Summer of sports and sun take its toll on Restaurant Group

Football World Cup, summer heat wave and lack of blockbuster movies are all blamed for disappointing results.

Article updated: 24 January 2019 12:00pm Author: Helal Miah

  • Like for like sales drop by 2%, while shares fall by nearly 3% in early trading.
  • Acquisition of Wagamama looks set to enhance earnings and deliver cost synergies.
  • We continue to recommend the shares as higher risk ‘buy’.

In a very brief trading update for 2018 the group said like for like sales were disappointingly down by 2%, leaving shares down by nearly 3% in early trading this morning. Investors may forgive management for 2018’s overall performance which was affected by the football World Cup and the heat wave and should be pleased to hear it has delivered like for like sales growth since the summer.

However, the lack of blockbuster movies towards the end of the year led to lower cinema admissions not helping its leisure business. New pubs and restaurant branches have helped raise total revenues though by 1% (excluding the acquisition of Wagamama).

Looking ahead, we take a more positive outlook and expect the acquisition of Wagamama, which has been performing well, to diversify its brand portfolio, enhance earnings and deliver material cost synergies. The expansion of its pubs and concessions at airports also show some promise.

For 2019, there will not be major sporting events to cause disruption to the same extent as last year but we can only have our fingers crossed with regards to the British weather. Hopefully there will also be a defined outcome on the Brexit situation before too long, allowing consumers to feel more reassured about their future and begin to spend again. We therefore keep our buy rating for investors seeking a balanced return and willing to accept a higher level of risk.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.