The Restaurant Group, founded in 1987, is a leading UK-based hospitality business. It operates a diverse portfolio of brands, including Wagamama, La Tasca, and Chilango.
The company's headquarters are located in London, England. The Restaurant Group has a significant presence in the UK market, with over 600 restaurants across the country.
In 2015, The Restaurant Group acquired Wagamama, a popular pan-Asian restaurant chain, for £215 million. This acquisition marked a significant expansion of the company's portfolio and helped establish its presence in the casual dining market.
The Restaurant Group's acquisition of La Tasca, a Spanish tapas restaurant chain, in 2005, further solidified its position in the UK's casual dining scene.
Deal Details
The Restaurant Group was acquired by Apollo Global Management in a private deal announced on October 12, 2023. This all-cash transaction was valued at £506 million, with each shareholder receiving 65 pence.
The purchase price represents a 63% premium over the average of the past 12 months, and a 34% premium over the previous day's close of 48 pence.
Deal Overview
The deal between Apollo Global Management and The Restaurant Group is a significant one. Apollo Global Management is the acquirer, while The Restaurant Group is the target.
The total transaction size is £506 million, a substantial sum. This all-cash transaction will reward each shareholder with 65 pence, placing TRG's equity and enterprise value at £506 million and £701 million, respectively.
The purchase price represents a 63% premium over the average of the past 12 months, and a 34% premium over the previous day's close of 48 pence. This suggests a strong belief in the company's future growth potential.
The deal has been approved unanimously by the TRG Board of Directors and is expected to be completed by early 2024.
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Company Details (Target)
The Restaurant Group plc operates over 400 restaurants and public houses across the United Kingdom.
Their diverse portfolio of brands includes Wagamama, Frankie & Benny’s, and Barburrito.
The company has a concessions business that trades mainly at UK airports.
They have a significant workforce, with over 16,000 employees.
As of 22/11/2023, the company's market capitalization is $625.25 million USD.
The Restaurant Group plc's enterprise value is $890.13 million USD.
Their last twelve months revenue is $1.18 billion as of 02/07/2023.
Their last twelve months EBITDA is $98.54 million.
The company's last twelve months enterprise value to revenue ratio is 0.8x.
Their last twelve months enterprise value to EBITDA ratio is 9.0x.
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Financial Projections
The Restaurant Group's financial projections are a crucial aspect of their business strategy. They aim to achieve a revenue growth of 5% per annum.
Their projected revenue for 2025 is £1.3 billion. This is expected to come from a combination of like-for-like sales growth and new site openings.
The company's EBITDA margin is expected to remain stable at around 12%. This is a testament to their ability to manage costs effectively.
They plan to invest £50 million in new technology and systems to improve operational efficiency. This will help them to reduce costs and improve customer experience.
The Restaurant Group's financial projections are conservative and take into account potential risks and challenges. They are well-positioned to navigate the changing landscape of the restaurant industry.
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Consequences and Growth
The all-cash acquisition of The Restaurant Group by Apollo has led to a significant improvement in the company's share price, rising 49 per cent over the last 12 months.
This boost in share price has improved the TRG Group's EV/EBITDA multiple back to the firm's average pre-pandemic multiple and at a premium to UK-listed peers in the casual dining sector.
Apollo's takeover of TRG has provided the company with greater access to capital and investment, enabling it to spearhead recovery and growth, as well as protection from market fluctuations and pressures.
TRG's recent struggles with falling margins and slow operational rebound following inflationary pressures and Covid-19 have been well advertised, but Apollo's support is expected to help the company recover and grow.
The private equity firm has announced plans to accelerate the openings for new Wagamama and pub sites under a dedicated expansion plan, aiming to recapture lost market share and support year-on-year volume growth.
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Short Term Consequences
Taking the Restaurant Group private will give it greater access to capital and investment to spearhead recovery and growth, as well as protection from market fluctuations and pressures.
Apollo's acquisition of The Restaurant Group will enable the company to boost its Adjusted EBITDA margin by 100bps and cut Net Debt/Adjusted EBITDA to below 1.5x by the end of FY25.
TRG's recent struggles with falling margins and slow operational rebound following inflationary pressures and Covid-19 have been well advertised, having seen operational costs of its near 400 restaurants soar.
The share price of The Restaurant Group has risen 49 per cent over the last 12 months, improving the TRG Group's EV/EBITDA multiple back to the firm's average pre-pandemic multiple and at a premium to UK-listed peers in the casual dining sector.
Apollo is well-positioned to assist in the next phase of growth for Wagamama, and TRG's diverse mix of other brands across the pubs and concessions spaces.
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TRG Sees Strong LFL Sales Growth
The Restaurant Group (TRG) has reported strong like-for-like (LFL) sales growth in the first half of the year.
This growth was driven in part by the recovery of its concessions business, showing a promising trend for the company.
TRG's LFL sales growth is a significant achievement, especially considering the challenges faced by the hospitality sector post-pandemic.
The company's strong sales growth is a testament to its ability to adapt and recover from the pandemic's impact.
TRG's concessions business has made a significant contribution to its LFL sales growth, highlighting the importance of this segment to the company's overall performance.
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Executive Changes
The Restaurant Group has seen some significant changes in its leadership, and one notable example is the departure of Ken Hanna, who is stepping down as chairman. He will no longer be in this role.
The news of Ken Hanna's departure may come as a surprise to some, but it's a change that's been announced and is now official.
Frequently Asked Questions
What has happened to the restaurant group?
The restaurant group was acquired by Apollo Global Management, with the takeover being completed in December 2023 for £701 million.
Who is part of the restaurant group?
The Restaurant Group operates several well-known brands, including Wagamama and Barburrito, as well as Pub restaurants and a Concessions business. Its diverse portfolio offers a range of dining options across the UK.
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