Europe’s The Restaurant Group (TRG), which operates over 650 restaurants and pubs across the country, is closing 150 eateries, Financial Times reported on Tuesday (Sept. 3).
Known for owning Frankie & Benny’s and Chiquito, the company is shuttering restaurants following an £87.7 million pre-tax loss for the first half of this year.
After acquiring the pan-Asian restaurant Wagamama, earnings took a dive, in part due to a £102 million impairment charge for its leisure businesses, located in cinemas, retail parks and shopping centers.
TRG said it will gradually close at least 50 percent of the outlets across the two brands as leases expire. The group said in a statement that “given the well-documented overcapacity and continued like-for-like sales decline in the casual dining market and cost headwinds, we have taken a more cautious medium-term outlook” for the business.
New CEO Andy Hornby said the group was looking to improve performance with “an acute focus on optimizing our leisure business, through targeted operational initiatives and disciplined estate management.”
Business increases were driven by the company’s pub holdings, airport concessions and Wagamama. Adding vegan and low-alcohol options to menus and signing up with delivery apps also marks a new direction.
The popularity of the Wagamama brand is prompting TRG to change six eateries to Wagamama locations before the end of 2019. Another seven Wagamama locations are planned for 2020.
“Over the next one to two years, they have got to keep their fingers crossed that Wagamama continues to deliver,” Graham Spooner, an analyst at Share Centre, told FT.
According to a study by the accounting firm Price Bailey, restaurants are struggling because of the proliferation of delivery apps, and also the saturation of the market. In 2018, there were 1,442 restaurant insolvencies, an increase of 40 percent from the prior year. That means as many as four restaurants are going bankrupt per day, an increase from less than two a day in 2010.