Loss-making business of Frankie & Benny is to be sold by TRG
Loss-making business of Frankie & Benny is to be sold by TRG
- As part of the deal, TRG announced it would pay Big Table Group £7.5 million
- The transaction is expected to take place early in the fourth quarter of 2023
Wagamama owner The Restaurant Group (TRG) has agreed to sell its leisure business to Cafe Rouge owner Big Table Group in a bid to improve earnings and reduce debt.
TRG will sell the loss-making unit, which houses the Frankie & Benny’s and Chiquito brands, in a deal that includes a payment of £7.5 million Large table group.
TRG told investors the sale would increase adjusted earnings before interest, taxes, depreciation and amortization margins and reduce debt.
As part of the deal, TRG will pay £7.5m to Big Table Group to take over its loss-making leisure business
The sale includes 75 leisure retail locations.
Earlier this year, the restaurant chain announced it would close up to 35 locations over the next two years.
Stores that have been making losses are being closed as the company tries to cut costs.
In a statement, TRG said expects to meet the majority of the lease obligations of the recently closed locations by the end of fiscal year 2024.
“We therefore expect the remaining liability and expected cash outflow from closed sites (the majority of which are currently sub-let) to be no more than £1m to £2m per annum from FY25,” it added them added.
“The consideration payable by the purchaser to the group upon completion of the sale is £1.”
“In addition, TRG will pay a cash contribution of £7.5 million, subject to certain cash, debt and working capital adjustments, and there will likely be a minor working capital outflow for TRG at the end of the 2023 financial year.”
The transaction is expected to take place at the beginning of the fourth quarter of this fiscal year.
TRG’s latest interim results show leisure business sales fell 3 per cent year-on-year on a like-for-like basis in the 34 weeks to August 27.
TRG CEO Andy Hornby said: “A sale of our leisure business will significantly accelerate our medium-term strategic plans to increase adjusted EBITDA margins and reduce debt.”
“On behalf of TRG, I would like to express our huge thanks to the extremely hard-working and committed teams across the leisure business who have vastly improved the customer offering over the last few years.”
Last week, TRG announced that Chief Executive Officer Ken Hanna would step down amid pressure from investors to step down.
Hanna said he would not stand for re-election at the company’s annual general meeting next January, citing “personal reasons.”
Big Table Group CEO Alan Morgan added: “Creating, developing and acquiring brands that complement our existing portfolio while providing broad consumer appeal is a fundamental part of our growth strategy.”
“This exciting acquisition is part of that strategy and we are pleased to welcome this new team to Big Table Group.”
Restaurant Group shares rose 5.89 percent to 50.30 in early morning trading on Monday.
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