The owner of Wagamama is facing mounting pressure to break itself up after a new activist investor took a stake in the business and called for change.
TMR Capital has in recent weeks presented The Restaurant Group’s chairman and chief executive with proposals to sell-off all its brands bar Wagamama, the Sunday Telegraph can reveal.
The British Virgin Islands-based investment company, which has bought a stake in the restaurant group, has also argued the business can no longer survive as a public company. The Restaurant Group is one of Britain’s biggest restaurant chain owners.
It adds to growing pressure on the group, which also owns Brunning & Price, Frankie & Benny’s and Chiquito. TMR is the fourth activist to take a position in the company’s shares and push for change.
TMR has approached The Restaurant Group’s chief executive Andy Hornby and chairman Ken Hanna with proposals to sell-off all the company’s brands, apart from Wagamama.
It then wants The Restaurant Group to expand Wagamama before taking it private in a sale.
Derek Vago, strategic advisor at TMR Capital, said: “We want [TRG] to acknowledge that the future is not as a PLC. It has to start with that... [and] that everything is non-core other than Wagamama.”
TMR’s campaign adds to already intense pressure on management and the board from investors. Mr Hornby and Mr Hanna are already embroiled in a row with Hong Kong-based hedge fund Oasis Capital over the director of the company and executive pay. Oasis stepped up its campaign on Friday with a letter to Mr Hanna expressing “deep concern” over management of the business.
New York-based investors Coltrane Asset Management and Irenic Capital have also publicly called for a change in strategy.
Activists are circling as the casual dining sector battles the surging cost of ingredients, energy and wages. Many chains are still struggling to recover from the shock of closing during lockdowns.
The Restaurant Group announced plans to sell off more than 30 Frankie & Benny’s and Chiquito sites earlier this year, after revealing its losses had more than doubled to £86.8m in 2022.
Rival chain Prezzo recently shut 46 branches in April, putting around 800 jobs at risk.
Mr Hornby told The Telegraph in March he did not expect the casual dining sector to recover to its previous highs, although he said people were still “prepared to spend money on good quality food and drink” despite the cost-of-living crisis.
Despite the downturn in the sector, Wagamama has performed well. Sales were up 9pc in the first quarter of 2023 if adjusted to take account of VAT relief last year.
Mr Vago said TMR wanted The Restaurant Group to implement a three-year strategy beginning with the sale of all its brands except Wagamama, and leading to an eventual sale of the Japanese chain as a standalone entity.
Irenic Capital has already urged the board to adopt this strategy. A spokesman said in April: “Ultimately, The Restaurant Group should own just Wagamama and focus its efforts on growing that business.”
The stage is now set for a combative AGM at The Restaurant Group’s London headquarters on Tuesday.