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Wed 7th Sep 2016 - Wagamama reports 9.8% boost to LfLs in Q1, average weekly sales per site now £38,700
Wagamama reports 9.8% boost to LfLs in Q1, average weekly sales per site now £38,700: Wagamama has reported like-for-like sales rose by 9.8% in the 16 weeks to 14 August, the first quarter of its Fiscal Year 2017. Its credit rating has been upgraded by both Moody’s and Standard & Poor’s. The UK like-for-like sales growth follows two strong prior years (Q1 FY16: 13.1%, Q1 FY15: 9.2%). The company said it had now traded ahead of the competition for 120 consecutive weeks. Total sales in Quarter One were at record levels – £75.6m, 16.6% up on the comparable quarter last year. Average unit volume is now £38,700 compared to £30,700 in the 2014 to 2015 financial year – and a 31% increase in three years. A new opening in Bromley is taking £59,000 a week and its new Bankside site is taking £52,000 a week – a third site opened in Staines. Restaurant Ebitda was £16.5m and adjusted Ebitda was £12.1m, both in double digit growth. In the US, the three Boston sites saw like-for-like growth at 10.8%. Its Heathrow T5 rebuild was opened, achieving three company weekly sales records in a row – £174,000 in one particular week. A new New York City flagship is on target for opening in mid-October – fire regulation approval was gained yesterday. There were franchise openings in Cyprus (Ayia Napa), Gibraltar, and Netherlands (Rotterdam) in Quarter One. David Campbell, chief executive of Wagamama, said: “I am delighted to report another very strong set of results, especially on the back of two prior years of robust performance. Like-for-like growth of 9.8% shows that we continue to trade strongly and are positioned favourably within the market. We continue to seek an even greater understanding of our guests, which drives our ongoing improvements. Operationally all of our company owned estate, in the UK and US, has ‘kaizen’ embedded, and physically by the end of the 2017 financial year the majority of restaurants will either be newly built, rebuilt or refurbished with the ‘kaizen’ design. ‘Kaizen’ is also in all new franchise restaurants and rolling out through our remaining estate. We are pleased with the new openings in Quarter One and current pipeline of new restaurants. We also continue to actively manage the estate by not renewing leases in a very small number of less well performing sites. New York City has not been without its challenges, but we are on target to open at 210 5th Avenue in Quarter Two, further strengthening our presence in the US. It’s particularly pleasing to have both Moody’s and Standard & Poor’s upgrade our ratings to levels above most of our peers. This reflects the strong financial results on both a ‘four-wall’ restaurant and adjusted Ebitda basis, and continued strong cash conversion. We are confident that our strong financial position means that we are well placed to further invest and grow market share and we are excited about the future opportunity.” The company added in a report to bondholders: “Turnover in our restaurant business in the United Kingdom increased 16.8% to £73.8 million in Q1 2016/17 from £63.2 million in Q1 2015/16. This was primarily due to the increase in the number of restaurants from 115 open at the end of Q1 2015/16 to 118 open at the end of Q1 2016/17 and a 9.8% like for like sales increase. Turnover in our restaurant business in the United States increased 11.8% to £1.9 million in Q1 2016/17 from £1.7 million in Q1 2015/16. US turnover increased by 2.5% to $2.7 million for Q1 2016/17 versus $2.6m for Q1 2015/16. Turnover from our international franchised restaurants business line increased 40.0% to £700,000 in Q1 2016/17 from £500,000 in Q1 2015/16.” The company has exited a site in Boston, Massachusetts that the company decided was too suburban. On Brexit, Campbell said: “There’s been no discernible impact from Brexit and we think there are opportunities in the short and medium term. Like-for-like sales growth was 9.6% before Brexit and 9.3% in the period after,” said Campbell. Chief operating officer Jane Holbrook said sales growth has been driven by 6.1% increase in covers but also, to a smaller extent, price increases imposed earlier in the year than usual. Out-of-restaurant sales now account for 12% of total sales, with takeaway 55% of this and delivery now 45%. New openings are planned in Peterborough, Ipswich and St Paul’s London before the end of October. A new loyalty tool will be rolled out at the end of Quarter Two. Campbell added: “We are in a category of one – there is nobody comparable on a national basis. The (overall) market dropped in the first quarter – it contracted marginally. Our differential versus the rest of the market is growing.” Campbell said the company thought that 50% of the sales through Deliveroo are incremental and 50% are substitute sales, at a lower margin.

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