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Morning Briefing for pub, restaurant and food wervice operators

Sat 4th Jul 2015 - Wagamama to get new chairman ahead of float review:
Wagamama to get new chairman ahead of float review: A new chairman is set to take the helm at Wagamama ahead of a review that could see it float on the stock market, according to Sky News. Allan Leighton, the former boss of Asda and ex-Royal Mail chairman, is to become the restaurant group’s next chairman. The move, set to be unveiled next week, will come four years after private equity firm Duke Street Capital acquired the business, which is led by David Campbell. Campbell, who oversaw the transformation of London's Millennium Dome into the 02 Centre, arrived in September 2013 and has achieved very strong sales and Ebitda growth during the almost two years that have followed. The arrival of Leighton will signal early stages of a review of options as the company. Currently the chairman of the Co-operative Group, Leighton is in the process of giving up a number of his board roles, including at the set-top box maker Pace, which has been taken over by Arris, a US rival. Leighton has also stepped down as chief executive of the Danish jewellery company Pandora, and is likely to leave Office, the UK-based footwear retailer, if it is sold as expected later this year. Wagamama, which means ‘naughty child’ in Japanese, was established by the restaurateur Alan Yau but has been owned by a series of private equity firms. Its current owner believes there is still considerable scope to expand the business, which trades from circa 116 UK restaurants and 34 overseas. Wagamama has reported that like-for-like sales rose by 9.9% in the 12 weeks to 1 February this year, with turnover up 18.3% to £47.3m for the quarter. Adjusted Ebitda for the quarter rose 14.5% to £7.9m. For the 40 weeks to 1 February 2015 like-for-like sale rose 10.5% with overall turnover up 19.8% to £147.4m. Adjusted Ebitda climbed £18.4m to £22.7m for the 40 weeks  Earlier this year, a total of £150m was raised through a bond issue to accelerate its expansion. Ratings agency Moody’s, which assigned a B2 rating to the £ fund-raising, stated: “Outside of its UK operations, Wagamama has 34 restaurants across 15 countries, as of December 2014. However, its earnings remain concentrated on its core UK operations, accounting for over 95% of the group’s Ebitda in FY13/14. Its four directly operated US restaurants currently contribute around £1 million to Ebitda and the group’s international franchise operations (30 restaurants) currently do not contribute materially to Ebitda. The growth of the UK casual dining industry in recent years has been supportive of Wagamama’s growth, with Wagamama seeing positive like-for-like revenue growth for each of the last four quarters to November 2014. Wagamama’s strategy is still for growth in its core UK market, planning to open around 40 new restaurants in the UK in the next three years. Following the refinancing, the group had around £21 million in cash and a fully undrawn £15 million super senior RCF, maturing in 2019, providing a good initial liquidity cushion." To November 2014, Wagamama reported revenues of £181.1 million and Ebitda (unadjusted) of £26.3 million. David Williams is currently chairman of Wagamama. 
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