The Restaurant Group to buy wagamama

The Restaurant Group to buy wagamama

The Restaurant Group (TRG) has announced plans to buy the entire issued share capital of Mabel Topco Limited, parent company of wagamama, for a cash payment of £357m, with an enterprise value of £559m.

This implies a multiple of 8.7x wagamama year-end August 2018 EBITDA after pre-opening costs (£42.5m), including cost and site conversion synergies (£15m and £7m respectively).

TRG, which owns brands such as Frankie & Benny’s, Chiquito and Coast to Coast, plans to convert a number of its current sites to wagamama.

The company will also look to expand wagamama UK concessions, delivery opportunities, pan-Asian food-to-go offerings, and explore international growth options enabled by wagamama’s established international presence.

TRG’s current trading update reported a total sales drop of 0.5% after 42 weeks in 2018. Like-for-like sales were down 2.2%. Like-for-like sales were up 1.4% in the 14 week period following the end of the World Cup.

“This transaction is an exciting and transformative opportunity to create a business which can pursue a truly multi-pronged growth strategy and create substantial value for our shareholders,” says TRG CEO Andy McCue.

“Wagamama is a fantastic brand, with a market leading pan-Asian proposition, which has consistently outperformed the casual dining market in recent years. Central to this success has been a cohesive culture and clear brand values which are focused on making the right choices for customers.

“The transaction not only gives us a great brand but also creates a business with a multi-pronged growth strategy which will enhance earnings with continued selective UK rollout, accelerated via conversions of some TRG sites; by further leveraging the brand in Concessions both in the UK and internationally; by maximising the opportunities presented by the rapidly growing delivery sector; and by optimising the potential within international markets.”