“Two Popular UK Restaurant Chains Sold Off to Reduce Massive Debt”

Two popular UK restaurant chains sold off due to huge deb

The Restaurant Group (TRG) has announced a significant move to alleviate its financial woes by selling off its underperforming Frankie & Benny’s and Chiquito brands. These struggling chains will now be under the ownership of Café Rouge’s parent company, Big Table Group. This strategic shift aims to bolster TRG’s profit margins and reduce its overwhelming debt.

“Two Popular UK Restaurant Chains Sold Off to Reduce Massive Debt”

As part of this deal, TRG will pay £7.5 million to Big Table Group, which is backed by private equity, while receiving a nominal value of just £1 in return. The transaction encompasses 75 restaurant locations.

Frankie & Benny’s logo outside restaurant site

TRG has been grappling with substantial financial losses over the past year, leading to mounting pressure from activist investors for a change in leadership and enhanced profitability. Last week, Chairman Ken Hanna announced his resignation, signaling the company’s commitment to revamping its management and financial performance.

“Two Popular UK Restaurant Chains Sold Off to Reduce Massive Debt”

The company’s board is actively exploring various strategic options to expedite margin growth and reduce debt. Post-transaction, TRG will focus on three core divisions: Wagamama, Pubs, and Concessions. Analysts from Stifel praised the decision, suggesting that divesting the Concessions business could be an effective means of addressing debt concerns without compromising the overall quality of group earnings.

TRG’s challenges have forced the closure of approximately 40 sites over the past year due to weaker trade conditions. Andy Hornby, the Chief Executive Officer of The Restaurant Group, expressed optimism about the sale of the leisure business, emphasizing that it would significantly accelerate their medium-term strategic plans to increase adjusted Ebitda margins and reduce leverage. He also conveyed gratitude to the hardworking teams that have improved the customer experience within the leisure business.

Chiquito logo outside restaurant site

In response to the acquisition, Alan Morgan, CEO of the Big Table Group, highlighted the importance of expanding their portfolio with brands that resonate with consumers. He referred to this acquisition as an exciting part of their growth strategy and welcomed the new team into The Big Table Group, which already includes Café Rouge, Las Iguanas, and Bella Italia.

This transaction marks a pivotal moment for TRG as it strives to regain its financial footing and streamline its operations.

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