Equity Analysis /
United Kingdom

GB : Restaurant Group - Outpacing cost pressures

    Anna Barnfather
    Anna Barnfather

    Analyst - Leisure

    Andrew Wilkinson
    Andrew Wilkinson

    Analyst - Leisure

    CGS-CIMB
    25 March 2022
    Published by

    Restaurant Group continues to outperform the market across all divisions, benefitting from its rebalanced estate and multi-channel offering. The sustained strength of trading provides us with confidence in the rollout strategy across Wagamama (ROIC c.45%) and Pubs (ROIC c.20%) and in its ability to manage a higher cost environment. Financial strength is underpinned by net bank debt / EBITDA set to fall below its 1.5x target in FY23E, which could trigger bolt on acquisitions, cash returns or an acceleration of the rollout. We make only minor changes to profit forecast with management’s FY22E expectations unchanged. Shares offer excellent value and trade towards bottom of pre-Covid valuation range.