Wagamama and Frankie and Benny's owner to close 35 restaurants

The Restaurant Group (TRG), which owns Wagamama, Frankie and Benny's and Chiquito, has revealed plans to shut around 35 of its loss-making casual dining locations in an effort to boost earnings.

Shutting the branches would help shore up cash after widening losses were reported over 2022, according to TRG.

Chief executive Andy Hornby said the move forms part of a "robust plan" to improve the group's margins over the next three years.

Mr Hornby said the business would try to offer deployments to staff across the affected sites wherever possible, although did not specify how many jobs would be impacted.

"Every year a number of leases come up for potential renewal, so the vast majority is where we are going to selectively - and we haven’t fully decided yet, we are going to constantly review the way the sites are trading - exit a number of those, rather than renew the lease for another five or 10 years," he said.

"We will manage that on a localised basis, and the teams will be the first people to know.

"But we are not closing any sites that we think have got long-term profitable futures."

Up to three of the sites will be converted to Wagamama over the next two years, and the rest will be sold or the leases will be exited or left to expire.

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He added: "A significant number of these potential sites are in areas where we have other brands, so the job impact should be significantly less than you might think from the number of sites that we will not be renewing."

The plans come after TRG has faced pressure from activist shareholders to improve shareholder returns, with shares in the business shrinking to less than a third of pre-pandemic levels.

The company, which has about 18,000 staff, has already cut a raft of loss-making restaurants over the period, including closing the majority of its Chiquito restaurants at the start of the pandemic to bolster its finances.

But TRG revealed its pre-tax losses widened last year, from £35.2 million in 2021 to £86.8 million in 2022, as it faced a knock-back from cost inflation across food and drink, energy and wages.

Meanwhile, sales from people dining in at Wagamama increased by nearly a 10th last year, offsetting a 17% decline in takeaway sales as people returned to the high streets.

And TRG said it wants to open five to six new Wagamama restaurants a year for the next three years, and increase the number of restaurants from 156 today to around 200 in the long term.

Mr Hornby said that, while the rise in sales was partly driven by higher prices, the chain has also seen an increase in consumers visiting restaurants.