December, bringing almost 200 branches into the group’s portfolio. When the deal was first announced last October, it raised eyebrows as it came at an increasingly challenging time for the eating-out sector.

Meanwhile, revenue rose one per cent to £686m, but like-for-like sales fell two per cent, which the company said were affected by adverse weather and the 2018 football World Cup, although it noted that this was an improvement on 2017.

The company said it is currently trading in line with expectations with like-for-like sales up 2.8 per cent for the 10 weeks to March 10.

Outgoing chief executive Andy McCue said: “We now have a business that is orientated strongly towards growth and we continue to focus on delivering shareholder value.”

Mr McCue is leaving the company due to “extenuating personal circumstances”.

The Restaurant Group owns the Garfunkel’s chain, Chiquito and bought Wagamama in December