Fears that one of the largest units at Riverside North, Bedford could become empty have been raised after the owners of Wagamama said they were closing 35 restaurants.
The Restaurant Group (TRG), which owns the chain alongside the Frankie & Benny’s and Chiquito brands, plans to close its worst-performing sites. As yet they have not revealed which sites these are or if Bedford’s Wagamama is one of them.
The company has been under pressure from investors recently to increase profit margins. All the closures would be from loss-making sites and would close as leases expire over the next three years.
The company says it is part of their plans to increase operating margins from 8.3 per cent to 11.8 per cent.
Reports in The Financial Times, suggest one of the company’s investors, Oasis, has clashed with TRG in recent weeks after the fund’s request for a board seat was rejected.
Writing for the FT, Oliver Barnes and Ivan Levingston, said TRG’s CEO, Andy Hornby may be pushed to leave if he failed to improve performance.
A second activist fund, Irenic Capital Management, has also been in contact with the company but has not filed a disclosure yet, indicating it holds less than 3 per cent of voting rights in the company.
The Financial Times also reported that shares in the London-listed group fell 15 per cent to 38p on Wednesday after it denied speculation that it would announce an immediate asset sale.
But, chief executive Andy Hornby did not rule out changing tack, saying: “No CEO is ever going to say an asset isn’t for sale, but clearly . . . the only logic of selling it will be if it is worth massively more to somebody else, and they’re prepared to pay for it.”
Hornby also stressed he was not unnerved by the pressure from the activist funds. “I’m nerved by making sure I run the business properly . . . If I don’t deliver on some of these promises that I’ve laid out, I will have an issue.”
Rising costs
The company said rising costs were the primary factor behind its plunge to an annual operating loss of almost £50m despite strong sales growth across its divisions which, it said, had continued at the start of 2023.
In a wider statement to media, chief executive Andy Hornby said: “We’ve delivered a strong operating performance for the year in a market which has continued to pose a number of headwinds for casual dining operators.
“Current trading has been very encouraging to the great credit of our teams who continue to ensure our customers receive the best experience possible.
“We have a clear plan to increase… margins over the next three years and deliver significant value for all our stakeholders.”
Update: This article was updated on 9 March 2023 at 2:53pm to clarify that The Restaurant Group is closing sites.
